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 Amazon.com (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.