Can HMV Survive Digital Music?

Even though the major retailer is in financial hot water, some independent record shops are seeing increased sales. Why?


Powered by Guardian.co.ukThis article titled “HMV’s woes do not signal the end for record shops” was written by Rupert Neate and Martha Thomas, for The Guardian on Wednesday 16th January 2013 08.00 UTC

The days of popping to a record shop on a Saturday to pick up the latest hit single are long gone. Just 567,000 (0.3%) of the 189m singles sold last year were physical CDs while downloads – mostly from Apple’s iTunes store – surpassed 183m (97%).

Music buyers, however, still like to own “hard copies” of albums: sales of physical CD albums are far healthier. Nearly 70m CD albums were sold last year compared with the 30m downloaded. But nearly two out of every three were bought online or in supermarkets rather than from traditional music retailers on the high street.

Craig Armer, an analyst at Kantar Worldpanel, said that if HMV disappears he expects the big four supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – to pick up 32% of HMV’s £932m annual sales. Amazon, he calculates, will claim 29% – meaning it would account for more than one in four of all CDs and DVDs sold in the UK.

But, for once, the smaller independent retailers could be among the winners. Despite HMV’s inability to make high street music retailing pay, many independent record shops are already reporting higher demand and sales, due partly to a backlash against Amazon’s tax set-up and the difficulty of stumbling across unexpected gems online.

Stephen Godfroy, co-owner of Rough Trade, a chain of three London shops including a 500 sq m (5,000 sq ft) warehouse off Brick Lane, east London, said business is “the best it’s ever been” in the company’s 36-year history. He said Rough Trade sales in the latest quarter were up 8% on the previous year and the company is in the process of launching a new online store and an outpost in Brooklyn, New York.

“UK music is in rude health, despite the woes of the last outdated chain of entertainment retailer,” he said. “The collapse of HMV is sad but ultimately a necessary process of renewal that will result in a significantly brighter future for UK music consumers.”

He added that independent record labels would “love to see a rejuvenated, smaller HMV return with fresh vigour under new ownership”.

Other independent record store owners also hoped HMV would carry on in some form – arguing the existence of a nationwide chain encourages consumers to shop for physical music.

Tim Winter of Harold Moores Records in Soho, London, said HMV’s flagship store, a short walk away on Oxford Street, attracts customers to the area, which is also home to a clutch of independent record shops, “in the hope of a tangible musical experience”.

Kat Bayley, director general of the Entertainment Retailers Association – which represents music, video and computer game retailers – said the industry was determined to help HMV survive.

“Both music and video companies are painfully aware of the consequences of losing a retailer responsible for about a quarter of UK physical music and video sales. We have to hope they will not stand by and watch HMV go down,” she said.

“There clearly is a viable business model for an entertainment retailer on the UK high street. It is up to the administrators now to do their job and take the steps necessary to make it possible.”

But British rapper Professor Green, also known as Stephen Paul Manderson, was less certain: .

“I’d rather the death of the internet to be honest,” he said on Twitter. “Everything has to be so instant nowadays, it’ll be the death of creativity, everything is churned out so quickly. As a kid saving up to buy a tape, record or CD was one of the best things about music, the anticipation. Then playing it non-stop.”

Then he added: “I’m saying all this sitting here on an Apple laptop that doesn’t have a CD drive …”

• This article was amended on 17 January 2013. The original said 3% of the 189m singles sold last year were physical CDs. This has been corrected to say 0.3%.

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