NOISE GATE: Record Labels vs. Guitar Hero – who owes who?

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noisegate.jpgOver the last month or so, there’s been an almighty argument between music labels and makers of rhythm games like Guitar Hero and Rock Band over who owes who. Major labels claim that the games wouldn’t exist without the music, but the games developers point out that the music in the games gets a massive promotional benefit. Who’s right? Click over the jump for my opinion.

Let’s start with the labels, and one in particular – Warner. The CEO of Warner Music Group, Edgar Bronfman Jr., has made several statements recently on his feelings on the matter.

“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.”

More recently, he threatened to withdraw WMG’s entire catalogue from future versions of these games, saying:

“I think the industry as a whole needs to take a very different look at this business and participate more fully… with both our artists and with gaming manufacturers than is currently the case. And if that does not become the case as far as Warner Music is concerned, we will not license to those games.”

He’s not bluffing. When negotiations between Warner and Last.fm faltered once before, the catalogue was completely withdrawn from the service, and remains unavailable to this day. Like a kid on hunger strike because he won’t eat his greens, this pig-headedness deprives Warner of revenue, makes it look stupid, and ultimately doesn’t achieve anything in the bigger picture. Dangerous for an industry currently teetering on the edge of a precipice.

Other labels have so far stayed quiet on the subject. They’re likely waiting to see the reaction to Bronfman’s statements before they jump into the fray. With Warner taking such a bullish attitude towards the situation, it can’t be long before the lawsuits start flying.

Activision, who makes Guitar Hero, hasn’t been sitting back and taking it. Activision/Blizzard CEO, Robert Kotick, retorted that record labels should feel damn lucky to have their songs included in the game. Kotick says:

“When you look at the impact [the game] can have on an Aerosmith, Van Halen or Metallica, it’s really significant — so much so that you sort of question whether or not, in the case of those kinds of products, you should be paying any money at all and whether it should be the reverse.”

“The bulk of our consumers will tell you they’re not purchasing the products based on the songs that are included, they’re purchasing based on how fun the songs are to play when they’re playing them.”

Fighting talk. He’s backed up by the numbers. The head of Universal Music Group, Zach Horowitz, told a group of analysts that songs included in Guitar Hero regularly see sales jumps of 200 – 300%. In the case of Weezer’s “My Name is Jonas” sales increased ten times over the background rate. There’s also bits and bobs of evidence here and there suggesting that songs from Guitar Hero get more airplay, too.

On the one hand, therefore, you’ve got Warner saying that the developers should pay more. On the other, you’ve got Activision saying the opposite – the labels should be paying for the promotional value.

My opinion is that both sides are doing each other a favour here, so why should either of them pay anything? There’s mutual benefit – record companies triple sales on back-catalogue recordings and greatest hits compilations, not to mention sales of Guitar Hero compilation albums which are surely not far away. The games companies get to use the music that they and the fans love, and earn cash from sales of their product.

It’s not as if the songs in the game are a “lost sale” to the record companies either. With one notable recent exception, I can’t think of any reason why someone, if they wanted to listen to a song”, would choose to buy Guitar Hero instead of the CD. Particularly when you factor in the increased cost of the game over the CD.

One issue with an “I’ll scratch your back if you scratch mine” arrangement is that labels might try to push songs into the games that wouldn’t otherwise have been included. If creative control is lost from the developers, and the latest Fightstar track is included above a stomping Metallica original, then fans will almost certainly desert the franchise in their droves. Don’t forget that, to the fans, “selling out” is one of the biggest sins that a rock band can be guilty of.

In the meantime, the public will continue to rock out. If Warner pulls its songs and refuses to be a part of it, and continues that attitude towards other future gaming promotional opportunities, then it will sell fewer and fewer plastic discs, and eventually wink out of existence. Gaming has incredibly strong growth at the moment, and Warner are just lucky to have an opportunity to be part of it. I hope it doesn’t waste it.

Which side of the debate do you fall on? Do you sympathise with the poor record labels? Or do you think the games developers are in the right? Share your opinion in the comments.

(via Listening Post)

Previously on Noise Gate: Why music subscription services will eventually work | Wi-Fi enabled MP3 Players

Duncan Geere