Kotick: Maybe Record Labels Should Pay Us To License Songs

Activision Blizzard CEO Bobby Kotick wants music companies to take note of how video games help digital song downloads, instead of demanding an increase in licensed song royalties from game companies. Kotick, whose long-term outlook for Activision depends to a considerable extent on the Guitar Hero franchise, even goes so far as to suggest record labels should actually pay game publishers, rather than the other way around. Warner Music CEO Edgar Bronfman recently described the amount of money video game companies pay to the music industry for licensed songs as "far too small," considering that rhythm titles are "entirely dependent" on content controlled and provided by record labels. "There's a misunderstanding of the value we bring to the catalog," Kotick says, discussing the issue with the Wall Street Journal. "When you look at the impact it can have on an Aerosmith, Van Halen or Metallica, it's really significant, so much so that you sort of question whether or not, in the case of those kinds of products, you should be paying any money at all and whether it should be the reverse." Kotick has responded to Bronfman's comments in the past, describing them as "one-sided and not "respectful of how much we’ve done to bring new audiences into the market." To support his position, he has also noted that Activision's Guitar Hero: Aerosmith generated more revenue for the band than any individual Aerosmith album. Universal Music Group president Zach Horowitz says that songs included in Guitar Hero sell two to three times more, and in some cases, the influence is much greater -- Weezer's "My Name is Jonas," originally from the group's 1994 debut album and featured in Guitar Hero III: Legends of Rock, saw a tenfold increase. But is it the songs themselves that sell Guitar Hero and other rhythm titles? Says Kotick, "We have lots of music to choose from, lots of artists to choose from. A 12-year-old kid has no idea who Steven Tyler is or who Aerosmith is. The bulk of our consumers will tell you they're not purchasing the products based on the songs that are included. They're purchasing based on how fun the songs are to play when they're playing them." Activision recently announced that it intends to triple the amount of its total released Guitar Hero games and content by 2010, and that it has no fewer than seven studios working on the franchise.