August 3, 2001

Honorable Chris Cannon

United States House of Representatives

118 CHOB

Washington, DC  20515

Dear Representative Cannon:

             I am writing on behalf of the National Association of Recording Merchandisers to thank you for introducing legislation that addresses important issues relating to the digital distribution of music. NARM represents the retailers, wholesalers, and distributors of pre-recorded music in the United States.  Our members include such familiar retailing names as Tower, Best Buy (Musicland, Sam Goody), Wherehouse, TransWorld, Borders, Target, Circuit City, CDNow, and Amazon.com.  Our wholesalers handle the music departments of retailing giants WalMart, K-Mart, and Penney’s.  Over 80% of my members have websites and are eager to embrace the opportunities of digital distribution, if they are allowed to compete.  That is why I am pleased to pledge NARM’s support of your legislative effort.

The music retailers of America are extremely concerned that the digital music marketplace envisioned by the major entertainment conglomerates, who are increasingly joining forces with one another through mergers, joint ventures and reciprocal licensing arrangements, is one in which competition in the sale and merchandising of recorded music will be significantly reduced and, eventually, eliminated.  All available evidence establishes that it has been the retailers of music, not the record labels, who have long provided American consumers with the benefits of competition in the price, service and selection of recorded music.  Actions or business models designed by the record labels to restrict or preclude full participation by music retailers in the digital marketplace can only serve to undermine this vibrant competition.  The Music Online Competition Act of 2001 recognizes the importance of such basic retail functions as offering consumers a chance to preview music prior to purchase, and does so in such a way as to benefit consumers and artists alike.  We also strongly support the provisions in Section 4(c) of the bill making clear that copyright owners that license content to affiliated entities must also license such content to entities not affiliated with them on non-discriminatory terms and conditions.

             We appreciate your leadership on these important issues.  NARM looks forward to contributing to the dialog which the introduction of such concepts as an online equivalent to in-store play and non-discriminatory licensing terms and conditions will stimulate.