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Kiss Wasn't Made for Lovin' the Internet

If you ever want to hear a new Kiss album, you'd better hope that the recording industry figures out how to get along with the Internet.

Last Friday, Gene Simmons told the U.K.'s Metal Hammer magazine, "The record industry is dead, it's six feet underground, and unfortunately, the fans have done this."

File-sharing and downloading have put the concrete boots on the traditional business of selling CDs, and Kiss doesn't like the resulting chaos. "We're gonna wait until everybody settles down and becomes civilized, and as soon as the record industry pops its head, we'll record new material," Simmons said.

The new world order of the music industry might turn up faster than Simmons expects. Apple (Nasdaq: AAPL  ) iTunes is already the largest music store in the U.S., based on the amount of music sold. Best Buy (NYSE: BBY  ) and Wal-Mart (NYSE: WMT  ) no longer fight over the top spot, and pure-play record store chains such as Tower Records and CD Warehouse have fallen into obscurity or bankruptcy.

No, Gene, the real way forward is all digital. Ask (Nasdaq: AMZN  ) , which is reaping some fine rewards from the launch of its MP3 download service. Ask Apple, of course -- besides selling the most music today, the company is also the leading provider of digital music players that hold the downloaded files.

And have a chat with fellow rockers like Thom Yorke of Radiohead, Trent Reznor of Nine Inch Nails, or Talking Heads front man David Byrne. They have all figured out how to make money in the emerging paradigm where their music that's for sale has to compete with free downloads.

The secret sauce seems to be built around adding your own flavor to the distribution brew, like premium boxed sets with high-quality artwork. The hardcore Kiss fans might grab a free song or two, but then they'll turn back to lust after the top-shelf stuff that can't be pushed through an Internet tube.

This may be bad for traditional record labels like Sony (NYSE: SNE  ) BMG and Warner Music (NYSE: WMG  ) -- but only if they allow themselves to be left behind in a puddle of blood and a cloud of dust. Until the ongoing lawsuit campaign abates, I'm assuming the record companies would rather die than adapt, leaving the music market to the likes of Amazon, Apple, and Napster (Nasdaq: NAPS  ) .

If they ever see the light, those old-line music companies might make brilliant turnaround plays, but until further notice, consider those stocks unsafe for investment.

Wal-Mart Stores and Best Buy are Motley Fool Inside Value picks. Best Buy,, and Apple are Stock Advisor picks. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund holds no position in any companies discussed here. He is ranked No. 3,414 of more than 110,000 CAPS players. He's also among the top 30,000 Guitar Hero players on the Wii. You can check out Anders' holdings if you like, and Foolish disclosure saw Jimi Hendrix at Woodstock.

Read/Post Comments (3) | Recommend This Article (3)

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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.

  • Report this Comment On June 19, 2008, at 7:27 AM, LouieJunior wrote:

    What do you mean, Ask Amazon?

    I did, and as usual, they disclose very little information -- very secretive. Your story leads readers to belive Amazon is hugely successful at something.

  • Report this Comment On June 19, 2008, at 3:15 PM, mtmtsullivan wrote:

    Simmons is a joke. Kiss hasn't recorded new music in over ten years and it's not because of the state of the industry. It's because they're just a nostalgia act these days. Nice job of blaming others for your own lameness, Gene.

  • Report this Comment On June 22, 2008, at 2:40 AM, politicsapocalyp wrote:

    Simmons lives in the past and as time passes since the innovative release of their album on the net, Radiohead has again and again proven that they are not really thinking outside the box.

    You may be interested in the album I just recently released. It is available free to download. Licensed with the Creative Commons Attribution 3.0 Licence. This licence lets you use this music for commercial products or make remixes or other derivative works, so long as you give credit to the original artists. Politics Apocalypse is political and subversive post-industrial rock with an interesting mix of classical instruments, guitars, electronic beats, and a small dash of aussie hip-hop. You can download the whole 11 track album at no cost at our website. We are also doing a name your own price CD (starting at cost price).

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