There was good news for HMV today, which said its “three pillar” strategy of new products, live music and reviving the Waterstone’s book chain was showing early signs of success after an 18% rise in profits.
The last surviving music retail chain on the UK high street, now 89 years-old, with 285 HMV outlets, has long-recognised that CD sales alone are a short cut to following the Virgin chain into obsolesence. Music now accounts for just 28% of HMV sales.
HMV: In the live business
Posting pre-tax profits of £74.2 million for the year to April, up from £63 million previously, the company cited a push into fashion – entertainment-related merchandising from T-shirts upwards in particular, mobile phones and Blu-ray discs for its improved performance.
A £46 million deal to acquire the MAMA live music group is paying dividends. That gives HMV a stake in summer festivals such as Lovebox and Global Gathering and venues including London’s Hammersmith Apollo and Forum, which both enjoyed record trading last year.
The firm hopes to build a business selling three million tickets a year and generating underlying earnings of £15 million by 2012/13.
But Simon Fox, the HMV Chief Executive who rejected the chance to head ITV last year, does not apparently believe that selling music downloads via hmvdigital.com has much of a future.
The company said: “Opportunities to create real value in digital are scarce for all involved, not least because of widespread competition from the free illegal market.
“We therefore welcome the arrival onto the UK statute books of the Digital Economy Act, which introduces penalties for repeat copyright infringement”.
That’s disappointing for record companies who were looking for HMV to become a potential alternative “digital jukebox” to iTunes.
The company is instead focusing on the “long-term” benefits of its joint venture with 7digital, the leading digital music company, in which the Group acquired a 50% stake in September 2009 for £7.7 million.
Last of the music high street giants
Digital books, with the arrival of the iPad and other readers, is another matter. HMV has sold almost one million e-books from its website so far and the firm believes it has also overhauled the struggling Waterstone’s chain, after tackling supply problems and refocusing stores on local customer demand.
Although the World Cup hasn’t proved great for HMV and computer game sales are generally down, Simon Fox says: “We are no longer a one-dimensional retailer facing rapidly changing product markets.”
It’s reassuring to see HMV still on the high street after the demise of Zavvi et al. For those who do buy physical CDs, the question is will the impressive back catalogue of rock, classical, country and jazz still be retained when the future of the stores lies so obviously in games, phones and fashion?
Just an idea, what about releasing this type of media as entertaining apps for all the mobile devices instead of concentrating on releasing items as an eBook download or mp3 file to sell. Meaning, make an interactive app to sell that includes the song, video files of the band, a game, pictures, etc. Then sell seperate apps like albums when new songs are released or new books when released. The songs will only play inside the app like a record would only play on a record player. Obviously you could still get the songs somewhere else but there would be benefits to having the app.
You could do the same for books. Sell the book as an app. Then think of all the extra fun stuff you could add to the book app – interviews with the author, options to hear the book read or read it yourself, pictures, interactive stuff, etc – the options are limitless.
I don’t know, just an idea.
Interesting read, thanks. We’re just about to release a study that confirms exactly this. Only 5 percent of independent artists are making enough money to live on, but the amount of money they’re making from stuff like merchandise, live performances etc is making up an increasing percentage of their income.