While music retailers continues to face what National Assn. of Recording Merchandisers president Jim Donio termed "seismic shifts in our business," the April 30-May 2 convention convened with music merchants and label partners resolved to explore ways to invigorate physical sales.

In the opening address, Donio conceded that the drop in CD sales, the 2006 losses of Musicland, Tower and Capitol, and the contraction at so many other companies are troubling realities, with no quick fixes. While onlookers appear fairly giddy about the industry's travails and have written off brick-and mortar music retail, Donio says support still exists. "If you look, you will find a vibrant healthy community, where merchants are exploring how to marry the digital experience with brick-and-mortar stores," he said.

As proof, he cited recent deals that partnered Trans World with Passalong and Circuit City with Napster; the launch of a digital store by New York City indie retailer Other Music; and Best Buy's collaboration with Real Rhapsody. Additionally, he noted that Amazon is poised to move into a new digital realm.

On the brick-and-mortar side of the business, Virgin Entertainment had a solid year; Newbury Comics is opening new stores; and many indie merchants like Criminal Records, Music Millennium, Twist and Shout, and Waterloo are thriving, while Silver Platters, Dimple Records and Rasputin are taking over some of the former Tower locations.

Russ Solomon's effort to open a new store, R5, in the exact location of the original Tower store in Sacramento, was lauded by Donio and others at the convention. "We will welcome him back to NARM next year as a new indie retail member nearly 50 years after he was the groundbreaking first retail member of NARM in 1960."

That notion was seconded when a state-of-the industry seminar kicked off with panelists being asked what made them optimistic and WEA president John Esposito answered Solomon's new store, to much applause from attendees.

Rich Bengloff, president of the independent label organization A2IM, noted that indie labels are optimistic thanks to the rise of non-terrestrial radio play from XM, Siruis and the Music Choice TV channels. While terrestrial radio has barriers that keep independent music to less than 10% of playlists, indie labels now comprise nearly 37% of music played on non-terrestrial radio, which now comprises nearly one-third radio marketshare,

Meanwhile, Capital Nashville president and CEO Mike Dungan noted that unlike past boons in country music, the current one could have staying power because it is fueled by a younger audience, who may buy two pop albums, but also pick up one country album as well in buying trips.

RCA Records GM Richard Sanders reminded that while times may be troubling, the industry currently enjoys the largest consumer base ever for music.

In the old days, there were few configurations and a limited amount of ways for consumers to find music, but that has changed with consumers have many options to explore and consumer music, added Diarmmuid Quinn, executive VP at Warner Bros. Records.

Univeral Music Group Distribution president Jim Urie reminded attendees that the Internet's real promise is marketing. "We have a fabulous new vehicle to drive consumption," he said.

Unfortunately, store closures and contraction of space devoted to CDs, leaves the now more knowledgeable music consumers with a dilemma, noted WEA's Esposito. If you look at customer studies, "the number one thing that motivates consumers to close a sale is selection." That's why the merchants who still carry a wide selection of music titles have the best chance to win with the consumer, EMI Music Marketing president Ronn Were said.

Earlier in the panel, Sony BMG Music Entertainment president Jordan Katz, while talking about his own company but summing up a spirit that seems to infuse the convention, said that his company is trying to "break the mold" in coming up with ways to solve the decline of physical music sales. In fact, the trying times called for the major to be receptive to ideas that it might not have embraced in the past. Nonetheless, he assured attendees, "we will figure it out."

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