1. Harmonix must make contact with the band and company the band was signed with. Some bands marketed CDs with multiple record companies, meaning that multiple companies may need to be contacted.
2. Harmonix, the band, and the company that recorded the master recording must all reach an agreement and sign a contract. If a band released music under Columbia and Geffen Records, but Geffen won't sign, then Harmonix can't use the songs released under the Geffen label.
3. Once the contract is finalized and reviewed by lawyers, The company must provide Harmonix with the master recording of the song. A mixed down copy like you buy in a store is no good; you can't seperate the tracks for the different instruments. If the master is lost, you are SOL. If the master recording has too many layers on one track (old recordings often only had 4 tracks available for recording, so extra instruments would be stuck on the vocal or guitar tracks), you may be SOL. You might be able to edit around the overdubs, but it will take more time. A lot of old master tapes are thrown out, lost or stolen over the years.
4. When Harmonix gets the master tape, they then need to isolate the guitar, drum and vocals they want to use in the game and then map those out to appropriate buttons, pads or pitches in the game. This is easier on newer songs (mid-90s and on) that might have 100 different tracks on the master; each instrument can be isolated. Older recordings were limited to 4 or 8 tracks. So if you had a 4 track recorder for your band and there were 5 band members, then 2 people would have to be on the same track (factoid: The Beatles' Sgt. Pepper album was done on a 4 track, so any backing vocals and added instruments had to be put on someone's track).
5. Quite a few songs don't end, they fade out. Harmonix needs to alter the ending of these songs, either by recording a new ending or making a "Big Rock Ending", so that it ends like a live concert song. Think Enter Sandman. The Rock Band ending is completely different than the Black Album ending, and is like how they end the song live.
6. Okay, you got the 4 tracks mapped out. Now you need to code it to mesh with already existing animations and player skins so that nothing looks funky when you switch to DLC songs. You also have to code it so the system doesn't crash when switching from disk-read songs to HDD-read songs on the fly.
7. Now you get to slap the four tracks back together and make it so you can choose to play any one track, or up to all 4 together with no conflicts. Hopefully there is a set process for this that Harmonix can slap on with a minimum of fuss.
That's all there is to it! Harmonix has stated it takes about 3 months from start to finish. That is if the band and company agree right away and the master is easily located.