Make Music Shopping More Fun, Says Top Industry Exec

SAN DIEGO -- Music mogul Clive Davis has some advice for music retailers looking to persuade music fans to return to traditional record shops: Make shopping more fun.

"You are faced with a major threat . . . competition from digital distribution," Davis warned hundreds of merchants and recording industry executives who gathered Sunday for a conference, as reported by Associated Press.

Davis said he was impressed by Tower Records, which has staff members well-versed in music, and Virgin Megastore, which recently redesigned some stores. Tower emerged from bankruptcy court protection in March.

The four-day gathering of music merchants comes at a turning point in the retail music business. Retailers, heavily dependent on physical music formats like CDs and audio cassettes, have been particularly hard-hit by an industry downturn that began in 2000.

Even though U.S. music sales are up 9% so far this year, retailers are struggling to hold their ground in a market where digital sales are growing.

Davis didn't address whether retailers should offer computer downloads or customized CD burning inside their stores. But finding ways to generate sales from the online music boom is now at the top of the list for retailers, from large chains such as Best Buy Co. and Tower to regional and independent mom-and-pop merchants.

Several firms were scheduled to pitch their own in-store technology offerings during the conference. Among them is a new hybrid CD-DVD format known as Dualdisc that features standard CD audio on one side and DVD-compatible material on the other. The technology is receiving a push by the four major recording companies.

Also being promoted are in-store computer kiosks that can crank out custom CDs and sell downloads.

"We have to make sure CD burning becomes a commercially viable option for all of us," said Glen Ward, president and ceo of Virgin Megastore.

Online sales of digital tracks remain a small part of overall music sales. However, in February, the number of song downloads sold in a week exceeded 2 million for the first time, said Jim Donio, acting president of the National Association of Recording Merchandisers, which organized the conference.

He said "seismic shifts in music consumption" are being caused by the popularity of Apple Computer's iPod digital player, its online music store and other Internet retailers such as Napster 2.0, Rhapsody and MusicNow.

Still, the most common music format is still the CD, and it's likely to remain that way for the next few years, Donio said.

Looking ahead, he warned that companies across the music industry are still operating on tight margins and merchants remain vulnerable to changing consumer preferences.