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Schulhof reassures record retailers

Record retailers will not be put out of business by the advent of the electronic superhighway, declared Sony Corp. president/CEO Michael Schulhof in his keynote address to the 36th annual National Assn. of Recording Merchandisers convention.

Schulhof’s Sunday morning speech kicked off three days of product presentations by the six largest music distributors and the independent record community, all part of the country’s largest yearly gathering of retailers, wholesalers and manufacturers.

Trying to allay the fears of retailers who are warily watching the developing threat of digital downloading and home shopping, Schulhof likened the possibility of change to Sony’s decision to enter the software business. “Today, the record retail business must go through the same kind of strategy: To reposition ourselves and formulate a new vision for the future.

“Is retail dead? Is packaged entertainment dead? I know that you … join me as a representative of one of the major music companies in saying our answer is a resounding no. We cannot accept a future without the strongest retail environment.”

Electronic delivery was positioned as an adjunct business to traditional retailing by Schulhof, who mentioned electronic shopping experiences currently running between Musicland, the nation’s largest music retailers, and Prodigy; and an experiment by Houston-based Justice Records, which offers its catalog via Compuserve, as examples of outlets seeking new and innovative outlets for their wares.

Things were less friendly when NARM president Steve Strome, chairman of the Handleman Corp., gave his state-of-the-association address. NARM had developed a plan last year for standardizing electronic security tags for retailers. However , that recommendation has not been implemented by manufacturers.

“Some have questioned whether our suppliers have the incentive to move forward with source tagging,” Strome said. “Others have suggested that as large oligopolies, the record companies have simply chosen to ignore their customers’ needs.” Strome added that NARM remains committed to finding an approach to source tagging.

Strome also took pains to stress that retailers need not fear the electronic superhighway.

“The information superhighway has yet to be paved,” Strome said. “The new technologies related to broadband delivery are not perfected. Specific time frames for rollouts are sketchy at best. Many of these services will require massive capital investments. And despite Vice President Gore’s assumed position as our nation’s technology czar, it is unclear whether the government will actually subsidize investments in superhighway technology. Most importantly, no one is certain how the consumer will react.”

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