I only see one major drawback so far:
What is the streaming bitrate of a web song?
64kbps streaming is pathetic. 128kbps is better, but it won't cut it for people who actually spent time ripping their music at 192kbps or higher (CD quality). Hopefully Lala will do what Napster has done and up their collection to 192 over time.
But is 128kbps for $0.10 a fair price?
Probably. But I'd pay $1 per album to stream in 192kbps VBR.
And this part of their Terms of Service:
We use non-personally-identifiable information including IP addresses and aggregate user data to analyze trends, to administer the site, to track movement around the site and to gather demographic information about our membership base as a whole.