In the expanding game industry, music game have been a new big contributor. Not just in terms of revenue, but capturing new audiences, who haven’t played games before. With games like Rock Band, Guitar Hero and Singstar, the convergence between music and games become even more clear. With new versions, add-ons and downloadable content (DLC) in the making, this segment will expand even more. Some inside the industry even believe the publisher and developers of those games will exploit music based games, ending up shooting themselves in the foot.
But people don’t seem to mind! They enjoy pretending to be rock stars in their home playing on plastic instruments. Which create a constant demand for more songs, artists and albums to be bought or downloaded. And artists with songs in the game feel the effect too. Music games have become a powerful marketing and sales channel for old, new, big and small bands. Boosting sales both through sales of the game (+ DLC) and outside the game medium, more artist and record labels discover the potential. Maybe the record label see to much potential…
One of the biggest worldwide record labels Warner Music Group released their Q3 numbers, showing and increase in digital revenue with 39%. No surprise! It seems they’ve become a bit to greedy however. Warner Music Chief Executive Edgar Bronfman had this to say:
“The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small”
- Edgar Bronfman – Reuters
The music industry have had problems for a long time, finding new ways to create revenue. And Edgar believe the licensing feeds for Warner Music songs are to low. He want to charge more for the right to use Warners music in the game, so the songs true value becomes clear. Value in music is a question of interpretation. Can you put a price on music value, when we all as individuals value differently depending on favorit genre and how much we dedicate ourself to our favorit music. Music value will not be determend by the record labels, the market (consumers) will set the overall value!
A interesting reaction have come from Wedbush Morgan analyst Michael Pachter, who question whether Bronfman actually understand the game medium:
“The other thing I find interesting is Mr. Bronfman’s distorted view of his leverage in this matter. Activision isn’t operating a music download service where consumers get to choose whatever they want; instead, Activision is selecting which songs will be available, since they require modification (conversion into a game file).
“Thus, Activision can select songs not published by [Warner Music], so Mr. Bronfman should rethink his negotiating leverage.”
- Michael Pachter, Edge-Online
Obviously Mr. Bronfman haven’t fully understand music games. He want just want more money, and probably not to increase the salary for the artist and bands. This statement is probably just a way for him to save and rise the stock value of Warner. I don’t think he actually cares about the artists, just trying to save his own skin.
Warner just provide the music, and that’s only one part of the whole game music infrastructure. Most of the work are being done by the game companies, who have the demanding job of synchronising the beats and the buttons combinations. And they also take care of the marketing and everything else. The record labels get marketing, new revenue streams and artist branding, for free! They only have to provide the music, which they would have to promote anyway.
An increase in revenue for every song provided by the record labels, will affect the whole chain. The game developers have to charge more for the games or don’t afford to include the amount of songs in every new version of the game as the previous one. The retail price will increase or buyers won’t get the same amount of content. And keeping the price to a minimum is very important. In a digital world were cost constantly decrease, it would hurt the music games appeal and brands if the price would go the other way. Consumers pay the price, and if Guitar Hero and Rock Band becomes to expensive, eventually people can’t afford them.
Also think about the fact that songs bought in those games are locked within the game it self! If they would release, say for instance the next Neaera album on Guitar Hero and I download the entire album, I can’t (today) upload the tracks to my iPod to take with me. And lets not forget that the majority of artists and bands represented in the music games owns by the bigger record labels. And many old bands presents as the selling points, band that already have made a ton of money!
It’s a bigger problem for the music industry than just music games. They (the big record labels!) desperately trying to find new revenue streams and sell the same music to us consumers over and over again in new ways. And as long as consumers buy their music over and over again they will continue. But eventually it will all turn around on the record labels, when people stand up and truly demand not to pay for already bought music one more time. And that day may not be so far away.
[Update]
Activision Blizzard’s CEO Robert Kotick have now answered to Mr. Bronfmans statement on the royalties for Warner music in games. At the same time as Music games have been reported to be one of the biggest key drivers this year for the overall increase for the game industry.