Wednesday 16 January 2013, 10:52 | By

Editor’s Letter: Can high street music escape His Master’s Void?

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HMV

For all the nostalgia and sadness that poured out over the social networks on Monday night as HMV announced it was going into administration, it’s possible there were also a few sighs of relief. This has been a long time coming – for a few years now each set of Christmas sales figures from the retailer have been shrouded in doom and gloom, and we’ve lost count how many “make-or-break meetings” HMV bosses have had with their bankers.

Of course the big British record seller is not dead yet, and maybe a fitter, leaner HMV can emerge from all this. For the 4000+ people working for the company, I really do hope so. Though for the British music business, while losing a long-held presence on the high street is going to pose challenges in many quarters, perhaps this is a shot-in-the-arm moment that the evolving industry needs. A moment where good old circumstance finally convinces artists, managers and most importantly labels – actually, we no longer need conventional mainstream high street record shops.

Blame for HMV’s demise has been attributed variously to illegal downloading; competition from the cost-cutting supermarkets and loss-leading mail-order websites; the ‘low value consignment relief’ tax benefits previously enjoyed by the latter; the rise of digital, the dominance of iTunes, and HMV’s failure to react quickly (or at all, really) to the emergence of the web; the hiring of CEOs from conventional retail backgrounds, even though entertainment retail was changing the fastest in the digital age; and confusion internally about what exactly the HMV brand stood for (just because HMV was selling less and less music, never stopped it being, fundamentally, a music brand).

The truth is, it was all of this and more. Some of HMV’s problems were so blatantly of the company’s own making that it was exasperating to watch it repeat its mistakes over and over again.

Though there were external factors too. The DRM obsession of the major record labels ten years ago meant that HMV’s first go at digital music was going to be woeful (and it was). And while it should have done more to support the indie retailers in campaigning against the VAT-dodging offshore mail-order sites (rather that ultimately joining in with the VAT dodge party), a lot of damage had been done by the cost-cutting online CD sellers before HMV really knew what was happening. And, of course, turning round any big business with a large workforce, long-running leases and profit-hungry shareholders is never easy, even if you do correctly identify the issues.

But anyway, enough of the past. What happens next?

Various players were rumoured to be interested in at least some of the HMV business yesterday, including Hilco, which bought the HMV Canada company in 2011, and which was boasting about its improved performance earlier this month. Another possibility being discussed on the sidelines was that the record industry itself could take over some key HMV stores. Universal Music, it seems, is liable for up to 40 of HMV’s leases anyway (a liability it acquired as part of its EMI takeover last year, EMI having guaranteed the leases when HMV was spun off from the British major in 1998). If those leases couldn’t be sold on, could Universal simply launch its own retail division, maybe acquiring the HMV name?

But if buyers do come forward, what could they do to ensure HMV (even a streamlined HMV) a long term future? Hilco-owned HMV Canada says that part of its recent recovery has been achieved by┬árebranding as a more general entertainment retailer, and growing its DVD departments. But that’s what HMV UK did in the 1990s. The company’s CEO, Nick Williams, has also said that his business is pushing its “specialist” status to try to compete with supermarkets’ CD departments. But again, HMV UK has been trying to talk up its specialist status here ever since the British supermarkets seriously moved into entertainment retail.

Though, perhaps there could be something in the ‘specialist’ thing if, rather than just talking about being specialist, a leaner HMV also lived by that ethos operationally, which basically means returning to the old days. As former HMV employee Dan Le Sac noted in a recent blog post, one less talked about big mistake the company made was to centralise too many of its buying procedures, rather than having staff in each store more able to react to local tastes. In small towns in particular, where HMV may have been the only decent-sized music store, this was incredibly important, and marked the chain out against the likes of Woolworths, WH Smith and the supermarkets.

Could that sort of approach work for HMV again? Perhaps. Or perhaps that’s something independent record shops are better positioned to do anyway. And perhaps, long term, we’d be better off if a rescued and streamlined HMV didn’t try to reinvent itself by competing more head-on with the indies. And anyway, as mainstream consumers increasingly embrace digital, and physical product – hopefully reinvigorated and made truly collectable – becomes something you sell, likely at a premium, to core fans, surely the good old fashion indie record shop is a better platform.

Jon Tolley, co-owner of Banquet Records in Kingston Upon Thames, wrote in a blog post yesterday: “I refuse to join in with the thought that music retail can’t exist without HMV or a similar replacement … [If HMV disappears], then it’s an exciting new time to be creative. To re-embrace physical releases and the experience of buying them. To help customers get exactly what they want and to turn them onto things they might not yet know”.

He added: “If we can create a market environment in which the market leader is no longer given an unfair advantage to remain there, in which the customer is a friend more than a revenue stream, in which the struggling indie becomes slightly less so, and in which the bigger indies are able to contribute to the structure of future market growth, then this silver lining might even shine past this mass of dark clouds over music retail right now”.

Indeed, if HMV were to disappear – even if that’s not a desired outcome at the moment – and if the majors redirected the energies they’ve employed to prop up the national chain in recent years to supporting indie retailers instead, then that could result in a renaissance for the smaller music seller, and a newer, happier if streamlined era for music retail, made up of smaller physical stores aimed at core music fans.

And while I’ve got my optimistic hat on, perhaps that’s the future of the high street in general. As Jessops, Comet and (maybe) HMV disappear, and rents in town centres slide as a result, perhaps independent, more locally-minded business people can fill those units with something more interesting, specialist enough that customers – some customers – enough customers – are willing to pay the inevitable premium that would have to be charged. Now wouldn’t that be marvellous? We just need to stop Tesco-owned coffee shops from buying up all those shopping units instead.

But even if that’s a little Utopian, I do believe a healthier indie retail sector could emerge from all this. And as for the mainstream music consumer, the record industry already knows they are increasingly to be found online. Digital music, despite once allegedly being described, amazingly, as “just a fad” by one HMV executive, will dominate music (and entertainment) retail in the very near future, while physical product will become niche, sold at a premium, via the aforementioned indie stores, and directly to core fanbase via an artist or label’s website.

For all the nostalgia and sadness of seeing a shop where you used to go and buy your music potentially disappear, something clearly had to change. New generations of music fans may never queue down the street to buy the latest big release, but that doesn’t mean they won’t find ways to get excited about music. If your memories of the shop are stronger than the music you bought there, things failed long ago anyway.

Andy Malt
Editor, CMU

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