Summary:

Yet another example of how music labels just can’t get along with digital content companies … *Warner Music Group* (WMG) and MTV Games are…

imageYet another example of how music labels just can’t get along with digital content companies … *Warner Music Group* (WMG) and MTV Games are in a standoff over pricing for Warner artists’ tracks in the Rock Band franchise, an impasse that could ultimately mean no new WMG tracks in the game’s weekly updates this summer. According to Billboard, MTV has stopped requesting licenses for new tracks, since the two parties can’t agree on pricing terms.

It’s familiar territory for WMG: there’s the nasty standoff it has going with YouTube over fees for the rights to its music videos; it kept tracks from artists like Estelle and Kid Rock off iTunes last year over pricing disagreements; and declined to renew its contract with Last.fm over track pricing as well. But while Warner has chosen to stick to its guns about the money, analysts like Wedbush Morgan’s Michael Pachter have argued that the label will do more damage to its own artists (and sales), than to the game publishers with this particular fight.

It’s true that gaming companies need a constant influx of new music for their franchises to thrive beyond the initial purchase: MTV has increasingly released Rock Band add-on packs with tracks from WMG artists like the Grateful Dead and the Pretenders; losing access to popular songs could hurt future downloadable content sales. Meanwhile, if rival Activision (NSDQ: ATVI) hadn’t worked out a favorable deal with *Sony* BMG, it wouldn’t have been able to release Guitar Hero: Aerosmith, which cleared $25 million in its first week of sales (per Rolling Stone).

But gaming companies aren’t beholden to any one label to get it: Gamers have gobbled up more than 6 million DLC levels and song tracks; the best-selling tracks have come from a plethora of bands and labels like Metallica, the Police, Foreigner and Weezer. Publishers like MTV and Activision also don’t have to go directly to the labels to get tracks; Billboard notes that one of the top 10 best-selling Rock Band tracks is a cover of Black Sabbath’s Paranoid that MTV didn’t have to get the master recording rights for.

Given the exposure to vintage classics that some DLC packs provide (thanks to Guitar Hero, my 12-year-old sister bought Aerosmith’s 1993 hit Livin’ on the Edge on iTunes), you’d think that WMG might be willing to make concessions to get its artists’ tracks into music games. But last summer, WMG CEO Edgar Bronfman told Reuters why the label would demand more from game publishers that wanted to use its artists’ tracks going forward: “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 …”.

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