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Is a Big iTunes Revamp in the Works?

Apple's iTunes content sales and delivery system is already the largest music retailer, having surpassed Wal-Mart last year. Now it looks like Apple is getting ready to take it in a new direction one that appears to be a cloud-based strategy.

The Wall Street Journal reports that Apple is "exploring an overhaul of the way it sells and stores music that is aimed at extending its influence to the Web." A key component in this is the music-streaming service LaLa Media, which Apple (NASDAQ: AAPL) acquired last week.

Numerous reports put the sale price of LaLa at $80 million, but TechCrunch insisted the deal was closer to $17 million.

Apple spokespeople did not return calls for comment.

Whatever the price, Lala.com does something iTunes does not: it lets consumers buy and listen to music through a Web browser and store their music remotely, so it can be played from a stream from the Internet.

WSJ said Apple is considering adopting that same model for songs sold on iTunes, which means you wouldn't have to download it to your computer, it would always be there in the cloud for you to stream to any Apple device.

That would mean iTunes can sell music through more than just the software-based client that has to be installed on the PC now. Apple will be able to sell music through search engines and other Web sites.

Who owns the music?

Apple still has to work out things like ownership. If music becomes a virtual product held in the cloud, who owns the song, Apple, the consumer or the record label? That's just one of many issues that need to be ironed out.

It also gives a clearer indication what Apple intends to do with the $1 billion, 500,000 square foot datacenter it recently announced plans to build in western North Carolina.

Apple currently has a datacenter in Newark, California that's 100,000 square feet, so what it intends for a new center five times that size has certainly stirred interest, although Apple is keeping things quiet, as it usually does.

Ben Bajarin, analyst with Creative Strategies, also thinks Apple has a cloud strategy in mind because that's LaLa's main strength. "There were a couple of technologies LaLa is sitting on that are interesting. The one I thought the most significant was backing up your iTunes library to the cloud so you could stream you library to whatever device that had a browser," he told InternetNews.com.

Moving to the client will mean not having to keep everything locally. Just a small amount of music can be stored on the local device and the rest streamed. Whatever Apple does, Bajarin figures "it's obvious they are looking to advance iTunes in a number of ways and this cloud portion will be central to it, whether it includes LaLa technology or not," he said.