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Video Saves The Day At NARM

11 Mar, 2002 By: Thomas K. Arnold

SAN FRANCISCO — If there was an overriding theme to this year's National Association of Recording Merchandisers (NARM) convention, it is a variation on the old British line of royal succession: Music is dead. Long live DVD!

Battered by wilting sales of CDs in the face of rampant digital downloading and CD burning, music retailers are grasping at DVD as though it were their only chance at salvation.

It very well might be; reports from all sectors of the product food chain indicate music retailers are buying more DVDs and devoting more floor space to movies while keeping their fingers crossed that their core music business recovers.

Veteran video retailer Jim Salzer is getting ready to put DVDs into his music store in Ventura, Calif., even though Salzer's Music is across the street from Salzer's Video.

"It's worth it," he said. "You're dealing with different customers."

Alayna Hill-Alderman, owner of two-store Record Archive in Rochester, N.Y., began carrying music DVDs last year and is gearing up to take the plunge into new and used movies. So are many of her fellow members the Coalition of Independent Music Stores (CIMS), a marketing group of 32 companies representing 72 record stores.

"Some of us have committed more than others," Hill-Alderman said.

The ranks of the committed are growing. A major feature article in the NARM issue of Billboard, the music industry's "bible," is headlined, "DVD Saves the Day," and asserts "since this past holiday season, music retailers have reassessed inventory and are bringing in more DVDs."

"If you're a music retailer, you've got to be buying that stuff — how could you not?" conceded one record company executive at the NARM opening cocktail party. "Anybody not into DVD is going to be out of business."

Last year, MDI Distribution, a music wholesaler from Atlanta that sells directly to 300 retail accounts, generated a mere 7 percent of its business from DVD-Video sales. Now, it's closer to 20 percent, said president and CEO Nina K. Easton.

"It certainly helps," Easton said. "It's kind of obvious to everyone."

Xenon Pictures, an independent supplier that primarily releases urban films, took a suite at this year's NARM convention for the very first time.

"This is a key show for us," said Leigh Savidge, the company's president. "In years past, we had a booth or tried to collar people in the hallways. But now so many of our customers are music retailers that it made sense to take out a suite."

The Xenon crew had barely checked in when it became clear the decision to come to San Francisco was a good one.

"People are coming up to me in the lobby, saying they want to get into the DVD business," said national sales manager Lisa Fuller.

Savidge said music retailers and electronics stores that used to emphasize music over movies, like Best Buy, account for 60 percent of Xenon's DVD business. What surprises him the most is the steady stream of independent record stores asking to buy product. They're as hungry as video specialists were for videocassettes in the early days of VHS, he maintains.

"DVD is what's carrying them through, week to week," Savidge said. "There's a whole new group of video distributors — the one-stops and music distributors who sell to independent record stores. They're at this show, and they're buying DVD."

Aside from DVD, much of the focus at the 44th annual NARM convention, held here March 8 to 12, was on weathering what everyone concedes are hard times.

"Boy oh boy, I don't know about you, but I don't think I can remember a year as tough as this one," said NARM president Pam Horovitz in her speech during the convention's opening session. She noted that attendance at this year's show is down a little from last year, with around 1,800 registrants, and ticked off a brief list of companies that have been shuttered, including Valley Media, once the music industry's largest distributor to independent retailers.

"I know welcoming speeches are supposed to be upbeat," Horovitz said, "but you know, in preparing my remarks for this morning, it was sort of sobering to reflect on all the challenges we face."

These challenges include digital downloading and CD-burning, which is eating into packaged music sales; the apparent death of the single, once an affordable entry point for new music customers; CD pricing, which retailers believe remains too high; and various other issues, including the consolidation in the record business Horovitz said is making it harder to break new and diverse artists.

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