I'm no stranger to buying music. It's been a lifelong addiction. However, a recent experience highlighted the bright spots -- and risks -- surrounding the companies that are involved in the collective search for music we love.
The musician in question may have opined on how our "dreams and desires are hung on the butcher's hook of rampant consumerism," so there's some irony that my purchase catalyzed my brain's spinning over the various business angles in question. However, the other side of the story is that the musical art form is at the forefront of a whole lot of change in media and some of us can't help but try to deconstruct these changes. And of course, rampant consumerism aside, maybe it's a great time to be an artist of just about any stripe, considering there are so many ways to find your fans.
So here are the five things I learned.
5. Amazon really knows what I like. Amazon.com (NASDAQ:AMZN) recommended an album called Grinderman to me a week or two ago, offering a pre-order since it was due to launch April 10. "Who is this?" I thought. I'd never heard of this band. Why was it recommended to me? It turns out Grinderman is a new project by Nick Cave and some members of the Bad Seeds. Considering I do indeed like Nick Cave, score one for Amazon.com. I went ahead and pre-ordered the CD.
Foolish takeaway: Recommendations engines and Internet distribution are changing the face of media's traditional hits-based model. It's a great new world compared to my teen years in the '80s, hitting bricks-and-mortar record stores with no guarantee I'd find music I liked -- and back then, the statistical likelihood of finding music I liked in a chain record store was about nil.
4. I have a serious problem with wrap rage. The CD arrived at my front door right on time (although apparently in conjunction with Amazon.com's soon-to-be-defunct relationship with Borders (NASDAQ:BGP), oddly enough). I know there are many reasons why CDs have been steadily declining in sales. However, the thing that struck me Tuesday night was that I was disturbingly distressed by how difficult it was for me to get the plastic off. (Can't ... tear ... plastic ... with fingernails ... pen isn't working ... kitchen knife, kitchen knife! Aarggh!)
It's quite possible I need anger management classes, but it seems like every time I try to bust into a CD or DVD I start entertaining violent thoughts. I mean, really, isn't this an activity that should take no more than five seconds? You'd think somebody in the industry would think of a better solution for protecting physical media without driving people insane.
Foolish takeaway: The music industry may be unhappy about the demise of the physical format, but even beyond piracy, inconveniences surround the form, as well as the fact that the industry has been slow to come up with innovations for it.
3. Digital extras -- why'd I buy this CD again? I went on an Internet hunt to see if people loved the album as much as I did, since it was hot off the presses. That's what led me to fire up Apple's (NASDAQ:AAPL) iTunes and have a look at user ratings there.
It seems likely that Anti-, the label that distributed the Grinderman album (with the tag line, "real artists creating great recordings on their own terms," a good battle cry these days), is onto the benefits of offering digital extras rather than shelling out for their physical production. For $9.99, I could have gotten some cool digital extras if I had bought Grinderman on iTunes -- 11 minutes of videos and a digital booklet.
Foolish takeaway: Back to weaknesses inherent in the physical format. You can offer more and lower production costs with the digital form, if you embrace it. My Foolish colleague Rick Munarriz recently discussed this when he pointed out that digital music's got a dirty little secret.
2. I can be Grinderman's friend. So can everybody else. Hey, Grinderman's got a page -- and more than 15,000 "friends" -- on News Corp's (NYSE:NWS) MySpace! But not so fast. It was heartwarming to see some actual fans' messages posted on the page (and I noticed lots of kudos for the album today), and it's all well and good to see comments from musical hopefuls hoping somebody will check out their music. That's what it's all about. What creeped me out was the amount of comments on the page that looked like garden-variety spam, having nothing to do with music or the band. With friends like those, who needs enemies?
I love the idea of bands being able to communicate with fans on a site like MySpace, as well as selling their music directly to fans. However, given the fact that MySpace is a bit of a free-for-all, I can't help but wonder if and when the downsides will start to outweigh the appeal of that site.
Foolish takeaway: MySpace has been outrageously successful, not least of which is because it helps musicians reach out to fans. However, will the seedy underbelly of spam come-ons and lack of crowd control eventually do it in?
1. Grinderman is a really great album. Grinderman was one of those albums that made me think, "YES!" straight out of the wrapper (as challenging as unwrapping it might have been). To give credit where it's due, I have Amazon's email to thank for that, otherwise I probably wouldn't have known about the album for a while.
Recommendations engines are a huge factor in much of today's commerce (Wired's Chris Anderson wrote an entire book on the related Long Tail theory last year). Taste is, of course, subjective, and the Internet has made it easier to access much more than just mainstream popular culture and arts. Our individual tastes have never been easier to satisfy.
Foolish takeaway: We're entering a great time to be an independent, as big media's traditional model is disrupted. There will always be big hits, but the blockbuster model, which has largely focused on providing stuff that appeals to everyone and offends no one, isn't the only game in town given the Internet's powerful distribution. Meanwhile, when considering investing in traditional music companies like Warner Music (NYSE:WMG), be sure to ponder whether there's suitable innovation. And of course, there's always one of the biggest questions: is suing your biggest fans, as the RIAA is fond of doing, a suitable change to business model when disruption -- and opportunity -- is at hand?
These are interesting times, to be sure, with some tough questions. Some companies may make beautiful music by recognizing the opportunities and suitably evolving. Others will end up facing the music. Investors who are interested in media concerns should think accordingly. The next couple years should be nothing if not fascinating.
Amazon.com is a Motley Fool Stock Advisor recommendation. Borders is a Motley Fool Inside Value pick.
Alyce Lomax does not own shares of any of the companies mentioned. It's her birthday, so she just might listen to The Birthday Party today. The Fool has a disclosure policy.
