CD swapping site Lala.com is keen on moving to the next step, and is transforming its site to a music portal. Once the changes are made, members will be able to download music directly to their iPods instead of their hard drives. The company had made a deal with Warner Music Group and will be selling 200,000 songs for 99cents each. Lala.com has no advertisements and makes its money only when members buy CDs or swap used ones for a fee of $1 per disc.

Analysts said Lala is taking a huge risk. As a full-service music site, it will compete not only against Apple’s iTunes, which sells 5 million songs a day, but e-commerce powerhouses Amazon.com and eBay.