Guitar Hero/WMG

The Guitar Hero games are hypnotic.
This definitely explains why the games are so addictive. One can play the game for hours easily without realizing it. The same goes for World of Warcraft.
 * Maybe that explains why the walls seem to melt when I stop playing.

The Guitar Hero/Rock Band games take place in another dimension where the band you play as write the songs and are NOT a cover band.
Well how else would a cover band get so famous? You're not going to get many fans when you make near-identical or identical covers of songs.
 * Four words: Gameplay and Story Segregation.
 * What about UB 40?
 * Jossed by the endgame screen of Guitar Hero 1. In the magazine cover, your character states, "I never thought I'd get this far playing covers".
 * That was almost certainly just a throwaway joke, and even if it was serious, there's no reason any of the later games had to follow suit.

The game is an allegory
for bands metaphorically selling their souls to the recording companies by signing contracts. Unfortunately, they can't get out of them that easily in real life.
 * That would be 3 and to a lesser extent World Tour. Yeah, kinda, but this is one of those cases where the message is so blatant that it doesn't really register. Signing a contract with Lou isn't bad because they're abandoning their principles as artists, it's bad because having anything to do with Lou is bad.

The game universe is somehow related to Brutal Legend.
Did you see the intro to Warriors of Rock? There is no way two rock universes just formed at random.
 * Get a good look at (Regular) Axel's face and tell me he doesn't look like a brown-haired Eddie Riggs.

Warriors of Rock is actually a journey through time.
It would make sense for a god to time travel to find suitable heroes, plus it explains how CBGB is still around and how industrial rock, black metal, punk, gothic rock, blues rock, and heavy metal are all still prominent enough to have notable musicians in the genre. He simply goes to the 70's to find Johnny Napalm, to the 2000's for Pandora, and so on.
 * Why would Johnny be playing The Offspring or Sum41 tracks in the 1970s?
 * I was under the impression that, in universe, the songs are actually written by the character's bands, as discussed above.
 * Covers were banned in CBGB's, so this would have to be the case.

There was no Character Derailment in Guitar Hero 3.
It was mentioned in Judy Nails' bio that she "dropped her label like a bad habit" when she realized most of her fans were fourteen year old boys. Therefore, it could be said that Judy Nails went from a perky alt. rocker to a tattooed punk rocker because she was trying to go for a Darker and Edgier image to stave off the hordes of teens. The look was softened in the next few games because she realized the new look did nothing and just decided to focus on her music.