You are correct in that if you have the mp3 files in your possession that you can listen to them should Lala go under. But Lala doesn't take away your files. All Lala does is allow you to listen to them through a web browser if you upload them to us. Then, this whole "network DRM" thing does is really make sure that you can listen to your own bytes. It's really just authentication.
On top of that feature, though, Lala also lets you listen to songs you don't own. The first listen of any song is free, at least. So this "network DRM" just prevents someone from grabbing the URL to one song and then posting that URL around. Some files are your own bytes that only you should have access to, and some files are in the catalog that anyone can potentially listen to.
Now, the 10-cent price-point for a streaming-only song comes with the limitation of being web-based. Some people like this product, others don't. If you don't, that's fine, and that's your option to not pay for a more limited product. But some people appreciate the much lower cost for "web songs", especially since they can apply those 10 cents toward an mp3 purchase if they decide to actually buy the DRM-free mp3. I like it (but I'm clearly biased) because I work at a computer all day with headphones and then listen to music through my computer at home. I'd rather not spend $0.99 per track, and I'm too lazy to use BT that often.
The article mischaracterizes the company and our product. There is a hefty chunk of FUD in there. Lala is like the Amazon mp3 store with two major additions: the 10-cent stream-only product, and an online collection. It is that straight-forward at its foundation.