Gizmodo's Matt Novak recently unearthed an old PC Magazine article highlighting a remarkable fact about the music industry: While Aerosmith has sold over 150 million albums and each member has an estimated fortune of well over $100 million, as of 2008 the majority of their money has come from … a video game.
Back in 2007, Aerosmith — whose 2014 World Tour kicks off next week in Ontario — licensed 29 of their songs to Activision, the American video game publisher behind the uber-successful franchise Guitar Hero. One year later, in June 2008, Guitar Hero: Aerosmith went on sale and brought in over $25 million (almost 600,000 copies) in its first market week alone. To date, the video game has sold over 4 million copies. In contrast, Rolling Stone notes Aerosmith's 2004 album Honkin' on Bobo only sold about 160,000 copies and grossed about $2 million in its first week of sales. According to Bobby Kotick, CEO of Activision, Aerosmith's "version of Guitar Hero generated far more in revenues than any Aerosmith album ever has."
This is part of a much broader trend of musicians getting less and less money from album or download sales and more and more from things like endorsements, cross-promotions, concerts, and video games. And it's a trend even big-name musicians are having trouble coming to terms with. Last week, in an editorial at the Wall Street Journal, Taylor Swift argued that, as my colleague Nilay Patel put it, "artists should make high upfront investments in their albums, and then set correspondingly high prices on them at retail." As Patel pointed out, that strategy doesn't really make sense in today's world. Album sales are tanking. Last year at this time, 11 albums had sold over 500,000 copies — so far in 2014, only 5 have done as well. And high prices will only make the decline faster.
The real answer is something more like Aerosmith's strategy. While, in an era where it's basically free to create digital copies of songs, music itself isn't scarce at all, recognizable and marketable brands of the kind you can sell to, say, the makers of Guitar Hero are still scarce. An artist's brand is singularly her own, and as such, possesses incredible profit-making potential. In other words, Nilay might be right: "being Taylor Swift is perhaps more valuable than Taylor Swift's music."