May 25, 2004 - By Chris Marlowe, The Hollywood Reporter

TDespite suffering from downsizing, tighter finances and other body blows, the music industry is still a hub of creativity and market potential. That was the main message in a presentation Tuesday by Tess Taylor, president of the National Association of Record Industry Professionals, at a Future of Music event hosted by the Digital Coast Roundtable.

"The common overriding theme among students and artists in the U.S. and abroad is a desire to get into the music business, and the American music business specifically is still one of the most desirable places to be," Taylor said.

There remain some major issues that must be addressed. According to Taylor, one of these is that music is being undervalued by some emerging business concepts. "Our industry is taking its lead from merchants who use music to sell other things like computers, advertising, soda and iPods," she said. "Music has been denigrated to the cheap lure of promotional value."

The prices set by online music services add to the perception because by charging less than a dollar per song, they "acquiesce to the demands of bootlegging and to outright theft," Taylor added.

Successful musicians increasingly get less return for their efforts and unique abilities, she said, and those who think merchandising and touring can make up for sales of hard product are wrong.

Taylor ended on a positive note: "In spite of the press reporting mostly negative angles, there is still much opportunity, intelligence and good judgment in the record industry and reasons to believe that the challenges we face can be overcome."

Following Taylor's speech, a panel of experts explored the opportunities and challenges inherent in some of the new business models made possible by technology. The participants included Loudeye CEO Jeff Cavins, MusiKube CEO Ashley Heather, Universal eLabs president Larry Kenswil and Sony Connect general manager Jay Samit.

The Digital Coast Roundtable event was held at the Peninsula Hotel in Beverly Hills as part of its "What's Next?" series.

Copyright 2004 The Hollywood Reporter