New website allows users to trade CDs
By Kevin Maney
USA TODAY
2 hours, 29 minutes ago
source: http://news.yahoo.com/s/usatoday/200...N5bnN1YmNhdA--



A new CD-trading website, launching Tuesday, could be the first of a new wave of sites that give consumers a way to legitimately get nearly free music.


The site, Lala.com, carries no inventory; it's more like eBay than used CD sites such as Djangomusic.com.


How it works: Users start by listing all their CDs. Then they look at menus of available CDs or through other people's CD collections, clicking on those they'd like to receive.


A request, say, for Coldplay's X&Y, generates a blind notice to anyone who has that CD that someone wants it. The first to agree to send it sees the address of the person who wants the CD, then mails it in a pre-paid envelope (which La La sends users when they sign up).


La La users get charged $1 for each CD they receive. They have to send a CD to get a CD, which is supposed to prevent anyone from abusing the system by only receiving CDs. Users are instructed to send the original CD, not a copy.


At launch, La La will be a "closed beta" - you have to be invited to use it until the site goes live this summer. (Related item: Kevin Maney's blog)


Though La La is the first high-profile site to create a CD-trading market, analysts say others will follow.


At a Billboard magazine conference last week, MySpace executives said it's "worth exploring" ways to incorporate eBay-like music trading capabilities.


"This legal peer-to-peer music trading is going to be something you'll see a lot more of," says Rich Greenfield, media analyst at Pali Research.


While LaLa.com "is not a slam-dunk, it could tap a new vein in digital and analog music," says Tim Bajarin, analyst at Creative Strategies.


Palo Alto, Calif.-based La La - which got $9 million in venture capital - might only be a niche player on its own, Bajarin says. But it could be powerful if bought by an entity such as MySpace or AOL and incorporated into established communities.


"I would not be surprised if that is part of the real goal," Bajarin says.


Music companies are trying to figure out what La La might mean to them.


Online trading could hurt sales if users can legally trade for a CD they might otherwise buy.


But La La CEO Bill Nguyen - who previously started and sold Seven Networks and Onebox.com - says he is reaching out to record labels.


His pitch: Through trading, users typically will get only 10% to 20% of the CDs they want.


For the CDs not available through trading, record companies could offer La La users new CDs or downloads.


"They could target people who want that CD" simply by seeing who was requesting it, Nguyen says.

Artists might support the site: Nguyen says he wants to funnel a cut of La-La's profits back to artists whose CDs get traded.

"I don't have any problems with the idea," says Chris Collingwood of the band Fountains of Wayne.

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