Lala.com bet with free music service

Lala.com hopes to succeed when the new version becomes a music portal, where members can download music directly to the iPod, bypassing the computer hard drive that users store.

Under the agreement with Warner, Lala will sell nearly 200,000 songs, for 99 cents each. Users can listen to Warner's songs for free, and Lala pays 1 cent per partner.

' This is a turning point for the music industry ,' co-founder Bill Nguyen, 36, said. ' I don't know if this investment is effective, but this is a gamble .'

In most other streaming music download sites, users must pay subscribers or only listen to the sample music that lasts for 30 seconds. For example, Napster, with 830,000 members, requires payment and advertising. Meanwhile, Lala.com has no advertising, its revenue is due to members buying new CDs or exchanging used CDs for a fee of 1 USD / disc. This site has about 300,000 members and is supported by two companies, Bain Capital and Ignition Partners.

Bill Nguyen estimates the company will have to pay $ 140 million for licensing fees in the next two years if the number of members increases as expected. Site leaders are negotiating with other big names like Sony BMG, EMI and Universal. ' We will announce losses if any but we are ready to catch the storm, ' Nguyen said.

Analysts say Lala is entering a big gamble. As a service music site, they will have to compete not only with Apple Inc.'s iTunes, which sells 5 million songs a day, but also e-commerce giants Amazon.com Inc and eBay.com.

To download music to iPod, the member must download a 3 megabyte extra software that runs on all browsers of Windows and Macintosh computers. Because the songs are not saved on the PC hard drive, the first file source is the peer to peer network.

K.Linh