Apple acquires music service Lala

By Gabriel Madway and Yinka Adegoke

SAN FRANCISCO/NEW YORK (Reuters) - Apple Inc has acquired digital music service Lala, as the dominant online music retailer explores new models for selling songs.

Terms of the deal weren't disclosed by Apple, which confirmed the purchase on Friday.

ITunes is the leading music service in the United States with more than 70 percent of all digital music sales and it is the leading music retailer overall.

But newer music streaming services from the likes of News Corp's MySpace Music and Spotify have begun to win over music fans in the last year.

"Apple buys smaller technology companies from time to time and we generally do not comment on our purpose or plans," Apple spokesman Steve Dowling said.

A source familiar with the matter said the iPod, iPhone and Mac maker is seeking new ways to expand iTunes to move it beyond being a predominantly download service for songs. The source asked not to be named.

"Apple recognizes that the model is going to evolve into a streaming one and this could probably propel iTunes to the next level," said the person.

The iTunes store offers more than 11 million songs. Apple has sold billions of tracks through iTunes since its launch in 2003.