Rights-Holders Could Net $40 Million In Beatles: Rock Band Royalties

The music and likenesses of The Beatles used in The Beatles: Rock Band will reportedly net an unprecedented payout for rights-holders -- a $10 million minimum to a potential $40 million in royalties if the highly-anticipated game meets sales expectations. The beneficiaries are band representative Apple Corps, recordings owner EMI, and catalog publishing rights owner Sony/ATV Music Publishing (a joint venture between Michael Jackson's estate and Sony Corp), says the Los Angeles Times, citing three parties close to the deal. "The royalty rates on this are not even comparable to anything that has been done before," Sony/ATV Music Publishing chairman Martin Bandier told the LA Times. Although peripheral-equipped band kit games have been reliable revenue-generating holiday blockbusters in recent years thanks to their higher-priced bundles, it's also a challenge to make them profitable. The plastic instruments are pricey to produce, and royalties for attractive songs and musicians drive up costs further. In Viacom's recent financial quarter, Rock Band-related costs docked MTV's operating margin to 35 percent from 39 percent. According to the report, Viacom's marketing material is actually encouraging Beatles: Rock Band consumers to use rival franchise Guitar Hero peripherals to help defray production costs -- a concession Activision boss told the LAT he embraces, benefiting from more efficient manufacturing and more profits for his own company. Kotick argued last year in the media with Warner Music CEO Edgar Bronfman about whether the band game trend was more of a biz boon to the music industry or to games, and in whose favor royalty rates should be adjusted. The Beatles: Rock Band release will introduce a new generation's audience to the mega-band's music, and may impact music sales just as the presence of the highly-desirable artists will surely drive sales of the video game. Research firm OTX's GamePlan Insights is tracking purchase intent among consumers for major titles ahead of the key holiday sales season, and on its cumulative platform-independent top 10 list, the Beatles: Rock Band ranks eighth. However, on the platform-specific SKU chart, the game does not make the top 20 -- whereas all three SKUs of Guitar Hero 5 (Xbox 360, PlayStation 3 and Wii) appear on the list.