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Be careful about what you wish for, Warner Music Group (NYSE: WMG ) .
The music label turned heads this week, when CEO Edgar Bronfman Jr. lashed out at Activision's (Nasdaq: ATVI ) Guitar Hero and Viacom's (NYSE: VIA ) Rock Band. The popular video games consist of players rhythmically playing along to rock tune standards on fake guitars. Rock Band ups the multiplayer ante with drums and vocals.
"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," Bronfman said.
Activision and Viacom's Harmonix aren't stealing the music. The labels know what they are getting into, since they are getting paid in licensing the songs. If Warner doesn't like the terms, it can let the kid-magnet video games promote another label's rockers -- or even promising unsigned artists -- instead. Oh dear, what will Guitar Hero V sound like without the uplifting metal jams of Madonna or James Blunt? Give me a break!
I can sympathize with the music industry's doldrums. I just don't see the logic of looking a gift Trojan horse in the mouth.
My 14-year-old son is a rabid fan of these games. Once he comes across the list of songs that will be featured on the next game release he buys -- yes, actually buys -- the songs from Apple's (Nasdaq: AAPL ) iTunes Music Store. He wants to be ready to rock, long before the game hits the shelves.
Best Buy (NYSE: BBY ) is adding musical instrument departments to many of its stores later this year. I'm not talking about cheap First Act electric kiddie guitars with tinny built-in amps or broom-wire ukuleles. Best Buy is ready to take Guitar Center head-on in select locations, with a full selection of the good stuff. Does anyone think that Best Buy would be doing this if Guitar Hero and Rock Band weren't inspiring fake musicians to give the real stuff a go?
The labels should be grateful to Activision, but Warner's not going to offer up any Hero worship. Instead, Bronfman suggests that the music video games of today are similar to Viacom's MTV 25 years ago or Apple's iPod five years ago, striking it rich off the back of the major-label music catalogs.
You may think he has a point, but let's think this one through. Why is it that MTV seems to be playing less music videos and more reality show programming as time passes? Perhaps more importantly, why is the iPod so successful, while other portable media players like Microsoft's (Nasdaq: MSFT ) Zune and Sandisk's (Nasdaq: SNDK ) Sansa have languished? Could it be that the medium is stronger than the message? You won't subsidize the losers, but now you want to milk the winners? That may be how you run your music label, but it doesn't hold up too well in the real world.
I remember when the labels tried to start their own digital music services. Does MusicNet or pressplay ring a bell, Warner? Apple actually created a way for digital music to work; now digital downloads are the only aspect of the Warner business that's growing these days.
MTV saved you in the 1980s. Apple saved you during the turn of the century. Activision and Harmonix are saving you now.
Are you stupid enough to hurl darts at your inflatable lifeboat this time around? For your sake, let's hope your aim is still crummy.
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