Employee Reveals Why Apple Acquired Lala Music Service

Aubrey Johnson, former employee at Color video streaming service that was Acquired by Apple last year, has revealed in a blog post why the Cupertino company acquired Lala music service having already bought Color Labs, both of which were founded by veteran Bill Nguyen (via MacRumors). 

Johnson says that Apple wanted to take advantage of Lala’s biggest strength i.e a search placement deal with Google due to which it was at he top for majority of Google searches of particular songs. “In 2009 when you Googled a song, the first result was a Lala result. Not an iTunes result, not the artist’s MySpace or website… a Lala result”, says Johnson. Every click that led to Lala wasn’t leading to iTunes for a potential music purchase. Even worse, Lala was often a better deal as well.

In late November [2009], Nguyen was seated at the dinner table in Steve Job’s home on Waverly St in Palo Alto. Also present were Eddy Cue and Tim Cook and other Apple executives. Steve led the conversation while eating a beet salad:

“I’m going to give you a number, Bill, and if you like it, let’s do it and just be done with this whole thing. Okay?” Bill agreed.

Jobs passed a piece of paper to Nguyen and Bill nodded. The deal was done.

Apple acquired Lala for roughly $80M with an additional $80M in retention bonuses for the remaining employees valuing the entire deal around $160M.