http://blog.wired.com/music/2008/09/activision-labe.html

Activision CEO: Labels Should Owe Guitar Hero, Not Reverse
By Eliot Van Buskirk

Guitar Hero, Rock Band and other music-oriented videogames are the latest hotly contested licensing battleground for music, as executives on both sides of the equation question the deals that allow songs to be used in the games.

Last month, feisty Warner Music Group CEO Edgar Bronfman, Jr. said he'll pull Warner's music from future releases of Guitar Hero unless the game's developer, Activision/Blizzard, starts paying more to include the label's songs in the game.

Activision/Blizzard CEO Robert Kotick (pictured) fired back by telling the Wall Street Journal (which apparently doesn't like people linking to it) that record labels should feel lucky to have their wares included in the game because of its widespread promotional impact.

"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," said Kotick. "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."

In other words, labels should pay developers for their music's inclusion in the games, because people want the games more than they want to play specific songs. This assertion makes sense, in a way. Anecdotal evidence indicates that songs played within the game are featured more often on mainstream radio, and at least one other label says sales of songs included in the games have skyrocketed, contradicting Bronfman's implication that these games lack promotional value.

Zach Horowitz, head of Universal Music Group, told a group of analysts earlier this month that songs included in the game regularly see their sales jump 200 to 300 percent and in one case (Weezer's "My Name Is Jonas") sales increased about 1,000 percent as a result of inclusion in Guitar Hero. If that's the case, Bronfman's claim that music game developers should pay higher licensing fees to labels rings hollow. Horowitz and Kotick make more sense than Bronfman on this issue, because -- at this point anyway -- Guitar Hero and Rock Band are promotional platforms for the sale of music.

There's just one problem with the idea of labels paying to get their songs into the games. In return, they'll surely want control over which music gets included. If that happens, gamers can expect whatever the labels are pushing at a given time shoehorned into these games rather than developers choosing songs based solely on their rockingness quotient. Such a system would probably dilute the games' promotional value while turning off gamers, which is why the deals for licensing music to these videogames should stay exactly the way they are.

Game developers and record labels have struck a balance that currently seems to be working well for both sides, which is probably why they're so desperate to mess with it. How does that saying go again? If it ain't broke, someone will break it?