“Why the Music Industry Hates Guitar Hero”

Ryan VeerkampSergio Cirinas

Neil Potter

By Jeff Howe, Wired Magazine

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Overview• Current State of the Music Industry• New Trend: Music Videogames– Threat or Opportunity?

• Industry’s Reaction and Perspective• Positives for the Industry• What should Warner Do?• Past precedents

Current State of the Music Industry• Album sales fell by

19 percent this past holiday season

• ITunes number one music store, recently passing Wal-Mart

• Industry still plagued by pirating

New Trend: Music Videogames

• Guitar Hero and Rock Band have made $2.3 billion over the past three years

• Cultural phenomena: bars, karaoke, etc.• Three versions of Guitar Hero released• Good thing for the music industry?

Industry’s Reaction

• Whining over licensing fees– Games are entirely dependent on content the record labels own

• Rock Band boycotting Warner Music/Artists

•A fight that no one can win

Industry’s Perspective• Warner Music believes that record labels have been

ripped off too many times in the past

– MTV sold in 1985 for $690 million on the strength of videos it received for free

– Apple denied record labels control over pricing on ITunes

Positives for the Industry• New channel for advertising• Consumers relate to bands and their music

• Breathing new life into old bands• Aerosmith, has earned

more from Guitar Hero: Aerosmith than any single album in the band’s history

• Both record companies and retailers have seen sales of songs and groups increase 200 to 300% after their inclusion in Guitar Hero

• 76% of people who play Guitar Hero actually buy music based on their video game play

Positives for the Industry

What Should Warner Do?

• Push for more Warner titles and integrate them into promotional strategies

• Music videogames could eventually become online music retail channel that could rival ITunes

• Game for turntable artists, provide songs and let users mix their own versions, while Warner could sell back mixes to customers (Wii-Mix)

Past Precedents• Music Industry needs to see this increase in

popularity of music as an opportunity not a threat

Fought pirating vigorously instead of adapting to

online outlets

Hollywood turned the VCR, a potential threat, into a revenue source,

building customer loyalty in the process

Threat Opportunity

Conclusion• Whining over licensing fees is a fight that won’t

be won

• Fighting game makers will not solve the industry’s problems

• Music videogames and their rising popularity should be treated by record labels as an opportunity and not a threat