Warner Music Group chief Edgar Bronfman wants greater payouts from video game companies, according to comments Thursday.
The executive drew unsavory comparisons to relationships with both MTV Networks and Apple, both companies that have benefited enormously from major label content. “If I use the analogy of MTV twenty-five years ago, or even Apple five years ago, those are two ecosystems in which [companies outside of] recorded music have derived the majority of the value created in that ecosystem,” Bronfman said. “That I think is the state we are currently in with Activision and Harmonix 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.”
Indeed, a glaring flaw in the major label business model has been the lack of control over downstream beneficiaries, a group that also includes promoters, merchandisers, and the bands themselves. That has always been a longtime gripe for label executives, especially in light of the massive developmental costs and risks associated with building a new artist.
But Warner has signed agreements voluntarily with various gaming companies, opening the question of why these undervalued deals were forged in the first place. Still, Bronfman signaled a potential change of course, suggesting equity stakes and stronger negotiation demands ahead. “I think the industry as a whole needs to take a very different look at this business, and participate more fully … with both our artists and with gaming manufacturers than is currently the case,” Bronfman said. “And if that does not become the case as far as Warner Music is concerned, we will not license to those games.”