Editorial HMV Goes Under - Why I don't Care

By now, most people will know that world famous music store, HMV, which has been around for almost a century, has gone into administration. Viewing their website now simply shows the notice below.

And I don't care. In fact, I'm glad about it, but more on that in a bit.



HMV are unsurprisingly blaiming their demise on the internet and changing times and they're right. People think of HMV as a "music shop", but what most people don't think about is how dependent it is on the technology that delivers that music. And if there's one thing about technology, is that it changes and changes fast, especially nowadays. HMV should have followed the trends and become a completely online operation years ago, like Amazon. With its massive brand recognition, it would have competed very effectively with the upstart Amazon, which was only founded in the early 90s.

Anyway, back to the start. Initially, music was delivered on vinyl discs, usually coloured black, with wiggly grooves engraved into them representing the music, which were called gramophone records, or just "records" - something which our younger generations may now be unfamiliar with, since the format has been moribund for so long. This format lasted for at least 60 years or more, providing them with a very healthy business.

Then came audio cassette tapes in the 1960s with their terrible sound quality, yet they sold well to the undiscerning public who simply enjoyed irritating noise that sounded vaguely musical. Seriously, it was crap. After that came the familiar Compact Disc (CD) in 1982 which revolutionized sound quality with its high resolution digital recordings, consistent performance and zero loss of sound quality over time and any number of plays (yes, analog record lovers, CD is just better). After that we had various other formats such as Digital Audio Tape, MiniDisc and Digital Compact Cassette (DCC) (analog cassette's successor) which all failed in the market. This I'm glad about, since they were encrusted with DRM.

Then in the late 90s everything changed. Technology went into overdrive and caught them with their pants down. The highly compressed, yet still reasonable-sounding MP3 format was invented, shrinking the file size for a typical digitally recorded song by around 10 times (4KB - 8KB are common) and the internet took off as a mainstream consumer product (that's if you can really call the internet a "product"). Transmission speeds grew massively, from the initial cripplingly slow and inconvenient 33K - 56K dialup days to the first 512Kb/s broadband offerings in 2001/2 and now to today's megafast broadband speeds of 80Mb/s all the way up to around 300Mb/s for the top, niche products available in the UK. At the same time, hard drive and solid state (Flash) storage capacity grew massively, enabling thousands of songs to be conveniently stored in one place. This also eliminated the cumbersome and space-taking CD collections, allowing a custom playlist to be created out of the listener's music collection of thousands of songs. Finally, its' worth mentioning that it also allowed for easy backups, for those who cared and understood about preventing data loss. Backups were possible before with physical formats, but not without penalties in terms of the time taken, loss of quality (analog only) and the sheer amount of physical space taken to store those backups.

So, as you can see, the technology landscape which HMV so depended on changed massively around them, as it did for their competitors. Back in the 80s and 90s, we used to have the likes of Our Price, Virgin Records and Tower Records high street retail shops competing with them. To HMV's credit, all these competitors went to the wall much sooner than they did, but the writing was on the wall for them too. Note that Virgin Records has sinced morphed into an online-only presence called Zavvi, which is still around. If HMV had done this, they most likely wouldn't have gone into administration and I wouldn't be writing this piece.



So, why don't I care that HMV went under? Basically, because of their annoying, rippoff prices. They were almost always much more expensive than their competition. It was quite common for me to find an album, of any description, for say, a premium £15 at HMV while the same exact product might go for £10 or even less at one of its competitors. The only time that HMV had good prices were during a sale and even then, one had to know the competition's prices in order to avoid getting stung with a "third off" or similar offer that was actually more expensive than the competition!

I found it surprising and very disappointing then, to see the competition dying off one by one when they were undercutting HMV. It made no sense to me then and still doesn't now, years later. There were probably exclusive deals and dirty tactics that I don't know about going on. Anyway, the end result is that of course HMV had a nice cozy near-monopoly without much competition and therefore kept those prices up. To be fair, the likes of Tesco did compete with them, but since their selection is way smaller, that competition is limited. However, HMV refused to compete with the likes of Amazon, who as we know, can have some very low prices indeed.

In the early 2000s, I checked a handful of HMV's prices and compared them to the same product on Amazon and saw just how large the difference was. I did this a few times in fact, to see if HMV were starting to get it, but the prices never came down other than during those sales. If they had kept the premium to within, say, 20% of Amazon's price, then the customer could have made a reasonable choice on whether to buy it for a little more and get it right now (marketing 101: massive marketing advantage) or what a few days and get it for less online. They didn't do this, so this is when I sat back with the popcorn and waited for their demise, which began way back in 2007 when the first wave of restructuring initiatives began. People may argue that a physical bricks and mortar store has higher overheads than an internet-only outfit and they'd be right. However, the competition managed to sell products at reasonable prices, including decidedly bricks and mortar Tesco, so why couldn't HMV?

In fact, with a near-monopoly, they had more buying power than ever, so could therefore negotiate better rates with their suppliers and pass on the savings to the customer. But no, they were just greedy and tried to fleece their customers instead, keeping their prices artificially high. They also didn't innovate in the online space, leading to the crisis they find themselves in now, which is why I don't feel at all sorry for them. Good riddance.

Of course, I do feel every sympathy for their 4300+ employees however, who's jobs now look very uncertain indeed, most of whom had no say whatsoever in HMV's disastrous policies and were hence blameless. Unfortunately, the people at the very top won't suffer much, because they're loaded anyway and almost always get rewarded with generous severance packages for failure, even in critical situations like this.

The one thing I'm quite surprised about, is that neither HMV nor the dinosaur record labels who's stuff they flogged, have blamed internet "piracy" for causing their demise. You'd think now would be the perfect opportunity to point the accusing finger of blame at this, rather than a failed business model, wouldn't you?

Finally, here's a BBC article on how the recording industry is reeling at HMV's demise.