MUMBAI: Warner Music is demanding higher royalties from video games like Guitar Hero and Rock Star, wanting to avoid mistakes made at the launch of MTV and the iPod, reports the Financial Times.
“Warner would not license its music to video games if royalty rates remained far below what their true value is. 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,” said Warner’s chief executive Edgar Bronfman.
“What we need to be careful of is that we do not allow an ecosystem to occur where we are not properly compensated,” he added, citing a long-held music industry belief that MTV’s music video channel and Apple’s iPod digital music player had taken the lion’s share of the value created by its content.
According to the third-quarter the company showed losses from 11 cents a share to 6 cents in the same quarter of 2007. The company has entered into a new joint venture with the estate of Frank Sinatra which allowed Warner to release a best-selling collection for the 10th anniversary of the performer’s death, and the group highlighted strong sales of Madonna’s Hard Candy album and an extended publishing deal with Stephen Sondheim.
A five per cent gain in revenues to $848m was flattered by currency translation, but the underlying one per cent decline demonstrated “consistent competitive outperformance” against an industry which fell 5 per cent, said Bronfman.
Digital revenues rose 39 per cent year-on-year to $166m, or 20 per cent of the total.
“Ringtone revenues, a mainstay of the industry’s digital business, were below expectations. These were beginning to be replaced by reasonable growth in revenues from full-track over-the-air downloads,” added Bronfman.
The chief executive has expressed high hopes for new models in which buyers of mobile handsets will have unlimited access to the catalogues of partnering music companies.
Warner music plans to align with business models of the music and mobile industries.The group, which discontinued dividend payments three months ago to preserve cash, reported that its cash balances had improved from $249m in March to $338m at the end of June.
Bronfman discouraged analysts from using the $1.8bn valuation placed on Sony BMG in Sony’s buy-out of Bertelsmann’s stake in the recorded music joint venture this week as a benchmark for Warner.