News and Rambles
5 Reasons the Music Industry is a Retard About Rock Band and Guitar Hero
You may have heard in the news lately about the music industry being unhappy with their arrangements with the game producers that make the popular Rock Band and Guitar Hero games. Specifically, Warner Music Group CEO Edgar Bronfman said that the money they receive for rights is ‘paltry’ and unless that changed they ‘will not license to those games.’
Which, given the state of the music industry in the last few years, is completely retarded and here in my opinion are 5 reasons why:
1. Bronfman is completely overestimating the amount of leverage and power he actually has.
By flat out refusing to work with the game developers unless he gets more money, Warner is shooting himself in the foot, and his tactic won’t work. MTV Games, which produces Rock Band, has already started to boycott Warner based on Bronfman’s comments. And who does that hurt? Certainly not MTV Games. No, it’s Warner and their artists, who are missing out on the opportunity for a huge amount of publicity and promotion by being included in Rock Band.
2. They’re concentrating on the bottom line instead of seeing opportunity.
The music industry is worried about the amount of money they get paid directly from the game companies, but did they ever do an analysis of how being included in these games has boosted sales in other areas? How many people do you think downloaded “Through the Fire and Flames” by power metal band DragonForce before it was included in Guitar Hero 3? Well, according to Nielsen SoundScan, before was about 2,000 a week, and when Guitar Hero 3 was released, it shot up to 10,000 a week, topping out at 40,000 a week. Think about that and wonder why the record companies are whining about their royalty percentages.
3. They’re digging their heels in on the wrong things when they should be negotiating.
As mentioned in #2, by concentrating on the royalties, they’re missing great opportunities to use these game to create revenue in other areas. In fact, the amount of actual money they get from a downloaded Guitar Hero or Rock Band song is about the same as what they get from iTunes. The difference is in the percentage, it’s about half what they get from iTunes. Which, when you think about it, makes sense because the song is really only half of what you’re paying for, with the other half being the interactive game part. If they were willing to negotiate, they might be able to get a bigger percentage, but no game company is going to give them double when they don’t have to.
4. They need to pick their battles instead of waging a whole war.
If the music industry was smart about this (which they certainly haven’t been yet) they would use the small amount of power they had and use it to their advantage. They could use the popularity of their big artists to also promote their smaller ones. Oh, you want to us this Rolling Stones or AC/DC song? Then you need to use one of our newer, lesser known artists as well.
5. They don’t realize how big this actually is.
These interactive music games are the MTV of the 80′s and the iTunes of the late 90′s-early 2000′s. And if the music companies don’t get on the bandwagon, (or refuse to play ball altogether life Bronfman) they’ll be left out of it. Because of their actual weak negotiating position (see point #1), they need to be willing to work with the game development companies in order to get a piece of the pie. Some of the music companies have figured this out, heck, look at the Universal Music Group – its parent company, Vivendi, bought Activision, Guitar Hero’s publisher. That’s one way to make sure you’re involved and change the power situation.
The music industry has been struggling in the last few years, and these interactive music games have breathed new life into it. If the music companies could get their heads out of their asses and stop worrying about percentages and start realizing the opportunities available, then pretending to rock could just save rock itself
