You Can’t Develop “New” Revenue Streams Without Launching Some Careers

There’s a lot of talk going around about how the “Guitar Hero” game has become a welcome, new revenue stream for what remains of the music industry. Edgar Bronfman, CEO of Warner Brothers, has a different view. He has recently complained that the licensing fees paid buy video game companies are too small. He has also said this…

“I think the industry as a whole needs to take a very different look at this business and participate more fully and in a much more partnership way,” he said. “And if that does not become the case, as far as Warner Music is concerned, we will not license to those games.”

So, Edgar is threatening to not let the games have the songs. Is it an idle threat? Don’t the games need the songs?

Interesting dialog concerning Bronfman’s comments from Activision CEO Robert Kotick in the Wall Street Journal via Idolator.

WSJ: How do you feel about the criticism from Warner Music Group CEO Edgar Bronfman that Activision and others aren’t paying enough for the use of artists in Guitar Hero and other music games?

BK: We compensate artists and publishers extremely well. There are millions and millions of dollars that are being made and paid. There’s a misunderstanding of the value we bring to the catalog. What happens to your catalog in digital downloads? What happens to your merchandise? What happens to your ticket sales? When you look at the impact it 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.

WSJ: Traditionally, music in videogames has been seen as a good promotional tool for artists. But aren’t you a little more sympathetic to the idea that songs in music games like Guitar Hero are actually selling the games?

Mr. Kotick: No. We have lots of music to choose from, lots of artists to choose from. A 12-year-old kid has no idea who Steven Tyler is or who Aerosmith is. 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.

How much do games like “Guitar Hero” depend on some degree of “song familiarity”?

Bands like Aerosmith, Van Halen or Metallica are experiencing career enhancement from the games but, they are bands who have established careers anyway. I don’t see “Guitar Hero” launching any careers. That’s the big thing that’s getting lost in the maze these days. How do you launch a career? That’s really what the record labels used to do. That was the focus. You have to keep launching careers to keep the ship afloat for the long run.

iTunes, YouTube, MySpace, product tie-ins, licensing for films/ads/games; all of that stuff can bring some temporary exposure to an obscure act but, none of it has launched a career. 360 deals, Live Nation-the “new labels”, they aren’t interested in career building, they only want established acts.

No entity is involved in the real business of promoting from the ground up. Only a few individuals are and, you aren’t seeing this generation’s Stones/Zep/Aerosmith/Van Halen/Bon Jovi/Metallica/Nirvana/Oasis/Radiohead emerging from the pack.

So, where will that leave all of these revenue streams in ten years? Will iTunes and, whatever replaces “Guitar Hero” as the next temporary, peripheral diversion, still be counting on Aerosmith?

The new revenue streams aren’t developed. People keep saying that they aren’t developed yet. Is it possible for them to develop if there are no music careers developing as well?

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Tags: edgar bronfman, guitar hero, music industry, robert kotick, Warner Brothers