Crime pays for music biz with new Grand Theft Auto

When "Grand Theft Auto IV" reaches stores on Tuesday, the latest chapter in the wildly popular and controversial videogame franchise will make history on several levels.

First, it will have the largest soundtrack of any videogame. Second, it will be the first game that lets players tag songs in the soundtrack for subsequent purchase online.

And should it meet early sales forecasts, the handiwork of Take-Two Interactive Software's Rockstar game studio could break single-day and opening-week records, not to mention potentially becoming the best-selling game of all time.

Taken together, these feats make "Grand Theft Auto IV" the most important videogame release for the music industry since "Rock Band" and "Guitar Hero III" on promotional and financial levels.

While the latter two games, released late last year, use music as the central gameplay element -- allowing gamers to play along to the included songs using special instruments/controllers -- "Grand Theft Auto IV" is a more traditional game, but still one in which music plays an important role.

The more sophisticated that videogames get in terms of storyline and presentation, the more important music becomes to setting that tone, and the music industry is demanding higher licensing fees as a result.

More so than most videogames, the "Grand Theft Auto" crime series has used music to establish the tone for each installment's storyline, setting and era. The plot for "Grand Theft Auto: Vice City" was set in a Miami-like city circa 1985, featuring a soundtrack of '80s classics straight out of "Miami Vice." "Grand Theft Auto: San Andreas" fast-forwarded to the late '90s, in a setting resembling South Central Los Angeles and with a hip-hop-heavy soundtrack to match.

"Grand Theft Auto IV" brings the franchise back to its roots -- Liberty City, a fictionalized version of New York -- this time in present day. While the developers spent more than three years visually capturing the neighborhoods and people that inhabit this surrogate city,

Rockstar Games music supervisor Ivan Pavlovich and his crew spent the last year-and-a-half compiling the soundtrack that brings it to life, contacting more than 2,000 entities across four continents to secure the necessary music rights.

"We've really paid attention to what goes on in New York City and I think we really captured the music of the entire city, from different ethnic and social groups to different tastes of music," says Pavlovich.

Music in the "Grand Theft Auto" series is split between several radio stations organized by genre, which gamers choose when they enter one of the many vehicles that serve as the primary gameplay experience. Each station is like a mini soundtrack of its own, allowing gamers to tune to their favorite every time they enter a new car.

To help reflect New York's diverse music scene, Pavlovich enlisted the help of several area DJs to produce or act as hosts for the stations.

Fans of dance/electronica have Electro-choc, hosted by Francois "K" Kevorkian. Punk fans have Liberty City Hardcore hosted by Murphy's Law vocalist Jimmy Gestapo. Nigerian artist Femi Kuti spins international funk on IF99, while Ukrainian superstar Ruslana hosts the Vladivostok FM channel of Eastern European pop music.

MassiveB label owner/producer Bobby Konders, who hosts a reggae channel in the game, went to the trouble of flying to Jamaica and revoicing several existing songs by the original artists to add shout-outs that refer to fictional in-game locations. And DJ Green Lantern produced an entire station with all-original songs exclusive to the game rather than licensing existing tracks.

Although Rockstar won't disclose the exact number of tracks before the game is released, Pavlovich says it will "far exceed" the last installment of the series -- "GTA: San Andreas" -- which holds the current record for most songs in a soundtrack at 156. "Grand Theft Auto IV" features a record 16 music-based stations that generally hold 10-15 songs each. So expect more than 200 songs in the new title.

A soundtrack of that size carries a hefty price. According to sources close to the deals, Rockstar is paying as much as $5,000 per composition and another $5,000 per master recording per track. If that deal applied to all songs, Rockstar's soundtrack budget may exceed $2 million.

That's welcome news to a music industry that has long struggled to convert videogame licensing from a source of mere promotion to one of actual profit. According to Cynthia Sexton, senior VP of strategic marketing and licensing for EMI Music North America, label negotiations with videogame developers have "changed dramatically" in recent years.

"It's changed from videogames as a great way to expose our artists to where music is integral to the game and they're actually willing to compensate us and our artists," she says. "Now that the purse strings have been loosened up somewhat, we can dig a little deeper into our catalog to get interest from artists who may not have been interested before to get involved."

When it comes to more music-driven games like "Guitar Hero" and "Rock Band," publishers of hit songs are successfully demanding per-unit royalties instead of flat per-song rates. According to one publisher licensing music for both, rates range from a penny to 4 cents of each game sold, as well as 20% of the net proceeds from new songs that gamers can download that weren't included in the original game.

However, Pavlovich estimates only about 15% of the "Grand Theft Auto IV" soundtrack consists of recognizable hits like the Who's "The Seeker." The bulk of the soundtrack comprises deep cuts and rarities like the Skatt Bros.' "Walk the Night," Jean Michel Jarre's "Oxygene Pt. 4" and Calle 13's "Atrevete-Te-Te."

Those holding rights to these tracks are far more interested in the promotional opportunities that "Grand Theft Auto IV" brings than the upfront cost.

"Reggae and dancehall is kind of underground," Konders says. "It isn't really mainstream, so this is great exposure. It's a whole new audience . . . Brooklyn and the Bronx are different than Cleveland or Idaho or Dallas. But there are kids out there that like to see and hear new things."

The popular franchise is a massive distribution platform. All past installments combined have sold more than 70 million units worldwide, and 32 million in the United States alone, according to tracking firm NPD Group.

"Grand Theft Auto IV" is on track to continue that momentum. Videogame retailer GameStop won't divulge preorder numbers, but says it was tracking slightly behind that of "Halo 3" last year, which reached slightly more than 1.7 million per month before its September release. Early projections peg first-week sales at about 6 million copies, with as many as 13 million by the end of the year in the United States alone.

"It will probably be not only the most significant entry in the series' history, which is saying something considering how well the franchise has done," GameSpot editor-in-chief Riccardo Torres says, "but also a landmark for this generation of consoles."

What's more, in an industry first, "Grand Theft Auto IV" includes a feature that allows players to tag any song in the soundtrack for later purchase on Amazon. Each tagged song is added to a custom playlist that gamers registered with the Rockstar Social Club social networking service will then find waiting for them on the Amazon site.

Rockstar has tried to capitalize on its soundtracks in the past, with mixed success. The soundtrack to "GTA: San Andreas" -- which was released as a two-disc compilation and a $50 eight-disc boxed set -- moved 33,000 units and 13,000 units, respectively, according to Nielsen SoundScan.

The deal with Amazon, however, allows for single-song sales and is the first time that the industry will be able to track the direct cause-and-effect relationship between including a song on the soundtrack and its subsequent sale.