Record Merchandisers Hail ’87 Profits but Want CD Price Cut

The 30th annual convention of the National Assn. of Recording Merchandisers (NARM) begins today at the Century Plaza Hotel on a positive note.

The music business, which went through a sobering slump in the early ‘80s, continues its resurgence. Sales--largely sparked by the continuing boom in compact discs and a series of 5 million-plus-selling albums--are healthy again. In fact, analysts expect that when all the numbers for 1987 are in, the dollar volume of the industry’s net shipments will top $5 billion for the first time. That would surpass the previous record of $4.65 billion set in 1986.

But that doesn’t mean the 2,400 convention registrants--representing retailers, wholesalers and manufacturers from around the country--will spend the next three days in an endless round of self-congratulation.

Among the key issues likely to be explored: CD pricing and the future demand for traditional vinyl LPs.

“There’s a tremendously strong sentiment (among retailers) that CDs are still much too expensive and that if we really want to make this configuration as popular as it should be, we’re going to have to reduce prices,” said Frank Hennessey, incoming association president.

Hennessey noted that many manufacturers have set up a three-tiered pricing program for CDs wherein superstar releases carry a suggested list price of $17.98, selected new artists are dropped to the $12.98-$14.98 range and older catalogue items are targeted for less than $10.

Hennessey, who is also president of Handleman Co., a Detroit-based wholesaler that supplies records to nearly 6,000 national retail outlets, feels that the lowering of new-artist and catalogue prices is a move in the right direction. But he believes it’s imperative to lower the cost of superstar CDs.

Russ Solomon, the association’s outgoing president, agreed that CD pricing is this year’s hot issue. “It’s been uppermost in our minds for a long time,” he said.

But Solomon, president of the giant Tower Records chain, said it’s important not only to have price reductions, but price protection on those CDs already in stores.

“If CD prices were to suddenly go down tomorrow, it would devaluate the inventories that are sitting in stores around the country--and that would impact the profitability of all the (retail) chains,” he said.

“We need some form of price protection, where if dealers and distributors have CDs on hand at the higher (wholesale) price, the manufacturers will make it up to them.”

As for the traditional vinyl LP, Solomon said the industry may be too quick in writing off what for years was the dominant album format.

“There’s no question that the LP is going to go the way of 78s, quadraphonic, 8-track and everything else that went away,” he said. “But it won’t happen tomorrow. LPs still represent something in the neighborhood of 25% of our pop record business (in dollar volume). I don’t think a (sudden) ‘drop-dead’ situation will happen with LPs.”

Surprisingly, neither of the key industry concerns cited by Solomon and Hennessey are on the formal convention agenda.

Instead, the seminars will focus on nuts-and-bolts topics like “Good Security and Loss Prevention,” “Motivation and Your Sales Force” and “Turn On the Store . . . Not Just the Lights.”

As with most conventions, however, most of the real business is conducted in hallways and over drinks and dinners.

Hennessey thinks that this schmoozing is one of the main values of the NARM convention.

“This convention is an opportunity for all of us in the music industry to discuss common goals and objectives, to meet the artists, to learn about new product releases and share in the camaraderie,” he said. “It’s a big business, but it’s also fun, and here we have an opportunity to get together and see what’s happening.”

The convention schedule includes hourlong product presentations from all six major record manufacturers, during which they’ll preview key upcoming releases.

In addition, Bruce Hornsby & the Range, Barry Manilow, the Jets and Kenny G are scheduled to perform at evening showcases. The association also plans to present Barbra Streisand a special award for sustained creative achievement.

Both Solomon and Hennessey said that relations between manufacturers and retailers are uncommonly good these days--despite the unresolved debate over CD pricing.

“Everyone seems to be getting along,” said Solomon. “The record business is very buoyant. There are no serious problems out there. Most of the large retail chains are doing all right, and the record companies for the last couple of years have been doing extremely well.”

One key concern that’s on the formal agenda is DAT--digital audio tape. This new technology has sparked intense industry concern because it allows digital-quality recording at home.

Explained Hennessey, “We have a need to exchange information on DAT. We need to know about recent developments and what they mean to us in terms of promotion, merchandising and packaging. It all has tremendous ramifications.”

LIVE ACTION: David Lee Roth will be joined by Poison on June 10 at the Forum. Tickets go on sale Monday. . . . Tickets will also be available Monday for two Wiltern Theatre shows: Miriam Makeba and Hugh Masekela on April 14 and Peabo Bryson and Regina Belle on April 16. . . . Whitesnake has added an April 9 date to its Irvine Meadows Amphitheatre engagement. Tickets available Sunday. . . . Whodini will be joined by Zapp and Kool Moe Dee on March 31 at the Hollywood Palladium. . . . Keith Sweat headlines March 31 at Celebrity Theatre in Anaheim, and the Bryson/Belle pairing is also due there April 14. . . . John Stewart returns to the Palomino on April 5, while Mutabaruka headlines there April 11. . . . Besides his show on Friday at McCabe’s, Harry Dean Stanton will open March 20 for John Prine at the Coach House in San Juan Capistrano. Prine will also be at the club Friday and next Saturday.