“There are over one million songs out there — probably two million — and Activision is going to turn fewer than a thousand of them into Guitar Hero songs every year.”

“Warner is wrong when it says you buy Guitar Hero for the song,” says Pachter. “You buy Guitar Hero for the game, and the song creates the challenge. It’s quite different from an iTunes download, where the only purpose is to listen to the music.”

The company told Reuters, “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.”

And yet, the artists are signing the contracts allowing these songs to be used and are thrilled by the results. Video game publishers and developers are happy, consumers are happy, and the artists are happy. The only one not happy is the major record labels and RIAA. Wow. Shocker.