While the National Assn. Of Recording Merchandisers convened in San Diego June 7-10 to try to solve the dilemma of a marketplace where music has never been more popular (yet its revenues keep falling), Guitar Hero president and CEO Dan Rosensweig told attendees that the intersection of content and technology will be the largest growth industry going forward.

He also pointed out that things move quicker nowadays. Three years ago, nobody had heard of “Guitar Hero,” but nowadays 11 million games have been sold and those buyers pay a subscription fee every month to play games.

In his opening keynote interview, Rosensweig explained that there isn't a culture that won't adopt technology and there isn't a culture without music, so the industry should be able to capitalize on this.

He says his company uses music for its video games, but also gives back in that artists included in Guitar Hero see catalog sales increases. Also, the video game helps sell tickets when the bands are on tour.

He pointed out that the video games themselves also pay royalties for the music they license, but he sidestepped a question on whether music owners and bands should receive better compensation, as suggested last year by Warner Music Group chairman Edgar Bronfman.

Earlier on June 8, NARM president Jim Donio pointed out that while about 2,500 record stores closed between 2005 and 2008, the consumer connection to music is as strong as ever. As Internet connection speeds get faster, it will foster different opportunities, said Donio.

Besides store closures, another trend hurting music sales has been the downsizing of music space in stores so that merchants can bring in other profitable product lines. Acknowledging that in-store music space is at a premium, Best Buy's Chris Smith said his chain was focusing on right-sizing its music selection. Some stores may have 5,000 titles when they should only have 2,500 titles and other stores maybe should have more than 5,000 titles. “Our charge, moving forward, is to right-size our stores,” he said during a "Music Business Crash Course" the day before staged by A2IM.

In marketing music, retailers stressed that getting music in advance of the release is still an important tool to reach consumers. Criminal Records store owner Eric Levin said that when he gets a CD, it gets played in the store, and customers get turned on. When the labels send links, “they get deleted,” he added.

As for the NARM convention itself, Donio noted that like other business conventions, attendance is down at NARM (though he didn't actually say what the total number is). But he did point out that employees from 350 companies are attending NARM, "seventy of them for the first time.”

Many say that because the industry didn't move quick enough to grasp the opportunities presented by the Internet, the industry left the back door open for unauthorized file-sharing. While it is easy to look back on the mistakes, Donio urged the convention attendees to make a commitment that as “we leave this decade, we need to reinvent the industry.” In that task, he said, there should be no limits to the questions that the industry asks itself.