Seven months after scrapping its iconic oversized format, the biweekly publication will enter the video game business with the May 26 release of Rolling Stone: Drum King, produced by 505 Games for the Nintendo Wii.

Drum King, a rhythm-action game in the same vein as Guitar Hero, is part of an effort by the biweekly magazine to hitch its brand to a growing medium at a time when print is contracting. In the first quarter magazines tracked by Publishers Information Bureau sold nearly 26 percent fewer ad pages than the same period last year. Rolling Stone’s pages fell 22.5 percent for the period.

Lately the Wenner Media title has been pushing its name elsewhere to offset declines in revenue from the magazine. After Barack Obama was elected, the publisher sold some 300,000 “bookazines,” glossy compilations of its coverage of the Presidential race, at $9.95 apiece.

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Not bad for a product that’s been around just 15 months. And, remember, these are pre-Beatles: Rock Band sales. When Viacom’s MTV Games ships that title on 9/9/09 (Get it? “Number nine, number nine, number nine.”), the franchise will be well on its way toward the $2 billion barrier, though it make take quite a bit longer to reach it. The public’s appetite for music games like Rock Band and rival Guitar Hero is said to be cooling, with sales expected to be flat in 2009. “[These games are] certainly losing steam,” Pacific Crest Securities analyst Evan Wilson told the Los Angeles Times recently. “This year will establish the direction that this genre will go. Maybe it continues to take off. Maybe it tops out at 15 percent of the software market. Or it could just turn out to be a fad. I think the latter two scenarios are most likely.”

I chatted with both Rosensweig and Activision (ATVI) president and CEO Bobby Kotick yesterday about the move and where the gaming company is going in the year ahead.

“I love music and I love big brands,” said Rosensweig (pictured here), whose enthusiasm for music, especially for Bruce Springsteen, is well known in Silicon Valley. “I wanted to do something different, something fun and something that was going to be the next big space online.”

And, indeed, the online music gaming space is stronger than most other Internet businesses these days, with a lot of potential, having just started to tap into social networking, mobile and other interactive possibilities.

So far, as a retail and home phenom, Guitar Hero has been a huge success since its release in 2005, followed by several new versions. And the company will be releasing a hip-hop-themed DJ Hero–complete with a turntable–soon, for example.

But, to keep up the pace, it will now be Rosensweig’s job to feed the consumer beast as never before.

Kotick said he had spent a lot of time looking for the right exec to turbocharge the company’s online Guitar Hero network. Already, for example, he pointed out that 200,000 original, user-generated songs had been uploaded to its Web site, with many millions downloaded back.

He noted that the concept of the “release your inner rock star” fantasy that Guitar Hero taps into at home had still not gone online as much as it could, and added that the brand would be moving into more and more music genres.

“We already have a big online business, but we have not even reached into five percent of the installed base of gamers,” said Kotick (pictured here). “I wanted someone who could focus on this with a passion and who gets how to leverage what we have already built.”

Kotick said he initially had asked Rosensweig for suggestions about who would be good for the job, having gotten to know him when Rosensweig was COO of Yahoo (YHOO) and Kotick was on its board.

“It was funny, but as I started talking to him, I thought he was the perfect person for it,” he said.

And it was perfect timing too, with all the turbulence on Wall Street and in the private equity business. Rosensweig had already been thinking about getting back into operations, after his post-Yahoo stint at Quadrangle.

“There is a lot of uncertainty in the market, but what I really wanted to do was be part of developing a whole new space for an already hugely successful brand,” he said. “The growth opportunity and the ability to scale here is enormous.”

Rosensweig, who will start April 20, does have his work cut out for him, overseeing Guitar Hero’s game development, marketing and distribution.

(The division’s former head and the co-creator of Guitar Hero, Kai Huang, will report to him, while Rosensweig will report to Activision President Mike Griffith.)

Besides dealing with the weak economy, which the company signaled in its most recent quarter could bring trouble, the Guitar Hero behemoth must keep innovating.

Rosensweig is also facing competition when competitor Rock Band releases a Beatles-focused music offering in September. It is likely to be very popular, even though Guitar Hero has typically outsold Rock Band.

More significantly, some think the entire online music gaming trend has played out, with sales down year over year.

Not Rosensweig. “It is just the beginning of what it could be online in this business,” he said.

And, for those interested, here is the full press release:

Activision Publishing Names Media Veteran and Former Yahoo! COO Dan Rosensweig President and CEO of Guitar Hero(R) Business Unit

–Appointment Further Strengthens Company’s Senior Management Team

SANTA MONICA, Calif., March 23, 2009 /PRNewswire-FirstCall via COMTEX News Network/–Further strengthening its senior management team, Activision Publishing, Inc. (Nasdaq: ATVI) announced today that Dan Rosensweig has been named President and Chief Executive Officer of RedOctane, the business unit which develops the blockbuster Guitar Hero(R) franchise and soon to be released DJ Hero(TM).

Mr. Rosensweig will oversee Guitar Hero’s global operations including game development, hardware manufacturing, supply chain, logistics and marketing. He will report directly to Mike Griffith, President and CEO of Activision Publishing. Kai Huang, former President and CEO of RedOctane, who along with his brother Charles Huang created Guitar Hero, will continue working at RedOctane reporting to Mr. Rosensweig.

Mr. Rosensweig brings significant experience to Activision having served as Chief Operating Officer of Yahoo! from 2002 through 2006, where he oversaw the company’s worldwide operations including its product development, marketing, and advertising sales and the development and introduction of inventive new Internet advertising formats.

Additionally, he spent 18 years at Ziff Davis, most recently serving as President where he was responsible for the global operations of the company and the successful merger of ZDNet and CNET. He held several senior positions during his tenure at Ziff-Davis, including President and Chief Executive Officer of ZDNet, which he built from a standalone Ziff-Davis company to a publicly traded, highly trafficked Internet network, President of Ziff-Davis Internet Publishing Group and Vice-President and Publisher of PC Magazine.

Prior to joining Activision, from 2007-2009, Mr. Rosensweig served as an operating principal at Quadrangle Group, a private investment firm, where he focused on the firm’s media and communications private equity business.

“Under the leadership of Kai and Charles, Guitar Hero established the music gaming genre and became a global phenomenon,” said Mike Griffith. “With the addition of Dan’s proven operational expertise and leadership, we will continue expanding the franchise’s global footprint in new and innovative ways. Dan’s deep understanding of how consumers can be entertained online will be invaluable as we continue to build Guitar Hero’s complementary growth channels, further establish the franchise as an innovative music platform and develop relationships with new business partners.”

Robert Kotick, Chief Executive Officer of Activision Blizzard noted, “I had the great pleasure of working with Dan during his tenure at Yahoo!. Dan has a rare combination of deep business expertise, entrepreneurial instincts and an incredible passion for music. We are looking forward to leveraging his proven online experience to build upon the billions of hours of entertainment we deliver each year in the Guitar Hero network.”

“I am extremely excited for this opportunity to work with the talented Guitar Hero team, which has transformed the interactive entertainment landscape,” said Mr. Rosensweig. “With a platform and content that universally engages a wide range of audiences, Guitar Hero has incredible growth potential. I look forward to continuing to develop Guitar Hero into an even more successful enterprise.”

Former Yahoo COO and current Quadrangle Group partner Dan Rosensweig (pictured here) will take over as CEO and president of Activision Blizzard’s powerful Guitar Hero franchise, according to sources close to the situation.

Rosensweig will run the hot gaming company’s division, which is located in Silicon Valley, the result of its purchase of RedOctane in 2006, source said.

He is well known to Activision (ATVI) Chairman and CEO Bobby Kotick, who served on the Yahoo board for many years when Rosensweig was a key exec there. Both Rosensweig and Kotick have since left Yahoo.

It’s an interesting move for Rosensweig, who has been working in private equity since his departure from Yahoo (YHOO) in late 2006.

His name has been bandied about for several high-profile Web positions of late, and many thought he might take a political job, given that he was one of many digital execs involved in helping elect President Barack Obama.

But the weak market for investments and Rosensweig’s longtime experience and interest in eventually returning to operations–along with his well-known passion for music–are the likeliest motivators for the move to Guitar Hero.

Sources said Rosensweig will start his new job at Guitar Hero–which Activision could announce as early as tomorrow–in several weeks.

Running a major consumer brand like Guitar Hero seems tailor-made for Rosensweig, who worked at CNET Networks and Ziff-Davis before Yahoo. In addition, the jovial exec is well-respected in Silicon Valley, giving Activision a much more prominent presence here.

And the energetic Kotick (pictured below with me and, yes, Paula Abdul of “American Idol”–don’t ask) has long talked about turbocharging the largely retail Guitar Hero business online, as a way to further grow the music phenom.

User-generated music, as well as a plethora of online transactions and social networking, have been promising new revenue opportunities, Kotick has said.

(See video highlights of my interview with Kotick below on that topic and more at last year’s D: All Things Digital conference.)

Overall, despite the weak economy and a cautious forecast going forward, the Santa Monica, Calif.-based Activision is growing, with revenues up in the last quarter, due in large part to the popularity of its Guitar Hero and Call of Duty videogames.

Its fast pace, in contrast to rival Electronic Arts (ERTS), has been helped by its merger with Vivendi SA’s Blizzard Entertainment last summer. Blizzard’s World of Warcraft online game is also one of the most popular multiplayer games in the world.

Here’s a highlights video from my interview with Kotick at D6:

The Bureau of International Information Programs at the DOS teamed up with MetroStar Systems, a Reston, Va.-based software developer, to create X-Life, a mobile game for Middle Easterners aimed at teaching them about English language and American history and culture.

The State Department invested $415,000 in X-Life as a pilot project to see whether the concept of “e-diplomacy” might spread cross-cultural understanding between the U.S. and countries in the Middle East and Persian Gulf. The game has two different role-playing modules, one in which a user’s avatar is a student studying abroad in the United States, and the other is a musician in a Guitar Hero-like scenario (Grammy-winning band Ozomatli contributed a song for the game).

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Now, there’s a new option for these digital performers: Wii Music from Nintendo. This $50 game was designed for Nintendo’s hugely popular $250 Wii gaming system, of which there were more than two million sold in November alone, according to the company.

Wii uses motion-sensitive controllers to move characters in games. A game of tennis in Wii Sports, for example, works when you swing the Wii remote like you would a tennis racket. The Wii’s simple graphics and adorable Miis (on-screen cartoons designed to look like you) appeal to the non-gaming set, inciting parents to challenge their kids to games of Wii Golf and spurring senior centers to start Wii Bowling leagues.

People playing Wii Music use the remote as a musical instrument.

Nintendo carries this cutesy, user-friendly style of video gaming over to Wii Music, where the remote works as a musical instrument, cheerful songs abound and a white-wigged character named Sebastian Tute gives instructions. Along with Sebastian, the Tutes — a musically gifted group of Miis that would give the Von Trapps a run for their money — appear and demonstrate how to play various types of music and instruments.

Though it’s comparably priced, Wii Music differs from games like Guitar Hero and Rock Band in many ways, and there are understandable reasons why a frequent user of those games would shun Sebastian and the Tutes. For starters, teenage fans of Guitar Hero and Rock Band who like the games’ variety of popular songs may gripe about Wii Music’s selection, which includes the likes of “My Grandfather’s Clock” and Beethoven’s “Ode to Joy”; none of Wii Music’s songs are more recent than the late 1980s.

Perhaps the biggest difference is that, in Wii Music, you aren’t using a few fake instruments like a guitar or drum set. You are instead manipulating the Wii controller to simulate one of many instruments depicted on screen. There’s even one “instrument” called Dog Suit — a dog suit that, when worn by a Mii, uses canine barks in place of notes. Another key difference is that, aside from one game, Wii never penalizes you for playing an incorrect note in a song, because you can’t play a bad note — every press of an imaginary key or strum of an invisible string plays the correct note.

A musically gifted group of Miis — on-screen personas representing players — demonstrate how to play various types of music and instruments.

This “no mistakes” environment is a little bit like a sports league in which every kid gets a trophy. Wii Music got a bit too saccharine at times, like when I scored a lousy 43 out of 100 points in a game and Sebastian Tute assured me that points didn’t much matter so long as I played the way I wanted to play. But for people who are learning about music and don’t want to worry so much about playing the right note, OK: Wii Music fosters a freedom to experiment with style by allowing users to improvise and explore variations of songs.

Outside of the Games section, you are the judge of your own performance, rating it however you see fit, or not at all. Wii Music is divided into Jam, Lessons, Videos and Games. My favorite section was Games, which included conducting a song in Mii Maestro, hitting the right note at just the right moment in Handbell Harmony and arranging Miis from lowest to highest note in Pitch Perfect.

The more activities I completed, the more instruments and songs were unlocked and available for me to use; off the shelf, each copy of Wii Music starts out with 27 instruments, but over 60 can be unlocked in the game. In Lessons, Sebastian Tute explained the importance of each instrument in a song and the role that it played. Before I played drums in a reggae song, he explained that reggae drums lay down an eight-beat rhythm. In the Japanese style of music, I learned how to play and recorded myself playing all four parts of a song: taiko drum, bells, shamisen, a three-string guitar-like instrument that puts bass in the song, and flute.

If you’d like, you can opt to save your performances as music videos when you’re finished. These include your mistakes — err, improvisations — and some other funny effects like views of the audience members as they bob their heads listening to you play “Twinkle, Twinkle, Little Star.” Album covers can be made for these videos, and the finished product can be sent to other friends’ Wiis if they also have Wii Music. Those friends can play over parts of your song and send the revised video back to you. While you’re playing songs, small black notes with faces on them called Be-Bops appear in the bottom right of the screen and work as a metronome would, steadily keeping the beat.

But cool accessories like guitars and microphones that are used to play music with other games aren’t available for Wii Music; instead, you must use your trusty Wii remote and Nunchuk to make one of four motions: piano-type, guitar-type, trumpet-type or violin-type. These four motions work to play a variety of instruments in different music styles, but some are easier to pretend to use than others.

While playing the imaginary trumpet I held the remote like one, pressing its 1 and 2 buttons like trumpet keys. But playing the piano uses the same motion as that which is used for playing drums — a downward hitting motion with the remote and Nunchuk — and this felt more like using a hammer than playing a piano. If you own a $90 Wii Balance Board, you can use it in drum mode in addition to the remote and Nunchuk. I tried this briefly, and it was fun to use the balance board in place of drum pedals.

Wii Music isn’t meant to replace a music lesson, but it’s intended to get people thinking about music and their own music style, without fear of making mistakes. It’s fun, unintimidating and will even teach you a thing or two. Just steer clear of the Dog Suit, if you can help it.

• Discuss: Share reviews of videogames and systems in Journal Community.

Edited by Walter S. Mossberg

• Mossberg Solution will return, Wednesday, Jan. 14. Email us at mossbergsolution@wsj.com. Find this and other columns and videos online free at the All Things Digital Web site: http://walt.allthingsd.com

We compensate artists and publishers extremely well. There are millions and millions of dollars that are being made and paid. There’s a misunderstanding of the value we bring to the catalog. What happens to your catalog in digital downloads? What happens to your merchandise? What happens to your ticket sales? When you look at the impact it can have on an Aerosmith, Van Halen or Metallica, it’s really significant, so much so that you sort of question whether or not, in the case of those kinds of products, you should be paying any money at all and whether it should be the reverse.”

– Activision Blizzard CEO Bobby Kotick says the recording industry shouldn’t look a Guitar Hero gift horse in the mouth

But–as many readers have requested–they will all be available in their entirety in this column.

Here’s an interview I did with Activision Chairman and CEO Bobby Kotick about the state of the gaming business.

The video of the interview is in three parts.

It’s a good week to focus on the gaming industry since Electronic Arts (ERTS) abandoned its hostile acquisition bid for Take-Two Interactive (TTWO) over the weekend.

EA’s effort was motivated, in part, by Activision’s recent merger with Vivendi Games, which includes Blizzard Entertainment’s “World of Warcraft,” one the most popular multi-player games.

The merger has made Activision (ATVI), with its own well-known franchises–especially the hugely popular “Guitar Hero,” which debuted version IV at D6–one of the gaming industry’s largest companies.

In this third video, Kotick publicly demos “Guitar Hero IV” for the first time, with the help of special guest stars Paula Abdul of “American Idol” and skateboarding star Tony Hawk.