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Good morning Mr. Chairman and
Members of the Subcommittee. My name is John Marmaduke and I am President
and CEO of Hastings Entertainment. I am a past Chairman of the Board of
Directors of the National Association of Recording Merchandisers, and I
currently serve on NARM’s Retailer’s Advisory Council as well as on the
Board of Directors of the Video Software Dealers Association. I appreciate
the invitation to appear before you today to update you on retail marketing
practices for music that carries the Parental Advisory.
Hastings is a publicly held
company headquartered in Amarillo, Texas. Our 144 stores carry music,
video, computer software, books, magazines and videogames representing nearly 3
million square feet of retail space. Between our warehouse, offices, and
stores, we have 7000 employees. We have over 30 years of retail experience
in a variety of markets, ranging from small towns to large urban areas
throughout 21 states of the Western U.S. For three years we have also
operated GoHastings.com, our e-commerce initiative.
Hastings’ corporate mission
is to satisfy our guest’s desire for personal entertainment and information.
That mission is reflected in every store we open, regardless of the size of the
community. We hear directly from our customers whenever they think
we’re not doing something right. So our success, like that of every
retailer, depends on our ability to meet the needs of our customers every day.
In terms of the music
selection, my company’s policy is to stock titles that carry the Parental
Advisory because they do meet a demand from our customers. However,
we require purchasers to be at least 18 years old. Hastings was one of the
very first retailers to have such a policy and we were considered quite brave
when we launched it. We now have similar programs in place for movies and
for video games. I get approximately 100 "Postcards to the
President" every day. I have not received a complaint from a customer
or a parent on inappropriate music in the hands of their under -18 year old
children in years. We stand behind these programs; we think they
work well; and we know our customers appreciate them.
Not every retailer’s policy
or program is exactly like ours. Some don’t stock titles with the
Parental Advisory; some offer edited versions, while others may not restrict the
sale of these titles to minors. Each retailer’s decision about what to
stock, how to merchandise, how to advertise, and who to sell to is driven by the
desire to meet the needs of their target customer. These different
approaches in the marketplace offer parents a choice when it comes to deciding
what’s best for their family.
Even though each retailer may
take a different tack when it comes to marketing music to its customers, our
common goal is to keep improving the program as a whole. Over the years,
through NARM, we’ve provided the record companies with feedback from our
customers. We’ve offered suggestions on a variety of things like, for
example, standardizing the placement of the logo, or adding merchandising
materials, or instituting guidelines for applying the label. In turn, we
have welcomed the information and dialogue provided by the FTC and by elected
officials. This ongoing review has resulted in many improvements.
Hastings has improved the way we handle Parental Advisory information in our
advertising and on our website. All of our ads contain the Parental
Advisory logo, and our website contains a link to ParentalGuide.org, the
industry site that contains information on all the media rating programs.
When NARM made point-of-purchase materials that describe the Parental Advisory
available a few years back, we began ordering those and replenish them as
necessary. Last year, when brochures on the program were made available
through NARM, we offered those to Hastings’ guests.
Since the
Subcommittee’s hearing on this subject a little more than one year ago,
NARM’s retailers have undertaken a fairly comprehensive review of the Parental
Advisory program that covered such aspects as the guidelines for applying
the label, the quality of information conveyed by the label, promotional support
of the program, and edited versions.
There were a number of
recommendations that were communicated to RIAA, including the need for more
information about why titles carry the PAL, adding guidelines for radio, adding
a label for edited versions and perhaps guidelines for editing PAL titles.
RIAA did adopt many of the recommendations, including the addition of labeling
edited versions of PAL titles, and both organizations worked together to
encourage greater support for the PAL program from independent labels.
(A detailed report on the review, the conclusions, and NARM’s activities in
response to the review is attached.)
NARM has continued to
provide retailers with copies of the FTC reports, with updates to the RIAA
guidelines, and with samples of copy that we can use to help educate our
customers about the program both in the store and online. NARM has
recently begun working with the Federal Trade Commission (FTC) and other
entertainment retailing organizations on a more comprehensive consumer education
campaign about the various ratings programs. We welcome that
initiative and think the more information parents have about these programs the
better they will work.
I want to assure you, Mr.
Chairman, and the members of the Subcommittee that music retailers take these
challenges very seriously. I know I speak for my fellow retailers when I
say that our stores are part of the communities where they are located. We
know we must be responsive to community concerns if we want to stay in business.
Can we do more? I’m sure we can, and we’re happy to keep meeting with
you and with the RIAA to keep improving this program.
Thank you again for giving me
the opportunity to testify today. I look forward to answering any
questions that you may have.
April 19, 2002
Mr. Dick Kelly
Ms. Mary Engel
Federal Trade Commission
600 Pennsylvania Ave NW
Washington, DC 20580
Dear Mr. Kelly and Ms. Engel,
Thank you for the opportunity
to update you regarding the efforts of NARM and our member companies to support
the Parental Advisory program for music. Since our last update there have
been a number of activities and communications about which we would like to make
you aware. Our activities have reflected two primary goals: 1) a
review of the guidelines for the Parental Advisory for the purpose of
identifying areas which could be improved; 2) enhancing the educational efforts
of both NARM and our members so that the public has a better understanding of
the Parental Advisory program and how it works. We believe that the
activities as outlined in this report reflect real progress in both areas as
well as the ongoing commitment of NARM and its member retailers to the success
of the Parental Advisory program.
Parental Advisory Guidelines
A joint NARM/RIAA Task Force
was formed in 2001 for the purpose of evaluating the Parental Advisory program
and making recommendations for improving the program. NARM began this
process by soliciting feedback from our member retailers and wholesalers
regarding various aspects of the program, including the guidelines for applying
the Parental Advisory Label, the consistency with which the label is applied,
the quality of the information conveyed by the label; the placement of the
label, promotional support for the label, and edited versions of labeled
releases. NARM concluded that there were a number of ways in which the
program could and should be improved:
1.
More information needed to be communicated to consumers about titles which carry
the Parental Advisory Label.
2.
More independent labels needed to be encouraged to support the program.
3.
Advertising guidelines needed to be revised to include radio as well as TV ads.
4.
Better labeling of music videos with music from CD’s carrying the Parental
Advisory Label.
5.
Edited versions of titles that carry the Parental Advisory Label needed to be
clearly marked with a standardized label. Artwork built on the
existing Parental Advisory was the preference. Guidelines for
editing PAL titles would be helpful.
6.
A coordinated set of guidelines for placement of the PAL logo and placement of
retail price stickers might be necessary to insure that price stickers never
obstruct the visibility of the PAL logo.
These recommendations were
communicated to RIAA through a series of communications and meetings over the
fall and winter. RIAA responded by revising their guidelines in February,
2002. The revised guidelines call for 1) an expansion of the advertising
guidelines to include all media: print, radio, TV, and internet; 2) the adoption
of standardized labeling for edited versions of PAL titles along with
recommendations for advertising the availability of edited versions.
Retailers would still like more information about why titles receive the PAL
designation or a link to song lyrics . Many would prefer a more consistent
approach to editing PAL titles. (Currently some edited CD’s may delete
whole songs, or bleep certain words, or include a revised version with new
lyrics.) Because the labeling of edited versions is new, there will be an
ongoing evaluation of the placement of the “edited version” label to
ensure that the current recommended placement (top spine) works. Retailers
concurred with labels that the top spine placement was the most logical place to
start the identification process, but have some concerns about the lack of
permanence of the label once the sticker is removed.
In addition, both
organizations promised to encourage greater support for the PAL program from
independent labels. NARM used the opportunity of a joint convention with
the Association for Independent Music (AFIM) in March to reinforce the
message. Retailers were invited to notify RIAA regarding music videos that
should be carrying the Parental Advisory Logo.
Discussions regarding the
coordination of PAL placement guidelines and guidelines for retail price
stickers are ongoing. The current guidelines for PAL placement from RIAA
instruct labels to place the logo in the lower left corner of the front face
whenever possible. NARM guidelines ask retailers to avoid placing price or
other stickers over the Parental Advisory Label. Despite the two
guidelines, the consensus of both groups was that keeping the labels separate
while not covering up the title of the work or imposing rules on artists that
could not be followed 100% of the time posed a challenge. NARM was asked
to review the placement of advisory information on movies and games to determine
how the placement issue is handled for those products. We’ve learned
that the MPAA rating for both VHS and DVD is on the back face of the product.
While the icon for video game ratings appears on both the front and back face,
the important content descriptor information appears on the back face.
With that information as background, it would appear to make sense to move the
placement of the PAL logo to the back face of music products so that the
consumer can begin looking for rating logos in a consistent place. If
retailers kept their pricing labels on the front face, any possibility of
accidental covering of the PAL would be eliminated. This possibility is
actively being discussed.
Educational Efforts
Retail Education A number
of activities have been initiated with the goal of educating consumers about the
Parental Advisory program. NARM’s efforts have also included a component
which focuses on educating retailers about the importance of the Parental
Advisory Label program, how it works, and how to support it. As was
promised last year, NARM created a section on our website devoted to the
Parental Advisory Label program. Posted on the site are a philosophical
statement from NARM about the value of the program and its importance to the
public along with the current guidelines for the PAL program. We also
include a sample descriptive statement about PAL for retailers to use in their
stores or on their websites, links to the RIAA page on the Parental
Advisory, links to parentalguide.org, (the site hosted by the entertaiment
companies covering music, games, and movies), and a copy of the reports from the
FTC on Marketing Violent Entertainment to Children. These published
materials are supplemented by updates in our electronic newsletter, and verbal
presentations at meetings of the NARM Board of Directors and the Retailers
Advisory Council.
Consumer Education
Educational efforts to consumers this past year included the ongoing NARM/RIAA
merchandising program of posters and counter cards depicting the PAL logo with
an explanatory paragraph. This year the pieces were revised to include the
URL to the parentalguide.org site. Nearly 8000 pieces of material were
shipped to retail and wholesale locations prior to the important holiday selling
season. These materials were supplemented with the addition of a new
brochure describing the PAL program in more detail. Nearly 100,000 of
these brochures were made available to the public through 4, 447 stores
beginning last September. We are in currently in discussions with RIAA
about the possibility of a reprint and ongoing distribution of the brochure.
In addition to the specific programs run by NARM, we know that a number of our
member companies created their own in-store materials regarding PAL and other
rating/advisory programs. Several companies either conducted in house
training programs for store personnel or reissued policy statements on the
program in the fall to help insure consistent dissemination of information and
execution of policies.
Advertising Another
important component to many retailers efforts regarding the PAL program was a
review of existing advertising programs and policies. The very helpful
feedback that NARM received last summer regarding specific approaches to the
incorporation of the PAL logo in print, radio, TV, and internet advertising was
passed on to retailers and wholesalers in September, 2001. Many retailers
have reported that they have revised their internal guidelines in response to
this feedback and these changes should be readily apparent in these media.
One area in which many retailers continue to disagree with both the FTC and the
RIAA relates to the need for the PAL to appear on every screen throughout a
sales transaction online. While some retailers have adopted this approach,
others believe that showing the PAL logo at the initial depiction of the album
graphic, and again at the point of sale provide sufficient warning to consumers
about the lyric content of the title.
Sales Policies No
retailers have reported a change of policy regarding the sale of music carrying
the Parental Advisory Label to individuals under age 17. Those companies
that decline to stock titles with the PAL continue to believe that approach best
serves their clientele. Those that had restrictive sales policies prior to
the FTC report continue them, and those that do not believe such policies work
for their customers have not adopted them. Most retailers continue
to express concern about the appropriateness of the FTC recommendation for
restricting sales of PAL titles to those under 17 when the RIAA guidelines do
not provide for an age based program. The only significant change in this
area is that more companies are stocking edited versions of titles with the
Parental Advisory Label now that such titles are identified with their own
label.
The Parental Advisory Label
program is now 17 years old. Like any teenager, it’s learned a lot, but
has room for improvement. We continue to believe that most parents
appreciate the industry’s efforts to inform them that certain titles may not
be appropriate for some of the children in their families. We also believe
that they appreciate having a choice in the marketplace regarding how different
retailers stock, merchandise, and sell Parental Advisory Label products.
Thank you again for the
opportunity to recap our efforts in this area for the FTC. We welcome any
comments or information that you’d like to share with us.
Sincerely,
Pamela Horovitz
Cc:
Alan Malasky
John Mitchell
David Schlang
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