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    Know What You’re Worth

    In a recent article by the Wall Street Journal Activision’s CEO, Robert Kotick, hinted that instead of the current structure for the Guitar Hero franchise – where Activision must pay for the use of an artist’s song – the tables should be turned. The idea being that Guitar Hero is such a great channel for distribution of songs that it is actually saving rock ‘n’ roll.

    It is worth noting that Activision – and video games in general – are different from radio in that Activision has a contract with the owners of the song whereas in radio royalties are paid.

    This seems like a classic game of chicken. As you may have guessed, the argument of promotional value is not new to the industry. A band needs to get play time to become famous, though the internet is changing that slightly, and the radio station needs bands to make music otherwise the radio station has nothing to play. They both depend on each other to make money.

    I think that the main difference in Activision’s situation is that they are not worried about bands trying to ‘make it’. They are giving new life to bands that were fizzling out in the next generation. This puts them in the unique position to make this work. The Guitar Hero brand is heavily, though not fully, dependent on good songs. People love the concept of the game and having classic rock songs is just a perk. Therefore, I would argue that while it may be difficult to have the next release of Guitar Hero be a smash hit with no headliners it would not be impossible. They could easily release some sort of “Tomorrow’s Rockers” edition that featured unsigned bands and sell plenty of copies.

    Overall, this is a great move on Activision’s part because they know what their distribution channel is worth. The tricky part is to state your worth and not overstate your worth and be caught with your pants down. I think the music companies are dangerously close to the latter. The resurgence of some of their artists is because of Guitar Hero and more artists want a piece of the action.

    This is why the music companies are in such a tough spot. They want to get paid for the songs, but I’m sure there is pressure from the artists just to get them in the game. They see it as a great avenue to get a new fan base. Now you also have Activision pushing back to the music companies and saying “why should we be paying you for promoting these fizzling bands?”. The music companies are being pressured from both sides and they don’t really have solid ground to stand on.

    This is going to be very interesting to watch. Who’s going to win and who is going to chicken out?  And can you really apply this to your blog writing?

    Thanks for reading the thoughts of The Cake Scraps.

    2 responses to “Know What You’re Worth”

    1. […] but given the popularity of the game it is clear that both Logitech and the Guitar Hero franchise know what they are worth and are not afraid to make a really expensive controller to capitalize one it.  I like that (you […]

    2. […] part of what defines your brand.  If you have read my blog you may remember the post about knowing what you are worth as a brand, but what that post didn’t talk about is the name of the […]

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