Why Aerosmith has to make its money off of roller coasters and Guitar Hero

Since the advent of the modern Internet and peer-to-peer networks like Napster, the music industry has struggled to find its footing in the modern world. In 2013, digital track sales fell 5.7% and album sales fell 8.4%, according to Billboard. Total U.S. music industry revenues were $7 billion in 2013, compared to $18.5 billion in 1997 (adjusted for inflation).

This week, it was reported by Bobby Kotick, the chief executive of video game company Activision, that Aerosmith made far more in revenue off of Guitar Hero: Aerosmith than from any of their albums. In an op-ed in The Wall Street Journal Monday popular artist Taylor Swift, who made nearly $40 million in music sales last year, defended the value of the music industry saying that songs that elicit emotion still sell.

She may have a point with streaming services like Spotify that reward how often songs are played, not bought.

“You have to be agnostic about how people consume your music,” says Yahoo Finance senior columnist Michael Santoli. “Yes, of course there are all of these new means by which people can access artist’s music. The problem is they’re a little more resistant to pay…. They want things to be a la carte…. They don’t want the package.”

Artists have to scramble more than they used to, says Santoli, in theory there are still sources of revenue in live shows and licensing. This might be a win for some artists but it’s a win for a “pie that’s not as easy to access as it used to be. So if you’re in Aerosmith you have a built-in fan base, but if you’re an up and comer it’s much harder to figure out how to get paid appropriately for what you do,” he says.

More from Yahoo Finance

U.S. bank penalties now exceed the GDP of most countries

The American Dream is alive but it will cost you $130k a year

10 Brands likely to disappear in 2015

Rates

View Comments (78)