Warner may keep music from iTunes, video games

Warner Music Group may keep some music from some artists back from the iTunes Store, and appears to be playing hardball, suggesting it may withdraw permission for inclusion of some of its catalogue within smash-hit console games, Rock Band and Guitar Hero.

Rolling Stone reports the success of Kid Rock’s ‘Rock N Roll Jesus’ album, which has spawned a smash hit single, ‘All Summer Long’, and isn’t available on iTunes or through any other digital music service. Despite not being available in digital form from services like iTunes, the album has already sold 1.3 million copies.

“It’s definitely interesting that he’s the only artist that’s not available on iTunes with a monster hit right now, and we’re seeing that kind of a growth,” Livia Tortella, general manager of Atlantic told Rolling Stone.

Tortella also suggested Warner to be considering keeping other artist’s singles out of iTunes in order to spur album sales, saying the plan is being debated inside Warner Music.

It’s not a cut and dried strategy. Digital is Warner’s growth story right now, the company’s digital revenue climbed 39 per cent year-on-year, and now accounts for 20 per cent of the company’s total Q3 revenue.

With Apple now accounting for maybe 70 per cent of US online music sales, and the US being the world’s biggest music market, it’s pretty clear Warner is making money out of its relationship with the iPod company. But Warner wants more than 65 cents per track.

It’s all about the money. As reported earlier this week, WMG CEO, Edgar Bronfman Jr. accused the videogame industry of unfairly building its business on the back of the music industry.

“If I use the analogy of MTV twenty-five years ago, or even Apple five years ago, those are two ecosystems in which (companies who do not invest in creating) recorded music have derived the majority of the value created in that ecosystem,” he said.

“That, I think, is the state we are currently in with Activision and Harmonix (owned by MTV), where 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,” he told analysts during a conference call.

Speaking earlier this year, Bronfman called Apple “a good friend” to the music industry, but continued his plea for flexible pricing, on the basis that not all music is created equal.

Just how far is Warner prepared to go?

Warner is pretty aggressive about getting its pound of flesh from partners – the company recently withdrew its music from Last.fm, for example.

Video games firms should probably take his warning seriously, though the long-sighted strategy it represents remains open to question.

Shares in the company fell 7 per cent this after a Goldman Sachs analyst downgraded the stock, predicting the company will find it difficult to further increase its market share.

6 thoughts on “Warner may keep music from iTunes, video games

  1. Scott Schuckert

    “We want more than you’re willing to pay, so we won’t sell to you.” Warner’s prerogative. However, you can only play that game so long. Eventually no one’s buying, and artists move to a label that IS selling. At the end, Warner is trying to sell one copy of one track, to some poor schmoe, for a half a billion dollars. Hopefully it’s a really good song.

  2. D9

    Don’t kid (no pun intended) yourself….this album and song is being pirated en masse on the peer groups. 1.3 million shows the love for Kid Rock, but another 2-3 million is being lost through the pirates. Warner will soon discover the fallacy of this theory when much lesser artists and their ware fail miserably to sell without the likes of iTunes, Amazon, Rhapsody, MTV, Wii, etc.

  3. superdevil

    “…those are two ecosystems in which (companies who do not invest in creating) recorded music have derived the majority of the value created in that ecosystem,” Isn’t that what record companies have been doing for years? Making money off of artists who had no other (until recently) way to get their music out to the masses?

    “…even though their games are entirely dependent on the content WE OWN AND CONTROL” He’s speaking for Warner AND their artists, right? lol

    And what about Kid Rock? He basically made a song by basing it off of 2 established songs everyone knows, so no wonder its a hit. I guess its OK to for the music industry to feed of it own success in the name of $$$

  4. :HAn.

    This sounds more like extortion to pay for a full album, on a physical CD when you only really want to download one song.

  5. bud

    If it is available to buy when demand is hot, it will sell. If one has to hunt down the song thru whatever vendor, clicks or bricks, the urge to buy fades, and under the table free distribution takes over.
    Don’t worry so much about How Much to ask for it, or When or Where it can be sold, and just make it available and affordable.

    The entire file swapping thing started because Radio stopped playing a variety and college kids had to make their own LAN radio. Most of them were not downloading as much as streaming.

    Oh by the way, the amount of time between promo copies to press and copies available to buy is too long an amount of time.

  6. Aaron

    The truth is that the album as it has been is dead. No longer do I want to have to pay for a collection of songs (unless I really love the artist), when in most cases a few songs are really good, and the rest just seems to have been recorded to make an album.

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