Lala.com jumps into the current online music revolution as it transforms its CD-swapping site into a music portal where songs can be downloaded without copy-protection, and directly to members’ iPods without having to go through computer hard drives.

“This is a turning point for music companies and the entire industry,” Lala.com’s co-founder Bill Nguyen said. “I have no idea if it will work — this is a bet,” he added.

This Silicon Valley-based company aims to sell about 200,000 songs from Warner Music for 99 cents each, starting Tuesday. Members will be able to play Warner songs through Lala.com’s web browser for free, and the company will pay Warner a penny every time someone listens to a song. Lala’s executives are currently aiming to make deals with other big labels such as Sony BMG, EMI and Universal as well.

Currently, Lala.com’s member subscription is free, and the site does not have advertisements, hence, revenue comes solely from new CDs purchased or used CDs swapped through their site. Lala.com has over 300,000 members to date.

According to analysts, this is a move that might be detrimental to Lala.com. Aside from having to compete with Apple’s official iTunes music site, Lala has to face equally powerful e-commerce businesses such as Amazon.com and eBay.com which also caters to the online music market.

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2. Apple iTunes Plus starts selling DRM-free digital tracks from EMI
3. iTunes Plus now offers 2 million tracks for just 99 cents
4. Best Buy Digital Music Store joins Universal Music Group
to test sales of DRM-free music
5. Major record companies and MySpace launch digital music JV