Virtual musicians play real part as revs grow

For years, record labels been spinning themselves in circles over how to get consumers to embrace the practice of legally downloading music.

Turns out the answer was a simple one: Make it fun.

Since “Guitar Hero” took the videogame stage in 2005 followed by “Rock Band” two years later, the titles have not only established themselves as loud moneymaking franchises for their publishers, but surprisingly have helped mute a devastating slump in sales for the music biz, as well.

While they can’t be credited with turning around the industry just yet, the games have generated hundreds of millions of dollars in revenue for labels that had all but given up on how to monetize digital distribution methods.

For example, Activision Blizzard’s “Guitar Hero” reached $2 billion in sales earlier this year, and has sold more than 40 million song downloads that keep gamers interested in punching buttons on their guitar-shaped controllers.

Rival “Rock Band,” from MTV Games and Harmonix, has surpassed $1 billion in sales, and also says it’s sold more than 40 million downloads.

Many of the artists appearing in the games have enjoyed a boost in sales as a result, with the games introducing younger audiences to a band and getting them to go out and purchase more songs.

An Aerosmith-branded version of “Guitar Hero” increased the band’s catalog sales by 40% following the game’s release.

For individual songs, that can be much higher, with “Guitar Hero” having boosted sales for a track by an average up to 300%, according to Zach Horowitz, prexy and chief operating officer of Universal Music Group, the industry’s biggest record label. Weezer’s “My Name Is Jonas” surged 1,000% in the weeks following “Guitar Hero III: Legends of Rock.”

Those kinds of numbers have certainly given labels something to sing about. But there are signs the popularity of the music games themselves is starting to play out.

For the first half of the year, sales of the “Guitar Hero” and “Rock Band” franchises slumped 49% from February through June, according to an analyst at Wedbush Morgan. Research firm NPD Group translates that to $390 million less than last year.

Yet analysts say that’s because the majority of people willing to shell out at least $60 for the games have already done so.

Instead, they’ll opt to update those games with new music, from single song sales or so-called track packs, meaning labels will continue to reap the rewards from digital track sales.

Both the gamemakers and record labels are counting on that.

MTV partnered with the music biz, including EMI, Sony and Universal, to launch the Rock Band Network as an iTunes-like online marketplace to sell songs, creating an opportunity for established bands to release back catalogs or unknown acts to get noticed. Artists receive royalties from the number of downloads.

“Rock Band” already offered songs from a catalog of more than 600 tracks from more than 270 artists, including AC/DC, the Cars, Judas Priest, Motley Crue, Foo Fighters, Megadeth, Rush, Nirvana and the Grateful Dead.

“Our goal with ‘Rock Band’ has always been to go beyond making music games and create a true music platform,” says Alex Rigopulos, CEO and co-founder of Harmonix.

What should also keep consumers opening their wallets is that the music gaming space could soon see an influx of new buyers Oct. 27, when Activision introduces “DJ Hero,” which will try to reinvent the music game by putting players in control of a turntable. “Guitar Hero 5″ hits store shelves Sept. 1, with 85 new songs by 83 artists, and “The Beatles: Rock Band” bows Sept. 9, with 45 tracks from the Fab Five.

It will be the first time the Beatles have licensed their songs to a videogame. But “Guitar Hero 5″ also features Arctic Monkeys and Elliott Smith — two of 20 artists who hadn’t been willing to offer up their tunes to a game in the past.

Getting such new bands onboard was possible only because of the popularity of the games, especially with a big audience not typically seen as hardcore gamers.

As Tim Riley, who handles the licensing for “Guitar Hero” has put it, “the larger the game gets, the more known it gets within the industry and with the artists themselves.”

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