Over the past fifty years, the music industry has benefitted from a steady and increasingly lucrative stream of revenue from synchronization licensing deals. Traditionally, the film, television, and advertising industries have dominated the licensee market. In the past decade, more and more licensors of recorded music have found synchronization licensing opportunities in the growing video game industry. 1
Video games have long been viewed as the poorer cousin of other socially acceptable mediums. However, the release of the mega-blockbuster Grand Theft Auto V by Rockstar Entertainment has proved that video game titles are not only capable of generating equally high revenues and wide-spread exposure as the traditional pillars of entertainment, but also have demonstrated a power to introduce entirely new and creative uses for licensed music content.
Synch Licenses and Music
A synchronization license generally refers to a licensed right granted by the owner of a recorded song to use a musical work in synchronization with recorded images embodied in a separate audiovisual work. Typically, the music publisher or record label acts as the licensor of the song, and decides whether or not to allow the use of the song by the licensee in their film, television program or commercial in exchange for compensation paid out by the licensee.2 Whenever the licensor of a song is considering granting a synchronization license, there are likely three important factors to consider: the compensation, the use, and the potential for positive and efficient means of reaching target demographics.
Compensation is often the first and most significant factor considered in any business deal. Generally a synch license produces a one-time up-front negotiated fee paid by the licensee. Additionally, licenses granted for use in a film or television program can trigger back-end royalties or bonuses when additional revenue is earned by the licensee’s product as it morphs into different platforms. For example, OnDemand and DVD revenue for a film, syndication deals for popular television series.3
Every negotiation is different, and often hinges a great deal on which party has the most leverage, but generally the fees offered for licensing songs are often directly related to the production budget the licensee has at its disposal. For example, large corporate brands like Best Buy, Wal-Mart or Budweiser have virtually unlimited marketing budgets and major summer franchise films routinely have production budgets exceeding $100 million. As a result, both are often willing to pay higher up-front licensing fees. Under certain circumstances, widespread exposure can often serve as a worthwhile alternative form of compensation depending on the licensee. Television programs tend to offer less up-front money because they have smaller production budgets but are able to remain attractive by guaranteeing large audiences.4
The second consideration concerns the manner by which the music piece is going to be used in the accompanying audio-visual work. For example, will the whole song be used, or just a snippet? Commercials by their very nature are limited in that they usually are either thirty or sixty seconds long. Is the song going to be featured prominently in the foreground of the audio-visual work or the background? A film might choose to use a more significant portion of a song at the beginning or end, but the song is often a secondary to what is happening on screen. The more relevant the song appears to be within the greater context of the audio-visual work the better. Journey’s classic “Don’t Stop Believing,” enjoyed a spike in sales after it was used in the final scene in the series finale of “The Sopranos.”5
Finally, film, television shows, and marketed brands already have an idea of the demographic groups they aim to target. As such, the better the brand cohesion is between the licensor’s song and the licensee’s product, the better the results. During the Super Bowl broadcast in 2011, the Ford Motor company began its “Made in Detroit” re-branding effort by running an advertisement featuring a hit song by the Detroit-native superstar Eminem.
Grand Theft Auto V
The biggest knock on the video gaming industry in the past with regard to the attractiveness of synchronization licensing is the perception that a popular video game simply does not generate as much gross revenue or command the kind of wide-spread exposure that is commonly associated with a big-budget film, a highly rated television program, or a national advertising campaign for an easily recognizable brand. However, the release of Grand Theft Auto V has proven that a popular video game is capable of earning high gross revenue and exposure that rivals any form of major entertainment.
Grand Theft Auto V, released on September 16, 2013, reported $800 million in world-wide sales in its first day.6 It blew past the $1 billion threshold in only three days. To put those figures in perspective, the highest three day total for any film in world-wide box office receipts was set by the eighth and final installment of Harry Potter, which took in roughly half, $493 million dollars, in its first three days.7 It took Avatar, the highest grossing film of all-time, seventeen days to gross $1 billion. In addition to a $165 million production cost, the Grand Theft Auto V makers spent an estimated $100 million to market and promote the release. Commentators have noted that “the global music industry sees less than $1.4 billion in record and song sales each month”, and that Grand Theft Auto V, a single video game, “in its first month of release . . . [outsold] the entire global music industry.”8 This, of course, ignores that only some of the game’s revenue is allotted to musicians and that the recorded music industry earns its keep by selling just music (the figures of music sales come from the International Federation of the Phonographic Industry, the trade body that monitors the global value of recorded music product).
An Abundance of Music
Perhaps the most salient feature of Grand Theft Auto V with regard to synchronized music licensing is the volume and diversity of the songs available in the game and the manner in which they are used.
First, it is important to understand the basic premise of Grand Theft Auto V. In video game parlance, Grand Theft Auto V would be considered a third-person role-play game. The player controls one of three main characters in a way that at a quick glance resembles the popular “The Sims” computer games. The formal object of the game is to guide a chosen character through a series of missions that involve completing a wide-variety of (pretend) criminal tasks related to a rather compelling and coherent storyline spread out over an enormous fictional world created largely to mimic and satirize the greater Los Angeles area. Because of the enormous layout of the fictional city, like most real-life Angelinos, the vast majority of playing time in the game is spent driving in a car.
Every car in the game comes equipped with the same fully interactive radio that allows a gamer to channel surf at any time. There are eighteen genre specific radio stations to choose from at all times. Each station plays songs at random in their entirety drawing from a playlist unique to each station. For example, “Channel X” is a punk rock station hosted by real-life punk singer-songwriter Keith Morris who spins roughly a dozen different tracks by Black Flag, Youth Brigade, and Agent Orange among others. The “Non Stop Pop FM” station plays selections spanning over 30 years of pop hits – from 1980s hits by Hall and Oats and Wham!, to more recent offerings by Enrique Iglesias featuring Pitbull, Britney Spears, and Rihanna. “West Coast Classics” offers non-stop geographically relevant hip-hop staples of the 1980s and 1990s from the scene’s biggest icons including N.W.A., 2Pac, Dr. Dre and Snoop Dogg.9
With Grand Theft Auto V, consumers of the licensee’s work are capable of interacting and customizing which licensed songs will ultimately be synched. Because the game has licensed so many songs spanning across all genres of music, the experience of playing it is inclusive of most types of music. Still, the game attracts those that enjoy hypothetical felonious acts of violence. As the gamer’s character is pursued by a swarm of cops on a high speed chase down an interstate, the user discovers indie acts like Black Strobe and DJ Mehdi on “Radio Mirror Park”. For mellower criminal profiles, the smooth and subtle classic soul renderings of Smokey Robinson found on “The Low Down 91.1” might do just as well.
Overall, it is unlikely that every video game will be as well suited to the industry as Grand Theft Auto V. Tying interactive gaming and much music choice effectively into a blockbuster release will always, of course, be welcome news for musicians and the business. On the other hand, it is hard to guess if music discovery and artist payback may have turned a corner. This is because it is difficult to gage the significance of the revenue generated by the game in the overall collections of synch licenses. Such transactions are not the subject of public record and the parties involved, songwriters and their publishers and, in this case, video game developers do not report them. Collections for synch licenses are much less transparent, for example, than sales of recorded music, where indie and major labels routinely report their numbers, confidentially, to their respective national trade associations; the latter then aggregate the data, protecting the original source.
By Christopher Shank