Startup Lala.com has abandoned its model of allowing users to listen to free streamed music through its website, only a month after it introduced the system.
Lala says the service is being withdrawn becuse its servers couldn’t handle the number of users, though Lala needs more labels on board, and this may be behind the decision.
This business model was a risk, with the idea being that enough of the site’s users would ether pay for downloads or buy CDs from the site to cover Lala’s payments to record labels.
Lala has to pay the record labels a cent for each song streamed through the site, and will pay an estimated $140m in royalties over the next two years,
Lala says that the free streaming music will return at some point, though it hasn’t commited itself to a specific date.