Lala lets users trade discs through the mail

Will people pay for music if they know the money’s going to artists and not “greedy” record labels?

That’s the hope of digital music start-up Lala.com, which is entering a crowded market with a unique promise: 20% of its revenue will go to a foundation dedicated to helping musicians.

Org, called the Z Foundation, will initially focus on providing low-cost health insurance to musical artists, who typically don’t have access to group plans and either go without or pay high individual rates.

Artists can sign up with LaLa and elect to take the 20% of revenue from their songs themselves. If they don’t, Netco will automatically put aside 20% into the foundation.

“We’re not doing this out of any obligation, but as a gift back to artists and so our users know that we respect the musicians they love,” says co-founder Bill Nguyen.

Though it’s an online start-up, LaLa makes its money the old-fashioned way: connecting customers who want to trade CDs. Users pay $1 per trade to ship a CD they no longer want in return for one they do want.

Peerflix already runs a similar biz for DVDs. But labels have more reason to be concerned about Lala than studios do with Peerflix: Lala users can easily get a CD, upload it onto their PC or iPod and then trade it without diskeries ever getting a cent.

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