(This article originally appeared on ArtistsHouseMusic.org.)

Michael Robertson, founder of mp3.com and persistent tech entrepreneur posted on his blog today about a new music service called Lala.com under the headline “$20 Million Dollar Experiment to See if You’ll Rent a Song for 10 Cents”.

In his post he talks about how the new service works. The site allows users to purchase a song for a dime. When they do, that song is put into your account. You can access this account from any place with an Internet connection.

The catch? There’s no way to download the songs to your hard drive or to a portable device.

All of the major record labels are on board and Warner Brothers has invested $20 million to help them get started. Their total capital investment is $34 million, the remainder coming from the large investment group Bain Capital.

If you’d like to try the service out, you can sign up here.

Michael’s big beef with the whole thing is that the site is betting that people are willing to pay ten cents a song for web only music. He doesn’t see that as a reasonable proposition.

He may well be right. iTunes has the brand and the cache among non-tech users. It’s certainly reasonable to think that this site may have trouble bridging the generational gap. It’s reasonable to expect that a certain amount of the success of the site has to do with how well the site is promoted and cross-branded.

It’s also true that Michael missed one key feature of the site: you can buy non-DRM versions of all of the songs for $0.89. It remains to be seen if they integrate their store with iTunes the way that the Amazon store does. (Really, the Amazon store is very clever in how they implemented that feature.)

From this angle, it seems as though Amazon is their natural competitor since they both share a lower price ($0.89) and are available as non-DRM files.

More accurately, I believe the site isn’t meant to be the online retail behemoth of iTunes. It’s meant to satisfy users who spend a lot of time online and who currently listen to their music via iMeem or Last.fm. It’s conceivable that this service could make a great addition to Internet radio stations.

To me, the site looks like an attempt to answer Tim O’Reilly’s quote from Star Wars in how copyright holders should treat music listeners: “Give the wookie what he wants.”

If you love making and sharing playlists online, a dime a song sounds imminently reasonable. If you want to take the music with you, it’s available for purchase in a non-DRM format cheaper than you could get it through iTunes.

It fills the niche between Pandora, Rhapsody, and iTunes. Will it be successful? Only time will tell. But just by signing up your first 50 downloads are free.

So take it for a spin and let us know what you think on the discussion boards.