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"I care more than ever because I have a certain amount of Jewish guilt about leaving while the transition is still happening."
RIAA'S ROSEN RUNS DOWN RETAIL
An exclusive HITS NARM dialogue with RIAA Chairman/CEO Hilary Rosen by Marc Pollack
Even though the industry won’t have Hilary Rosen to fight its battles anymore (or serve as a convenient scapegoat), the outgoing RIAA Chairman/CEO has been tapped to deliver the keynote speech at this year’s NARM convention in Orlando, FL.

In January, Rosen announced that she would leave the organization at the end of the year. Rosen, who has been with the trade group for 17 years, was the industry’s chief advocate and spokesperson during a time of unprecedented turmoil and controversy in the business. She led the RIAA to winning copyright infringement cases against file-sharing services Napster and Aimster, as well as the recent judgment against Verizon to combat online piracy by subscribers to major Internet service providers.

While she looks forward to leaving and spending more time with her family, Rosen realizes her job is not quite complete. "The RIAA has much to do to address [piracy and file-sharing], as well as help the companies transition the music consumer to the exciting offerings everyone has been working so hard to deliver.

"When all is said and done, I’ve long been a capitalist tool with an activist’s heart." in the legitimate online music business," she said. "We must also work with our partners at retail, in the creative and technology industries and with governments worldwide to promote the future growth of the music industry."

In addition to delivering the keynote address, Rosen will also pick up the Harry Chapin Memorial Humanitarian Award from the retail organization during its annual confab. "Hilary has long been a fierce advocate for the music community, the arts, free speech, human rights and many other worthwhile causes," says NARM President Pam Horovitz. "Her selfless service on the boards of so many humanitarian foundations is a telling reflection of her values." Rosen will receive the award on Monday, March 17, the same day she delivers her opening remarks. Before that, Rosen took time out from downloading the latest Linkin Park LP to discuss the upcoming gathering with HITS’ favorite retail slut "On Your" Marc Pollack.

Will things ever turn around in the music industry?
Well, I’m not a forecaster, but I’m optimistic that we’re going to experience a growth period towards the end of the year. There’s nothing on the horizon in the next couple of months that looks like we’ll get there. But, between the marketing that’s going to start to kick in on some of the online services and other things, we’ll get there. By the end of the year, we’ll start to see more people spending money on music.

Do you think it’s coincidental that the industry tailspin coincided with the demise of MAP (Minimum Advertised Price)? The DVD and video game markets are booming and MAP is still in place there.
That’s a good question. The music CD is already a mature product and, regardless of what happened with MAP, there would have been price pressure at the retail level. Retailers have to be responsive to their customers, to the extent that some retailers were determined to be more competitive in that environment than others. The record companies couldn’t create an artificial barrier there—even if they tried, which I don’t think they did. But even if they had tried, it doesn’t work. You know, consumers are king here.

So how do we get the consumer to once again see the perceived value of music?
I still believe consumers feel that music has value in their life. The question is whether they always relate the value in their life to the cost proposition. From now on, we’ll get revenue from a lot of different places. And not all of it just through the sale of the CD. There are some things retailers need to do this year to increase unit sales. Or at least try to stem the loss. Things like marketing more to adults, investing more in value-added product. Particularly for genres like Rap and Latin, we’re hoping that our anti-piracy efforts will begin to help. Going forward, it would be a losing strategy to think that the 100 million people around the world, who are downloading from a file-sharing service and buying less music, can be pushed back into buying physical CDs. I believe that we can persuade them to pay for music, but it has to be offered in multiple formats.

Do you see a time when we can effectively copy-protect material, or will we always be fighting the same battle?
Copy protection will never be foolproof. But there are a number of speed bumps we can introduce into the market that people will just have to live with.

Several labels, Interscope in particular, have taken to shifting the street dates to combat piracy. Is that a good idea?
Interscope has been particularly aggressive about connecting the dots on anti-piracy with their release efforts and we’ve worked very closely with them. We have encouraged other labels to follow that model. Our guys were on the streets a couple of weeks before the 50 Cent release came out, picking up information. During the week of its release, we were already seeing pirate copies on the street. An early release makes sense. Still, it’s very hard, given today’s technology, to control the windows of release the way people would like to. That’s just a reality everyone has to deal with. And by the way, it’s right around the corner for the film industry, too. They’re not going to be able to control their windows much longer, either.

Many of the largest retail outlets seem to no longer be using music as a profit center and instead, selling CDs below cost to get people in the stores. Is that damaging the business?
I’ve been thinking about what to talk about at NARM. Finding ways to excite consumers about a music purchase is critical. Too many people in the music business, whether they’re retailers, label execs, artists or even journalists, talk about CD prices in a way that makes consumers wonder whether they’re a good value. So in some respects, retailers have to be more positive about their product because, if they’re going to stock CDs and invest store space in them, they need to demonstrate more enthusiasm about them for their customers. And there are more creative things we could work on to accomplish that. But retailers are going through a hard time, so the last thing I want to do is pick on them. Let’s not forget, the economy is clearly and demonstrably affecting all retail right now, not just record stores.

What’s the future of the music-only retailer and how do they combat the price war from the Best Buys and Targets of the world?
The music-only retailer has a limited future. I don’t know if you could find a music-only retailer right now. Everybody has branched out into entertainment products like DVDs, video games and other merchandise. It’s just inevitable that people want more choice. Our consumer surveys show that one of the major reasons that Wal-Mart, Target and Kmart are increasingly becoming destinations for music purchase isn’t really price, although that matters. People don’t have the time to go to so many different stores to shop. They want to go to places where they can have all their needs fulfilled.

Now that you’re leaving the RIAA, how much do you really care about these issues?
In some respects, I care more than ever because I have a certain amount of Jewish guilt about leaving while the transition is still happening. The digital transition is still ongoing, and I don’t think I’ve ever worked harder than I’m working right now, actually, to do our part on the anti-piracy front.

Has the search for a new RIAA head begun?
It has. Korn Ferry is making a list and checking it twice, and anybody who has ideas ought to call them.

What do you see as your successor’s chief concerns?
We have a great team in place at RIAA. And these industry issues are critical. Cary Sherman will continue to be a leader on many of them. We have to look to the next CEO to pump up the volume a little bit on political leadership. The next CEO will have a very different job than I’ve had. I believe we’re coming out of the tunnel in terms of the digital transition. Companies have good strategies and people are investing in new opportunities. So, it’s just a matter of the consumer picking and choosing among some winners in terms of how they want to access their music. There are plenty of choices now. I said this before, but I hope whoever comes next does a much better job than I did because that will make me feel as if I created a good platform for the future.

What should NARM’s role be in shaping the future of the music business?
That’s a good question. In some respects, NARM has a more important job than ever and more challenges in accomplishing its goals because their retailer base is so varied. I represent the record companies, who are either big or small, but they all do pretty much the same thing. Whereas retailers have extremely different business models. NARM should get more involved with the online retailers and subscription services. Those people are selling music and they ought to be invested in working with NARM in the same way that Virgin Entertainment and the Virgin stores are working with the organization to try to figure out how to promote and encourage people to buy music. NARM’s challenge is to get all of their varied constituencies on the same page in terms of taking advantage of the opportunity to bring consumers back to the music market.

You’re receiving the Humanitarian Award.
I just found that out… Isn’t that nice?

What does it mean to you?
[Laughs] I haven’t a clue. It must mean I’m nice to animals or something. Even though I have no pets.

It’s nice to be honored anyway.
Absolutely. When all is said and done, I’ve long been a capitalist tool with an activist’s heart. It’s nice to have the latter part occasionally recognized.

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