Written and Edited by Mitch Santell
It started with this.....The chief executive of the company behind the Guitar Hero video game franchise has hit out at Warner Music after the label said higher royalties should be paid for use of its songs.
In a sign of increasing tensions between the two companies, Robert Kotick, chief executive of Activision Blizzard, said Warner Music had failed to acknowledge the benefits to music sales from Guitar Hero . The game has sold close to 20m units and generated $1bn in revenues but has also boosted sales of the artists it features.
Warner Music's response to the success of the Guitar Hero franchise is yet another example of a seemingly general lack of common, and business, sense in the music industry.
In a period of declining sales and interest in recorded music, along comes a games manufacturer that embraces a "lost" generation by introducing heritage and development recording artists to a new and diverse audience via an exciting and interactive medium. How does Warner Music respond? With accusations that the games manufacturer does not recognise the importance of the artists and music upon whom it has built its franchise success.
For a start this ignores industry-wide reports that artists featured in the games do see significant increases in their track and album sales, which obviously benefits labels and publishers. This is all the more notable as this is the generation that, according to industry trade organizations, supposedly no longer purchases music but steals it.
Perhaps Warner Music would be smarter to stop complaining about another company's creative initiative and instead form a partnership and use the popularity of Guitar Hero to sell some catalogue and find and develop some new musical talent. Or is the music business now the business of managing decline and not recognising an opportunity when it is staring it in the face?
Mr Kotick told the Financial Times that Edgar Bronfman, Warner Music’s chief executive, had made “one-sided comments” that were not “respectful of how much we’ve done to bring new audiences into the market”.
Mr Bronfman said last week that the amount being paid to the music industry from music-based games was “far too small”. But Mr Kotick said Activison had to invest “capital and resources” in its games to make the songs “fun to play”.
“I think his view was ... that [Warner Music] should be compensated the way they might for a performance on iTunes,” said Mr Kotick. “But this is an entirely different business that is very technically complex. We’re going to favour those publishers that recognise and appreciate how much we can add value to their artists.”
Activision recently merged with Vivendi’s games unit. Vivendi owns Universal Music, the world’s largest music publisher.
Mr Kotick said there was a direct link between artists featured in Guitar Hero and sales of their music. “We’re introducing a whole new group of artists to new audiences that is resulting in their iTunes downloads being exponentially higher than they would otherwise be, [as well as] new album sales and new merchandising opportunities.”
Guitar Hero has spawned two sequels and an Aerosmith spin-off but Mr Kotick also revealed a desire to see the music of Led Zeppelin added to the game. “Their music would really appeal to this new generation,” he said.
Activision moved from Silicon Valley to Santa Monica several years ago with the aim of tapping into Hollywood’s creative talent. Mr Kotick said he expected future video games to take on “some of the characteristics of linear media ... the production values will get higher, the storylines will become more important”.
A Warner Music spokesman said the company had “enormous respect” for the investment and creativity game-publishers had brought to the music-gaming business.
He added: “We hope that our partners in the gaming space appreciate not only the value of their own contributions but also those of the recording artists, songwriters, record labels and music publishers on which their games are significantly based.”
My view is simple, the entire entertainment business has become a mash up so it will be interesting to see who ends up with the most (how shall I say) "guitar picks!" Email me your thoughts....Mitch Santell
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