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SUNSPLASH 2001: Andersen Urges Retailers to Support Bill That Protects Promoting Product In-store and Online

3 Aug, 2001 By: Thomas K. Arnold

MYRTLE BEACH, S.C. — “I’m tired of it. I’m just tired.”With those words, veteran Carolina retailer and former Video Software Dealers Association (VSDA) board member Monty Winters explained why he’s in the process of selling his store and getting out of the business.

It’s the second high-profile exodus this year at Sunsplash 2001, the 13th annual “retailer retreat” sponsored by the Carolinas Chapter.

The other is Bob Edwards, another former VSDA board member who at one time owned three Movie Man Video rental stores in Greensboro, N.C., and other small towns nearby.When the big chains got direct revenue-sharing deals with the studios and started slugging it out with their guaranteed rental programs and extended rental periods, Edwards suffered. He closed one store, then another.Finally, a few months ago, he got out of the business entirely and went back to driving a truck, as he was doing before he got into video more than a decade ago.At the Sunsplash registration desk, Sharon Chamberlain – who with her husband, Harold, owns two-store That’s Entertainment of Aberdeen, N.C. – said with that with walk-ins, she expects about 400 retailers to attend this year’s show, up slightly from last year.

But a lot of the old regulars are gone.

“I walk around here and I don’t recognize too many people,” said Winters, who owns Club Vid Superstores in Archdale, N.C. He said he’ll search out a broker in the coming months to help him sell his store; after that, “I’m not sure what I’m going to do,” he said. And yet as Chamberlain’s preliminary attendance estimate shows, Sunsplash 2001 did attract a respectable segment of the regional video retailing population.

They came to meet, greet and network with each other — through fun events like VSDA chairman Tom Warren’s “Southern Pig Pickin’” barbecue, a deep-sea fishing cruise and a golf tournament — as well as a series of seminars on such topics as tanning, customer service and video games.

Addressing attendees during a luncheon sponsored by Buena Vista Home Entertainment, VSDA president Crossan “Bo” Andersen called Sunsplash “a gift in August” and urged the crowd to “fully appreciate the value of this event.”He spoke of a bill in Washington, D.C., that the VSDA helped draft, the proposed Music Online Modernization Act of 2001, that would make allowances for online delivery and trailering of music.

“It has an in-store exemption to public performance issues. These are issues music retailers face and so do you,” Andersen said. “We are working to get the same structural analysis done by Congress for video retailers, to protect you against restrictions to promote your own product in-store and online,” he said. “This legislation may be a small gift to us or a problem, because it opens up the Copyright Act.”

In the future, Andersen warned, studios or the Legislature may move to curtail rental of sellthrough DVDs.

“Our purpose is to defend, as an all-out war, your right to rent. First Sale will survive this legislation and into the next decade — that is our charter,” he said. “We have one strength the studios do not have — we have you, business men and women in every congressional district, and the ability to put that support behind our common interests.”

Andersen also reiterated that the VSDA convention “is not dead,” with a final decision expected as early as next week on whether to keep the show in January or move it back to its traditional July time slot.

During one of the retailer workshops, VSDA v.p. of membership Marc Fisher had Dave Benish of Gerke and Associates present the results of the association’s latest membership survey. The topic this time was rental rates and the conclusion was that raising rental prices has little negative impact on demand, particularly in regard to new releases and adult product.

The value of a 1985 dollar is now 62 cents, Benish said, so in an inflationary environment, “not changing prices can be disastrous.”Based on the survey, he said, retailers who hike rental rates on new releases stand a 95% chance of making more money.

Retailers who raised their new release rental rates from $2 to $2.50 reported the highest gains. On average, they reported a 19% increase in revenues. Next came retailers who raised new-release rental rates from $2.25 to $2.50 (14% gain), then retailers who raised rental rates from $2.50 to $3 (13% gain).

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