Warner Music seeks higher in-game sales royalties

Warner Music‘s CEO Edgar Bronfman Jr says that games such as Guitar Hero and Rock Star should pay higher royalty fees for the use of songs, reports the Financial Times (FT).

Speaking during an earnings call, Bronfman says games companies such as Activision and Harmonix are similar to MTV 25 years ago and Apple’s iPod five years ago, in that each business model draws most of its value direct from the music industry. “The amount being paid to the music industry, even though their games are entirely dependent on the content we own and control, is far too small,” says Bronfman. “What we need to be careful of is that we do not allow an ecosystem to occur where we are not properly compensated.”

Bronfman warned that if royalty fees remained “far below what their true value is”, then Warner would no longer license its music to video games.

Warner Music’s fiscal Q3 2008 results showed profit improvements on last year, despite a net loss of USD9m. For the quarter, which ended June 30, losses were USD7m up on the USD16m loss for the same period in 2007. The results come against a general downturn in the music industry and were partly buoyed by international sales and currency-related gains.

Digital music revenues grew 39.3% year on year reaching USD156m. However, this still only represents 22.7% of Warner’s total recorded music revenue. Industry wide, analysts claim the increase in digital profits is not enough to offset the steep loss in physical album sales.

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Published by Reinout te Brake

Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry. Check out his games podcast; https://www.game-consultant.com

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