Over at CNet, Greg Sandoval’s inside sources say Apple’s setting low expectations for cloud music, and hasn’t yet acquired licenses to stream songs from its own servers.

In other words, the assumption that Apple acquired Lala to build its own streaming music service won’t pan out anytime soon. The Lala crew may actually be working on some sort of streaming video service instead, Sandoval’s sources say. Apple acquired Lala in December 2009, and shut it down in late May.

We’ve written about Lala quite a few times, because it took such a unique approach to digital music. In addition to selling MP3s, Lala sold streaming tracks for 10 cents each, and let you listen to any song once for free. It could also scan your entire downloaded music library and store a cloud version to be accessed anywhere. For Apple to offer any of those services, it needs more licensing from the music industry, and Apple reportedly hasn’t negotiated for that yet.

But as I look at the digital music landscape now, I don’t think Lala is really necessary. All-you-can-eat music services have emerged from Rhapsody, MOG and now Rdio, all of them offering mobile and desktop access for $10 per month, with the ability to download songs locally. That’s a lot more convenient than building a streaming library of individual tracks, and could be more economical for music junkies. If you just want to hear a song once for free, you can accomplish that with music search tools from Google and Bing.

As for the digital locker concept, how essential is it? Music doesn’t take up a lot of room, and storage capacity on mobile devices is only increasing. I’d rather see Apple focus on streaming video, because movies and TV shows are much more unwieldy to store and transfer. Although I was sad to see Lala go, I’m not desperate for it to come back.

 
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Read more: Apple, Digital Music, Lala