Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



SNOCAP's Snowball Effect?

Last winter, I identified SNOCAP as one of four interesting privately held companies that investors might just wish were public companies. There wasn't too much news out of SNOCAP after that, to my surprise -- until now, and it's pretty big. As you have probably heard, it's hooked up with News Corp.'s (NYSE: NWS  ) MySpace, enabling the popular social networking site to offer tools to musicians looking to sell directly to fans.

It's true that this development bears watching for Apple (Nasdaq: AAPL  ) shareholders. Fool contributor Jack Uldrich wrote about the varied and sundry services that are springing up these days to challenge iTunes, with the SNOCAP/MySpace deal being the latest. (Last week brought word of similar challenges from Time Warner's (NYSE: TWX  ) AOL, as well as SpiralFrog.) However, I think this development is a lot more interesting than whether MySpace will loosen Apple's grip on digital music.

SNOCAP is the brainchild of Shawn Fanning, who created Napster (Nasdaq: NAPS  ) , the infamous service that created a heck of a lot of panic over piracy until it went legit. Through SNOCAP, a digital licensing and copyright management service, musicians will be able to easily set up online stores on MySpace by the end of this year. (Since they'll sell the songs in MP3 format, I can only imagine they'll be compatible with iPods.) News reports are saying MySpace and SNOCAP will take a cut of the proceeds, but artists will set their own prices.

Lots of people bring up the old-fashioned idea that "unsigned" translates to "artists without talent." That's pretty much what any record label, publishing house, or movie studio would want you to think. Media distribution more often than not sides with artists that are easily accessible and promoted to the masses. (In other words, often quite mediocre. There's little other choice when you're trying to be all things to all people.) Most media companies have functioned as hit makers for ages, but the tide is turning.

The Internet is changing all that, and it's most visible in the surge of user-generated content (and ratings and recommendations, for that matter). Blogs, YouTube, and Wikipedia all prove there's plenty of unsigned, undiscovered, unsung talent out there if you're willing to look (and yes, dig through a lot of not-so-hot fare). In a personal anecdote, I've been trying to buy digital copies of back-catalog work by one of my favorite (though fairly obscure) musicians from the '80s, much of which was no longer available on (Nasdaq: AMZN  ) . Over the past two years or so I've been able to buy content on his website (using eBay's (Nasdaq: EBAY  ) PayPal) and then more recently through iTunes; this past week I noticed that he has also been posting video on YouTube with links to content for purchase as well. That's a prime example of how artists can link directly with fans and do their own grassroots promotions.

So while Apple shareholders can wonder if (or when) a MySpace-driven music service will impact iTunes, the fact is the ramifications of this type of deal as related to traditional media businesses might be pretty astounding. With strong online communities springing up, uniting people from all over the globe and allowing artists unprecedented exposure (and services like SNOCAP), could the media companies that have functioned as the facilitators of "talent" face increasingly difficult days in the not-so-distant future?

eBay, Time Warner,and areMotley Fool Stock Advisorrecommendations. To find out what other companies David and Tom Gardner have recommended, clickherefor a 30-day free trial.

Alyce Lomax does not own shares of any of the companies mentioned.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 515771, ~/Articles/ArticleHandler.aspx, 10/28/2016 10:12:22 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,209.01 39.33 0.22%
S&P 500 2,133.41 0.37 0.02%
NASD 5,218.65 2.68 0.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/28/2016 9:56 AM
AMZN $781.58 Down -36.78 -4.49% CAPS Rating: ****
EBAY $29.06 Up +0.25 +0.87%
eBay CAPS Rating: ****
FOX $26.35 Up +0.11 +0.40%
Twenty-First Centu… CAPS Rating: ***
AAPL $114.80 Up +0.32 +0.28%
Apple CAPS Rating: ****
NAPS $2.64 Down +0.00 +0.00%