What the Apple-LaLa Deal Could Mean for Video Streaming

There's been a lot of noise over the last few days about Apple's purchase of the online music-streaming service Lala. No one's quite sure what this means for the future of Apple's iTunes music service, or Lala's own service. Most are speculating that Apple may be moving into the cloud to compete with subscription services from competitors like Rhapsody and Napster. Or that Apple will follow Lala's current format where you can actually own a cloud-based version of a particular album or song at a reduced price.

My take? If Apple really is heading for the clouds they can't stop at music streaming, because the real killer Web application would be online video streaming.

Free the Hard Drive

One of the biggest benefits of moving to streaming videos over downloads would be the savings on hard drive space, perhaps even making it possible to have devices with smaller storage spaces in the future. Although an ardent music lover could fill up a big hard drive with music, most people can easily fit their music collections onto a 160GB hard drive. Video files, on the other hand, are always getting bigger thanks to improvements in high-definition formats, and it doesn't take long to fill up a hard drive with video files. Online storage and streaming would be far more beneficial for video than music.

The Market Already Exists

Apple may be a pioneering company, but part of Cupertino's overall strategy is to move into an established market and revolutionize it. That's what the company did with the iPod and the iPhone, and online video could be ready for this kind of move. Amazon already offers a cloud-based retail store that allows you to store and stream television episodes and movies right from your browser. A new movie streaming service called EPIX recently launched, and looks like an exciting addition to online video. Netflix has been making some inroads with its streaming service and the Roku set-top box. Finally, we can't forget the endless parade of popular free video streaming sites including Hulu, TV.com, YouTube, and the Web sites of almost every major network and specialty channel.

Streaming video from iTunes with the newly announced iTunes Extras is just one way Apple could change the current state of online video.

The Pirates Are Here Too

Earlier this month, the London-based Global Web Index released a study arguing that online streaming is a key way to figth music piracy, according to TechCrunch.

But if you think that a legitimate streaming video service is going to kill video piracy, think again. That's because pirate video streaming sites and codecs are already quickly replacing file sharing as a means of getting what you want, albeit still illegally.

Streaming piracy affects television primarily, as it is harder to find quality movie content on pirate streaming sites. But almost every home has a DVR, and there are plenty of people out there who are willing to upload content to make (illegal) online TV streaming possible.

Television producers don't have much of a chance at beating this form of piracy simply because it's a numbers game: for every site you knock off, another one pops up. Not to mention the fact that p2p file sharing is still a reliable back up to streaming. But a popular, and reasonably priced, cloud-based streaming service could help close the gap on pirate streaming. It's not likely to kill the practice mind you, but a quality pay service with fast streaming rates would certainly reduce piracy.

Two Major Problems: New York and Hollywood

The biggest sticking point to a brave new streaming world always comes down to the content producers. Namely, the studios in Hollywood and the television bigwigs in New York. Price is one issue that should be rethought, but a much bigger question would be how these companies would deal with regional restrictions. Right now, you can buy downloads of television shows and movies from iTunes, stick them on your laptop or iPod, and view that content anywhere in the world whether you're on a plane to Bermuda or sitting in a cafe in Paris.

But streaming brings out a completely different mentality among content producers. Take Lala for example. So far, Lala has only been available to American customers while they are physically in the U.S. or using an IP proxy overseas (a trick that can be easily blocked, although Lala hasn't done this). Regional restrictions like Lala's are not particularly fair to the paying end user, and it doesn't encourage customers to put their trust in cloud-based services. I want to be able to use my purchased content from anywhere, without interference from my service provider. One possible solution could be to offer a download option for those times you really need a physical copy of your purchased content. But a better option would be to give customers global access to their purchased content.

But this is all just conjecture at the moment. No one really know what Apple is going to do with Lala, but if Jobs and Co. are looking at streaming as the future, then video should be an important part of the company's plans.

Connect with Ian on Twitter (@ianpaul).

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