That was the contract lala made with their customer.
This exact same scenario - users losing access to music they've paid for due to a service being killed - has happened multiple times[1] due to DRM. I think it's clear that whether the reliance is on a DRM key-server, streaming, or whatever, consumers shouldn't "buy" music that stops being available when servers disappear.
[1] http://en.wikipedia.org/wiki/Digital_rights_management#Obsol...
I am still a bit skeptical that this would hold up in court. There are laws about what you can hide in the fine print, and often judges will hold the transaction to be for things that that a reasonable person would expect, not what is stated in the contract.