Bands Are Making A Killing In Videogames

Major music labels may not be thrilled with current videogame licensing deals but many of the bands have a different perspective: Aerosmith made more money from Guitar Hero: Aerosmith than it did from either of its last two albums.

Publishing labels earn some royalties from games like Guitar Hero and Rock Band, but a new AP report (via Yahoo! Finance) says they often lose out on income from “image and likeness” licensing deals, which are usually controlled directly by the band. Videogame sales are still only a fraction of music sales, but music sales are continuing to decline while game sales experience phenomenal growth, a trend that’s expected to continue. As a result, music-based videogames have become a new priority for many bands.

The release of Guitar Hero: Aerosmith earned the band more money than either of its last two albums, according to Kai Huang, president of Guitar Hero publisher RedOctane. “That kind of exposure artists can get through the Guitar Hero platform is huge,” he said. But for the labels, it’s a different story: One anonymous executive said that while bands are experiencing a videogame windfall, a “typical record company” makes more money from one album that sells three million copies than it does from all its videogame revenues combined.

But music publishers continue to play along, largely because they have no choice. “There are literally probably 2 million songs out there, and fewer than 1,000 were used in these two games combined in these last two years,” said Wedbush Morgan analyst Michael Pachter. “If Warner wants to say, ‘We’ll take our 20 percent of the market and go away,’ a lot of bands are going to leave the label if they think they can get better exposure by being on these games.”

Even without their own special editions of videogame releases, bands like Nirvana and the Red Hot Chili Peppers have seen their music sales more than double after being released in videogame format, and some groups are now premiering new releases in videogame format. Not only does it give increased exposure to bands, but as Rock Band enthusiast Grant Lau pointed out, it also protects them from piracy. “It’s a way to save the music industry,” he said. “You actually have to buy the music. You can’t just rip it and put it on Limewire.” Fellow fan Tan Doan added that he bought The All-American Rejects CD after discovering the band through the game.

And despite some dissatisfaction with the current arrangements, Huang said most parties involved recognized the mutual benefits of the music game genre. “We still have great relationships with most of the (music) industry. We continue to really benefit each other,” he said. “At the end of the day it’s about creating a great game for the users. We’ll figure this stuff out.”