Metallica and the morphing of the music biz

Last week saw a first in the music biz: the simultaneous release of a new album, Metallica's Death Magnetic, in its musical form (CD and digital download) AND for the interactive video game, Guitar Hero. This game allows you to try and play along to a song with your own guitar, following instructions on the screen. Cool eh?

You have to pity the poor old record labels. They are dinosaurs lumbering around, mere spectators of their own demise.

Take Guitar Hero. This is the first game to have annual revenues in the USA of, wait for it, $1billion. The idea is pretty simple when you think about it. Who hasn't played air guitar to a rock song at least once!? The record companies had all the music. But did they come up with the idea? No, it was game company Activision, who license the music.

And what is the response of the record companies? They could create their own gaming division. They could even create a new band, exclusively for Guitar Hero. Or develop music especially adapted to the game. But no, what they do is moan and groan and ask for more royalties. Warner Music Chief Executive Edgar Bronfman recently commented: "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".

What Bronfman fails to acknowledge is that there is even evidence that Guitar Hero helps stimulate record sales. For example, according to gamesindustry.biz DragonForce's album "Inhuman Rampage" got a 126%
week-on-week sales boost following the launch of Guitar Hero III.

Guitar Hero is merely the latest attack on the broken business model of storing and selling music on plastic.We of course have the explosion in digital downloads driven by Apple's iTunes. The latest version, 8.0 came out yesterday. It has a function called "Genius" which creates a playlist based on a single song for you.

And then there is the incredible rise of Live Nation, the concert company. Last year Maddonna left Warner Music to sign up with Live Nation in a $120million deal. Live Nation who will release her records in addition to organising her blockbuster tours, the last one of which grossed $260.1 million.

Who'd want to work in the record biz? One man who does is Elio Leoni-Sceti, who Warner Music recently poached from Reckitt Benkiser, who have powered top-line growth with a stream of product innovation. Could Leono-Sceti be the man to save the industry from extinction?