The music industry currently treats downloadable content like movie companies treat licensed video games – quick cash grabs that are just a part of the overall marketing mix. But inherent in both of these approaches is extreme short sightedness and inability (or perhaps unwillingness) to challenge the status quo and try and do something, you know, different with this new medium. Doing that would be risky, but as CD sales start to drop, new media formats have room to step in.
There’s some back and forth between Activision and record labels about who pays for it. Right now, Activision/EA acts as a licensor, so they pay the record labels for the privilege of hosting the songs on their service. Most “free” tracks or reduced price tracks are tied in with some overall promotion, for an upcoming record or movie. But things will need to change if this format is to evolve – Activision/EA need to shift from paying out of their pockets to get stuff on, to profit sharing with labels iTunes style. Not, as Activision CEO Bobby Kotick seems to suggest, getting money from labels.
In order for this to happen, labels need to see Rock Band and Guitar Hero DLC not as promotions for physical CD sales, but as a separate entity entirely, with physical sales boost as an ancillary benefit. That is, assuming further market saturation, DLC sales have the potential to be formidable sources of profit in their own right. In a lot of ways, game content seems ideal for the labels – piracy is prohibitively difficult and there’s a lot of control as to how the content gets consumed. And now, the criteria for acquisition isn’t centered around the vagaries of demographics and how the music appeals to those various demographics and niches, but on the much more manageable idea of “if the song is fun to play, I will play it.”
There are a couple of ways to monetize this continuing forward. Activision’s been considering a subscription model, which if they worked something out with Microsoft to tie into Gold Membership, may work in helping clear that initial hurdle of a subscription fee. What a subscription model allows is infinite free reign to the tracks available in the music library – think Ruckus but nearly unpirateable. Content maybe streamed as you play. Activision’s current idea is a limited number of songs a month, but that’s retarded – it needs to be unlimited for people to justify subscribing to the service.
An iTunes-system doesn’t make much sense because unlike songs, game content needs to be demoed somehow. iTunes’ 30 second demo is enough, but people treat game content differently – they need to know if it’s fun. Microsoft might even dredge up its Zune “Three days or three plays” idea, but at the very least the subscription model allows people to try songs without penalty. An extreme idea might be to allow people free access to play the songs, but a lo-fi non-master version of the track – basically perfect for demoing gameplay. Interestingly, this would answer a lot of questions as to exactly how much the quality of the song contributes to how much fun the song is to play.
Opening up the DLC would require a bunch of content, and for record labels to give up master tracks, and for people to author the note charts. This last part is key – bad charting is disastrous. It nearly ruined Guitar Hero 3.
Anyway, here are some predictions, assuming everyone doesn’t get sick of music video games, and assuming record labels see some potential in DLC as a separate music delivery format as to what might be coming down the line:
I was chatting to a marketing head at a major label about this a few weeks ago. Kotick didn’t know what he was talking about and I assure you some of his business practices haven’t entirely endeared him to what is a very desperate music industry. They need new streams of revenue right now and music games they have suddenly realized overnight are perfect – they generate revenue on catalog titles, get people to buy old tracks for themselves, and they can’t be pirated anywhere near as easily and furthermore can cost more than a single download. It’s all win / win for everyone.
But how you approach it would explain why Harmonix nabbed the Beatles and Activision did not. And I’d point to the Guitar Hero commercials as indicative of how Kotick sees things: celebrities playing the game as opposed to musicians. Those numbers on WT can’t be heartening, either, even though they are good.
Music videos, which I was making a living from for awhile, are pretty much over as we know them for now.
The future is the Rock Band store. Everyone’s happy with it, except for whichever label conglomerate is tied into Activison (can’t recall).