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Apple Shutting Down Lala on May 31

Apple will be shutting down streaming music service Lala effective May 31, fueling speculation that the Cupertino company is getting ready to launch its own streaming music service under its iTunes brand. Apple bought Lala back in December 2009 for an undisclosed amount, but has never publicly stated why it wanted the company or what it planned to do with it. The odds are good Apple’s master plan wasn’t merely to shut Lala down after a few months, and speculation is now centering on Apple unveiling a cloud-based, streaming music service under the iTunes name, possibly with the big reveal coming at this year’s Worldwide Developer Conference in June.

Lala has already shut down registration for new customers, although existing customers will be able to continue using the service through May 31. Lala will be offering customers with unredeemed gift cards and Lala credits credit at the iTunes store once LaLa shuts down. Customers who purchased $0.10 Web-only songs through Lala will be reimbursed for their purchases, rounded up to the nearest dollar for refunds under $10, or the nearest $5 for refunds of $10 or greater. Customers can get their refunds sent as a check.

Although the online digital music industry has traditionally struggled with subscription models, industry rumors have had Apple working on a Web-based version of iTunes. No information about Apple’s plans has been revealed, so no one knows whether Apple plans to offer an all-you-can-eat subscription service, or roll out Lala-like features like Web-only songs for sale at a steep discount (a la Lala) or a way to let users tap into their own music libraries from anywhere they can get decent Internet access.