(06.07.09) I’ve recently celebrated my 21st anniversary at NARM, and this is my sixth address as president of the organization. I can divide my NARM life in two very distinct 10-year time periods…1988 through 1998 and 1999 through 2009.

As I am sure you can imagine, the dramatically different industry context during these decades has provided me with a unique frame of reference as I look back for perspective, and then look ahead for ideas and inspiration.

You all know this Thursday, June 10 marks the 10th anniversary of the original Napster. Big Champagne has reported that today more than one billion songs a month are still being traded on illegal file-sharing networks, a disturbing reality. 
A refashioned, legal Napster service 
lives on, and its alignment with Best Buy has recently yielded a new consumer offering.

But the open nature of the web over the past decade has bred essentially unfettered development of illegal music services, which I’m sure will be a primary focus of the World Copyright Congress which is going on this week.

While there is now unparalleled consumer choice in discovery, experience and consumption, it is also fair to note that creators, major and independent content providers and commercial businesses have found enhanced marketing and promotional opportunities by cultivating audiences through social networks.

Since the year 2000, sales of CD albums have declined internationally by about 49%. More than 2,500 stores that sold music closed in the U.S. between 2005 and early 2009, including many independent operators and major chains such as Tower and Musicland, and most recently, Circuit City and Virgin, among others.

This same shockwave has been felt around the world. Except for HMV, in the UK all the national music specialty retailers have been eliminated, and the venerable Woolworths, a variety retailer that was once the UK’s largest music retailer, is no more.

Five years ago music distribution formats were numbered in single digits. Today, the variations number in the hundreds. Whether it’s via a-la-carte downloads 
from Apple’s iPod and iTunes, emusic, Amazon or others, or subscription services, in game placement, ad-based streaming, or user-generated content, a single artist’s music can now be released in myriad ways from physical, digital and mobile platforms using audio, video and interactive components. The decade also transformed both video and radio from promotional avenues into revenue generators.

Google’s YouTube forged the path for user-generated content and currently dominates consumers’ search for music videos, and who knows how Vevo will alter the landscape. MySpace broke ground in social networking communities, uniting tens of millions of users, and we’ve yet to see when and how Facebook will enter the arena. Last.fm created personalized streaming radio filtered by people who like the same kind of music you do, while Pandora’s music Genome can power streaming radio stations based on the sonic characteristics of a song.

Already, the 21st century has seen the birth of 3G enabled mobile phones, with network operators offering users advanced services, capacity and efficiency, and wide implementation of even faster mobile connections through 4G technologies like WiMax and LTE, which are already scheduled to hit over 80 markets as soon as 2010. These faster connections will foster additional avenues for commerce.

Leading researchers project that revenue from mobile media and entertainment services in the US will more than double in the next five years. By the end of 2013 there will be 700 million broadband subscribers, and two billion wireless subscribers, up thirteen percent from today.

We can certainly look back over the past ten years with decidedly mixed emotions. Many who have scrutinized our industry from the outside and inside have chided us for screwing up either through slow action, lack of vision or just plain stubbornness. They say that with the back door open, the pirates walked in and took their place at the table with services and access, unrestrained by convention, that the industry must meet or best to get consumers to purchase again. It’s easy to say, but regardless of what’s been asserted, the industry accepted we could not continue the way things were.

It’s clear that some customers have gotten alienated and confused by either products that made them feel like they needed an engineering degree just to listen to their music, or store environments or service offerings that were not as compelling as they might be.

I would urge us to all agree right 
here, right now that as we prepare to leave this decade behind, we also leave behind these negative and unproductive characterizations and recriminations. 
We need to explore the issues that will help support our efforts to reinvent ourselves for a healthy future that is flexible and consumer-centric. What will that future look like? That’s what we’re here to explore.

None of us have experienced times as uncertain and unnerving as those we’ve all shared over the past year. NARM made a decision to move forward with this year’s Convention, in spite of the tough economy and in spite of the industry’s ongoing consolidation.

We knew that you would want and need to come together, and you relied on NARM to provide the forum to accomplish that. We slashed fees to pre-millennial levels so you could at least feel like you were partying like it was 1999.

But, even with these needed accommodations, our Convention has been affected just like virtually every other business and trade event around the world over the past nine months.

However, I am very pleased to report that we have representatives here from more than three hundred companies, including seventy companies who are here for the very first time.

This is also the largest business program we have ever had at NARM, with more than 75 speakers from as diverse a collection of disciplines and points of view you have ever experienced at our Convention.

Today is programmed to provide you with context through data presentations from research companies and industry analysts, plus a live and lively exchange with the elusive college-aged music fan.

Tomorrow you’ll all have a chance to hear perspectives from the label, retail, service, and social media communities, and compare what’s going on here and in other countries around the world. Then, on Wednesday, we’ll take a glimpse ahead to new frontiers and scope out the boundaries with presentations and discussions of bright ideas and innovations.

Some would say we are dealing with an unforgiving marketplace and the industry’s evolution has felt more like a revolution. Even as we deal with rampant piracy, and confront the reality of a smaller retail store footprint, we strive to create and cultivate a healthier and sustainable sales climate.

You’ll hear all the stats later this morning from Chris Muratore of Nielsen SoundScan. The sales data and analysis provided by them and other vendors informs how we run our businesses.

We are well aware of the industry’s sales declines, and have come here to look at possible solutions. Others who simply provide daily and painstaking commentaries on every single negative factoid are doing nothing to inform or provide insight into ways the business can move forward.

In 2010 and beyond, NARM will offer unflinching support for all its members to provide consumers with the physical, digital, mobile, and other formats they demand as retailers experiment.

With a laser focus on consumer demand, let’s pause to note that CD, vinyl and deluxe physical packages that fans embrace are critical revenue drivers and should not be dismissed as irrelevant to a vibrant music business.

And we should not limit our measurement 
to select delivery formats. There are important sources of incremental revenue that must be factored into any full portrait of the business … games, applications, ringtones, ring backs, streaming music, video, concert tickets, merchandise, and more.

I feel strongly that our industry would greatly benefit from a comprehensive metric that best illustrates the breadth and depth of the full music entertainment marketplace. NARM remains committed to collaborative efforts to achieve this 
goal in 2010.

We know that no one has all the answers and that’s why we are here to share information. But, for a minute let’s set aside the search for the answers and focus on the questions that will provide a platform for your public and private dialogue over the next three days.

What is the ongoing role of the various contributors on the content and commerce sides of the channel? How can they support and draw strength from each other? 
What defines an album? Could we let 
the consumer decide and make it more appealing? What are the implications of recasting the value proposition?

Do teens today, who are coming of age in the era of Limewire and The Pirate Bay really engage with artists differently than their parents did at that age? Is the future less about unit sales and more about aggregation and filtration to give music fans what they want?

How can our industry better align objectives with the hardware and application developer communities? How can we overcome free streaming as a substitute for buying?

Is our data infrastructure what it needs to be to supply the needs of Music 2.0, as consumers pluck their music from an endless library in the digital cloud?

How do we harness the power of the fan base and the boundless user-generated content they create?

There should be no limits to the questions we dare to ask. As we look at the potential for new music-oriented products on every screen imaginable, NARM will continue to broaden its own horizons to include more members, speakers and events from the technology community, and extend a helping hand to entrepreneurs who may have the next Blip, Topspin, Spotify, or Twitter up their sleeve.

In my view, it’s really all about what I call the ”spectrum of consumer touch points.” Music fans can and have chosen to discover, access or purchase music in a variety of ways and the expectation for unlimited choice will only grow.

But, depending on the artist, the motivation, the timing, the value, and the venue a consumer may choose to adopt a physical, digital or mobile delivery opportunity … or perhaps a hybrid of all of them.

Whether we like it or not, our world of entertainment is now irrevocably mandated to provide media-on-demand. We have the content and the commercial partnerships to successfully negotiate this revolution.

On behalf of the Board, I want to thank the Convention Committee, my staff and all of our trusted advertisers, sponsors, speakers, and partners, as well as the artists and musicians who have pulled 
out all the stops to make this year’s NARM unique, worthwhile and fun

To Motown on its 50th anniversary… Island Records on its 40th … Def Jam Recordings’ on its 25th …, 
we commemorate yours and all the other milestones this year. Congratulations for surviving and thriving.

In closing, I’d like to remind everyone that doing a better job of listening to our consumers won’t make a difference if we don’t also do a better job of listening to each other.

And what’s most important is that we simply cannot settle for the same outcomes today that we’ve had before. To quote Victor Hugo, “There is no idea so powerful as one whose time has come.”

And the time has indeed come for us to take a collective deep breath and rally around those powerful new ideas. And, of course to always remember that whatever the situation, music makes it better. 
I hope our time together in San Diego will be exhilarating and invaluable.

Have a great Convention.