Now that HMV Canada has been forced into receivership, I’ve been thinking about how drastically this will affect the Canadian music industry landscape. Hell, a better phrase would be “damage the Canadian music scene.” Even if you havent shopped at HMV for years, this is going to affect you as a music fan.Here’s what to expect as the 102-store chain winds down towards the end on April 30.
Here’s what to expect as the 102-store chain winds down towards the end on April 30.
1.Taking 102 stores out of the marketplace is going to freak out the recording industry. That’s a huge chunk of their distribution and retail network for their physical product, with some estimates saying that the chain was responsible for selling 25% of all CDs sold in the country. Doing a little math, that could mean as much as 2.5 million units a year. Wow.
With so many fewer places to buy CDs, we’re going to see sales of physical music drop drastically over the next few months. And please, urban people, get outside your bubble. While you may have other shopping options, there are plenty of HMVs in smaller centres where they were one of the few places that sold music. Some places only have their HMV store. This is also going to hurt DVD sales, too.
2. Fewer places to buy CDs should mean a greater adoption rate for streaming. Watch for those numbers to tick up sharply as the sales figures for physical product crater. Still, pause to think about people who are unable to afford big data charges. For them, it can still be cheaper to buy CDs, especially since HMV sold a lot of product for less than 10 bucks.
3. Artists and labels will have to rethink the whole idea of physical product, too. If there are fewer places to sell stuff, artists will have to evaluate the trouble and expense of creating physical music media. This is especially important for artists who are popular only available in Canada. HMV was an important outlet for selling music that was only big in this country. What if, for example, the Northern Pikes wanted to reissue one of their albums as a special edition. Without HMV, the number of units they could move would be severely limited. Another thought: Canada-centric box sets. Most were sold through HMV. Without them–well, you see the problem. Artists will have to further consider direct-to-fan offerings, rather than place stuff in stores.
4. How much money does HMV owe its music suppliers for their current inventory? You can bet that the accounting departments at all the labels are scrambling to get paid on any accounts receivable. (I do know, however, that after Sam the Record Man went down, new arrangements were made with retailers to protect their P&Ls.)
5. Independent record stores will have to adjust to this new reality. Theoretically, they should benefit greatly from the departure of a big competitor from the marketplace. But what form will those adjustments take? And will record labels extend extra love and attention their way now that the biggest music chain in the country is gone? Or will the demise of HMV just force them further away from physical product and deeper into streaming? Whatever the case, this is the death knell for the big box music retailer. Other chains still exist–Sunrise, Archambault, London Drugs, Best Buy, Wal-Mart–but none was a big as HMV when it came to being a pure music player.
Here’s a thought: Might a big independent retailer like Rough Trade or Amoeba move in with one or two stores?
6. What about the real estate HMV will leave behind? While most stores are in malls–mall operators are used to tenants moving in and out–what will become of the superstore at 333 Yonge Street in Toronto?
7. What will this do to the price of physical music media? HMV could afford to sell CDs relatively cheaply thanks to their volume purchasing and the fact that prices were subsidized by the high-margin merchandise they also sold in their stores. Will CD and vinyl prices go up?
8. This could be a blow to the new vinyl pressing plants coming online. HMV sold a lot of vinyl. Will their disappearance hurt demand?
9. Time to bulk up on physical music purchases. There will be plenty of deals to be had as all HMVs enter their “all stock must go” phase. Sale prices start at 30% off. Signs are up already. Watch for discounts to increase as we get closer to April 30.
10. Where are we going to get our Walking Dead merch now? Just sayin’.