Beleaguered Music Retailer HMV Might Not Be Going Under After All
The announcement last week that U.K. music retail chain HMV would be going into administration (the British equivalent of bankruptcy filing) was greeted with widespread fear by the record industry; the chain accounts for roughly 37% of all physical music sales in the U.K. Now various companies in the industry are teaming up in an effort to keep the 92-year old chain alive.
Music Week is reporting that Universal Music, Warner Music and Sony — in addition to major film studios including 20th Century Fox, Universal Studios and Warner Bros — have agreed to discount the price of CDs and DVDs for HMV and to offer generous credit terms in an effort to keep the company afloat. The record companies are worried that HMV’s dissolution would result in a downward spiral in prices by competition from “supermarkets” (not the word we’d use in the U.S., but I’d interpret that be the U.K. equivalent of “big box retailers” like Wal-Mart and Best Buy) and Internet distributors like Amazon. And they’re probably right; why pay more for anything when you get it more cheaply elsewhere? That’s what got HMV into this mess in the first place.
On one hand, at least the 4,500 employees of HMV could get to keep their jobs a little longer. But on the other hand… what’s the end-game here? Discounting wholesale prices isn’t going to do anything to stop the tide of inevitable change, the shift in consumer trends away from physical media; it’s just a stop-gap measure. So is this kind of “rescue” being carried out to kick the can further down the road while HMV contemplates a new business model or gracefully shuts down for good, or do the parties involved genuinely think they’re going to be able to keep HMV alive forever? If it’s the latter, they’re just plain delusional IMO. CDs and DVDs are never coming back.