It’s D-Day for HMV - administrators KPMG have set today (January 15) as the deadline for bids from potential buyers of the retailer.
As revealed in the latest issue of Music Week, the music industry has helped HMV to keep on trading since it went into administration last month by continuing to service the retailer with physical music. So the support of labels and distributors will be crucial to any rescue plan.
Here, BPI and BRIT Awards chief executive Geoff Taylor stresses that the rapid growth in streaming doesn’t mean the industry is about to give up on the last music chain…
Last year we saw major releases from artists such as Drake, Cardi B, Eminem and Travis Scott arrive on CD after DSPs. Is it a concern for the physical music market when big releases aren’t immediately available?
“We can’t deny that we’re in a transition. It’s not that we have a format that’s losing popularity with fans who are then no longer consuming. In fact, we’re seeing consumers transitioning to audio subscription, which is generating very good income for the industry. The important thing is that consumers have the choice, consumers elect how they want to enjoy their music and we offer them the different ways in which they do that.
“Clearly, with the HMV situation it is hard times for retailers generally. We would like to see the government have another look at the conditions on the high street, and see if there are ways in which the situation of businesses like HMV can be ameliorated in terms of business rates, for example, because we all want to see a vibrant high street and that consumers have all the different choices available to them, and government is part of that.”
Is there a case for VAT being cut on music as a cultural product?
“Yes, very much so. We’ve argued the case over the years that there isn’t really a good reason for music being excluded from cultural products. It certainly could give a boost if prices could be more competitive because they weren’t attracting VAT, or a lower rate of VAT. Obviously, from government’s perspective they’re not looking to reduce taxes generally, but that might be one way in which they could help the physical retail environment. It’s certainly worth a renewed look.”
Will there be a wider industry effort to help HMV?
“Labels have worked very hard to support HMV as a business, and other physical retailers, over the last few years. I have no doubt that they will be continuing to do so. Obviously, they need to manage that against their own risks of trading, and I’m sure they’ll be doing that very carefully. But the music industry has been a long-term supporter of HMV, we think it’s a fantastic brand and we’d love to see it continue. I know labels are working hard to try and help the efforts to find a buyer.”
We would like to see the government have another look at the conditions on the high street
Geoff Taylor
How damaging would it be if HMV was lost?
“Obviously, it would be significant. Clearly people who want to buy physical product can get it online, so it’s not so much that the ability to easily acquire physical product for the consumer goes away. It’s more that some of that spontaneous purchase is difficult to replicate in the online environment. We would obviously love to see that high street presence continue and we’ll be working towards that.”
Would you expect to see some of those HMV consumers alight on streaming platforms if it did disappear or was slimmed down?
“Absolutely, the good news is that it’s not that we have a format that is declining and not being replaced; we have a format that is declining because people are transitioning across to an alternative. For physical buyers, they will still have the opportunity to go to independent retailers and to the online market, to Amazon or other retailers, and also they have the option of streaming. So it is our job to keep on putting out music that fans really want to listen to. If they do, then they will find their way to it in the format that best suits them.”
What went wrong at HMV?
“It has clearly had a difficult Christmas. But I think that reflects overall the difficulties for retailers. High street retailers across a broad range of industries are finding times tough at the moment. The costs of running physical stores are extremely high, particularly business rates as well as rent. In a time when consumer confidence is not at its highest, and household spending is perhaps under greater control than at some other times, that makes it difficult for businesses that inevitably have quite high costs like HMV because of their footprint and their retail locations. We would love to see the government have a look at whether there is any more assistance that can be given to the high street. But I think the music industry has been supporting it as much as it can. Clearly some of HMV’s difficulties are down to problems in the video market, more so than music.”
And it wasn’t the Q4 music release schedule that led to HMV going into administration?
“There hasn’t been the huge the seller on the scale of Ed Sheeran or Adele. Those always do boost the market by bringing people into stores and making fantastic gifts. We perhaps didn’t have something that played that role to the same degree in the market this year.”
What’s your hunch about the future of HMV?
“Labels are trying to help the administrators as much as they can, to retain stock and keep stores open to the extent possible. That’s the most important role that we can continue to provide now but obviously individual labels have to take their own decisions about how to manage their risks in that regard.”
To read Music Week’s full report on the future of HMV, subscribers can click here. To subscribe and never miss a big industry story click here.
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