Games like Guitar Hero and Rock Band have been a big help to the bottom line of record labels and games alike. Through November, about 22 million units of Guitar Hero have been sold since its introduction in 2005, with another 5 million units of Rock Band since it came on the market in 2007.
While the major labels complain that the licensing fee is only a fraction of what it should be, artists are making out just fine since they also control (and therefore license to the game maker) their image and likeness. In fact, it's been reported that Aerosmith made more money from the June release of Guitar Hero: Aerosmith than either of its last 2 albums.
At first glance this seems like the future of the music business. After all, everyone wants another revenue stream to replace what's being lost from the decline of the CD. The problem is that the only ones who benefit are the ones who need it the least - the legacy artists like Aerosmith.
If the music industry is to survive, it needs ways to promote new artists and new music. It needs a musical "farm team" where the artists learn their craft then make it their art (remember - "art is something you do for yourself: a craft is what you do for everyone else"). And it really needs new revenue streams to sustain these artists on at least a subsistence level until they graduate from to the big time. Unfortunately games aren't the answer.
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