Thursday, February 7, 2013

Can Nipper the Dog be saved from the Digital Cold?

Well I guess the news is somewhat old now, but on Tuesday 15th January, HMV went into administration - the news is not good, more to the point of devastating.

This for me has touched a rather raw nerve, as per one of my previous blog entries from June last year; I noted the many sentimental memories I had of HMV, when it was here in Australia.  This was in particularly the numerous visits I made to the Mid City store in Pitt Street Sydney.  That store was closed down at the end of August 2007, when Westfield bought out the old Mid City Center for demolition.

But back to the moment of the present, it was announced on Tuesday evening the 15th of January (Sydney time) that the main UK division of HMV went into administration, when it could not secure $300 million in credit from its suppliers.  Thus Deloitte were appointed the task of either restructuring or winding down the business - depending on how proceedings go over the coming weeks I guess.  At this stage it seems the music suppliers are interested in supporting a slimmed down version of the store, and Hilco (a Canadian firm) is expressing a strong interest of buying out the stores debt. 

With experiencing such a fate, it is no doubt that the chain store is receiving a lot of free advice from bloggers, ex employers, customers, and others within the industry.  This is regarding how they could've improved their stores and sales model.  Being in such a position is not envied by anyone, as usually it is a point where some hard decisions have to be made, and those charged with such a chore would not be interested in advice from those who are not in their shoes.  The unsolicited advice often comes from the armchair critics and observers who have the luxury of not having to deal with the headaches and possible risks a business in administration would represent.

For example the average blogger would not know the entire picture of operating a retail chain like HMV.  This would include considering all the elements of a physical retail business, researching markets, stock control, and niche product focusing.  Other tasks would include going through the company’s books, checking which stores are profitable, which ones are not, then deciding who is made redundant, and organising sale of the physical shops that have closed down.  No doubt all of these factors would be complex issues, and would take time to work through. 

It would be easy for someone reading this from HMV's head office to assume that I'm some 18 year old kid wanting to add his two pieces worth.  Regardless of my vast musical knowledge and experience, the thing about the internet is you don't know who is on the other side of that website.

Considering the above points, I would still like to present my take on the situation, after all I have been involved with music, listening to it, buying it, researching it, mixing it, and breathing it for over 30 years.  With that in mind, I believe they were three important elements missing from HMV's recent business model, but let start with a little background on why HMV was so special in its day.

When I lived in the Blue Mountains back in the 1990's, I would regularly take that two hour trip from Leura to Sydney, just to visit HMV's Mid City store.  Every time one stepped into such a shop, the selection of CDs on the shells was incredible, one was always gob smacked at the amount of stock, and the shear size of the store.  I would often lie to my parents, saying I was doing something else - they were fed up with the amount of money I was spending there.  But that is the all important key question; what was it that made me spend my money?  It was the fact that the store carried a huge amount of back catalog material - it was this vary attribute that made HMV stood out, something they could've carried through to an online model. 

More explicitly it is these three key points that they needed to concentrate on: Quality, Variety, and Accessibility.
  1. Quality - Instead of being another store with iPod docks and bargain accessories, It's focus should of remained with its core product; music - being able to purchase it in a quality format as either CD from a store, or lossless FLAC files from an online model, no more bloody mp3s, 
  2. Variety - offer something lacking on iTunes and Amazon, a huge back catalog of artists and titles, rather then the same chart toppers and best sellers,
  3. Accessibility - customers being able to access the merchandise, a crippling annoyance with Amazon, apparently they don't like to ship stuff outside the United States.

First off - sticking to their core product, HMV could have offered music for purchase in a quality format.   From those who know me, I'm coming at this from a different angle - my absolute hatred for lossy audio, and loudly cranked CDs, some areas HMV could have set themselves apart from the crowd - but they didn't.  

It's hard to blame HMV alone, but the direction they were taking was certainly killing them off.  Selling boring iPod docks and accessories was already putting them into a position where they were competing with a myriad of other stores, and selling mp3s online was the same, they were just NOT doing anything DIFFERENT.

Many carry on about the internet being some sort of Aladdin’s cave when finding music - it's like they think you can find any song out there, but let me assure you this is CERTAINLY NOT QUITE TRUE - They are still many charting pop tracks from the 70s and 80s that simply cannot be found, as if they never existed.  Sure, there is a lot of music to be found on the world wide web, much more then your suburban record stores, but definitely not everything, not like the HMV's of the 1990s.  Whether one wants to go down the legal or illegal root - that's another discussion, but reality is there is a ton of music that is just simply NOT ON THE INTERNET. 

Even when looking through eBay, they are the hassles of bidding, and loosing out to another bidder, and trying to make head or tale of the seller’s vague description of an item.  Many CDs and albums are listed without the seller placing neither a track listing up, nor what pressing or label the CD was released through.  99% of music available on online stores is mp3, this is particularly so with the major two; iTunes and Amazon, which takes me to my second point, when HMV used to have a huge selection.

It was all about Variety.  When walking into the Mid City store of the 1990s, already at the entrance of the store, you were greeted with the slogan, "Australia's biggest music store" - and it meant exactly what it said.  I would have my printed list of singles that I wanted to buy.  It was down the stairs, to the right, and a section the size of a small grocery store (like a 7 11) was just totally dedicated to CD singles.  Out of my list of 15 singles, I would always find at least 13 to 14 of them, no worries, the other two would arrive next week, and the staff would always assist with finding them if the need arised. 

I would walk past the wall full of blank cassette tapes and blank discs, which in itself was about the size of an average shop front, only to land in the CD album section.  I often got lost in there; the massive store space was utter magic.  At its zenith HMV had many CD sections, classical, jazz, movie soundtracks, compilations, dance, and of course rock and pop.   Browsing the CDs, you would find your common chart topping albums with "best of"s and "greatest hits".  More importantly though, there was thousands of overseas imports consisting of rare albums and artists.  HMV would have their shelves sprinkled with those hard to find and obscure back catalog gems, the ones you wouldn't find in today's JB Hi Fi or Sanity.  Here's a challenge, try and find the 2008 reissue of Kiki Dee's 1978 album "Stay with me" on CD at a JB Hi Fi.  I can bet my life you won't.  If you do, please contact me, I want a copy. 

Accessibility to the music - This now leads me to my third point, the actual fact I was able to touch the stock, pick it off the shelf, take it to the counter, and BUY it.  In many cases, this is something one can't do with Amazon, eBay, and other online stores, because of their ridiculous phobia about sending items over seas.  In the US this problem has become diabolically mad; some places just don't want to ship overseas.  Some have got the craziest excuses, including; "because we just don't feel like doing it".  I'm serious; I actually had someone communicate this to me in an e-mail.

Translating the "accessibility of music stock" factor into an economically viable model can be done.  The best part is that it doesn't require the spending of thousands, upon millions of dollars buying large foot-print stores. This simply is a killer in rent, and staff costs.  There is already the right idea appearing on the internet - it just requires a quality website where lossless files can be purchased - SIMPLE!  Unfortunately I'm suspecting it is being held back by the main-stream record labels "control freak" behaviour. 

Only over the last two weeks, I've purchased some FLACs and WAV tracks from a store called Beatport.  Though their concept regarding formats on offer is excellent, unfortunately I don't know 99.9% of there material.  Most of it is independent which is not exactly my type of music.
"I simply heard a dance track in a Youtube video which led to me googling it.  Beatport came up with the track as they had a WAV copy for purchase.  Out came my credit card and they got my business; HOW SIMPLE WAS THAT?  Beatport were at the ready, when I wanted to buy - HMV WERE NOT!"

Almighty is a record label who are dipping their toes with the right idea, but unfortunately they still seem to be crippled with the mp3 (don't want to use too much disc space) mind set.  As I noted in my e-mail to them, I've got no problem paying MORE for a wav or flac copy.  I understand that such files takes up more resources, and am happy to pay the price difference.  It is not having the choice of buying a bit perfect copy of the master that annoys the proverbial out of me.

So where to now for HMV?

It is agreeable that the internet has taken a huge chunk of sales away from the physical shop front store, however noting all the issues above; HMV could have exploited these weaknesses.  They could of collaborated with the labels to offer exclusive in-store deals, and offered the same exclusivity online in a lossless audio store.

For example a relationship with EMI would be an idea.  Long out of print and hard to find albums from EMI's repertoire is a niche that could have been exploited.  Possibly these albums would not have the market to sustain a complete CD pressing, so HMV could have offered the album as a lossless Flac download.  One case is the English Singer Kiki Dee, who had most of her material on PolyGram during the 70s and early 80s.  She then had some albums released through EMI. 

Many releases were put out on a short run, such as Kiki Dee's 1978's album "Stay with me".  It was reissued in 2008, but I had no idea of its release until I found a review on Allmusic at the end of 2012.  I looked on Amazon and eBay, but the CD was completely gone, out of existence.  With it being long deleted, both HMV and EMI have missed out on a CD or download sale.  Multiply this scenario thousands of times, and one can see were HMV could have, emphasis on "Could Have" made sales.  Album and back catalog reissues are now a "Hot" craze.  HMV could've been on top of this, as already they had great expertise in this field.  

Offering the HMV model in flac audio quality?

Transferring this into a 21st century online experience, they could have then carried their back-catalog model through to the internet, and I don't mean more bloody mp3's, we already have enough of these nasty sounding things on the internet.  Where HMV could've stood out here is having a pure lossless "FLAC" digital shop-front - something like HMV pure-audio or HMV Platinum.  

One good example of advancing a lossless model is looking at the Dave Clark Concept Soundtrack "Time".  It was originally released on vinyl in early 1986, and included artists like Ashford and Simpson, Cliff Richard, Stevie Wonder, Sir Laurence Olivier, and many others.  Unfortunately this great album was never released to CD, however to my great disgust; it was released only as a lossy download on iTunes for $11.99. 

I thought that it would've been nice if at lease they had the courtesy to also release a lossless version.  Considering that this format takes more bandwidth resources, I was prepared to pay around $18.99 - $20.99.  But in the end I had no choice.  iTunes decided that I've got bad hearing, and that we all have to be content with mp3, a generalisation from iTunes management that very much grills me off.  Again we can see another opportunity here for HMV.  As noted on the Steve Hoffman boards, this situation has happened frequently with other releases as well.  This is where certain albums were released to vinyl in their day, a CD release was skipped over, then it is released as mp3s only.  One would think if they were bothered to get the original master tapes out for a remaster, why not also offer a bit perfect digital copy like flac. 

Another possibility is Singles.  Record labels no longer put out CD singles, because the costs of distribution, printing, and manufacturing no longer makes the physical CD single a viable concept.  In the 1990s I was overwhelmed by the huge selection of CD singles I saw when visiting HMV.  The mind seriously boggled on the amount of material available, it was a radio disc jockey’s dream.  It would be great if this experience could be recreated online, by having a website devoted to selling  singles in the flac format.  This could not be more important at a time like the present, as the only way to buy a single today is a lossy mp3 from iTunes, and again not everybody likes mp3.  From my own experience, I would have no problem paying more for a lossless copy over a lossy copy.  Again, Beatport and Almighty are touching on the right idea; this is a huge opportunity for HMV.  

Could HMV still have Bricks and Mortar stores?

Simply looking at the Las Angeles store Amoeba Records; shows that there is a place for the old style HMV's of the early 90s, back when their stores had every CD from a record labels catalog, sitting out on the floor.  This was the HMV's winning difference.

Personal Experiences?

Another personal anecdote from the last few days - This is the frustrating "accessibility to merchandise" issue.  Last week I was on the German site of Amazon to buy the "Bravo Hits" and "Dome" CDs (German equivalents to "So Fresh" and "Now").  I added all the CDs to my cart, was ready to pay my 180 euros, and just before checking out, I was informed that I could only buy one out of the ten CDs I ordered.  In shear rage, I cancelled my order with the thoughts; "Amazon can go and screw themselves".

With that scenario, I thought they may be some copyright issues, as the CDs may have been stipulated for the German market only.  But wait a minute; this only gets more ridiculous and Crazy.  On Saturday, my friends and I went to a second hand record store in Sydney's Newtown.  He bought some vinyl LPs, I went for the vinyl 45's, and walked out of the store with about ten singles.  The 45s themselves were in pretty good nick; however the jackets were badly ripped and torn. 

No problemo, so yesterday I logged into the United States version of Amazon (, and ordered a number of transparent outer sleeves, clear inner sleeves and a few packs of white cardboard replacement jackets.  When proceeding to the checkout, I was given the costs of shipping and the total for the goods, I was happy.  I then confirmed my order, and just as I did, I nearly fell to the floor in absolute horror.  Amazon told me that I had to remove all the items, as it COULD NOT ship any of the items to my address.

JB Hi Fi, which currently is Australia's leading entertainment retailer does have an "okay" stock level, but is still a store with weaknesses that HMV could exploit as JB Hi Fi seem to have access to limited markets.  In July last year, I tried ordering the German compilation series "Dream Dance"; a Sony BMG compilation series.  The guy behind the counter at their Galleries Victoria store told me that he couldn't order it, because JB Hi Fi could not access that market.

So in the end when HMV blames rival retailers, online stores, and downloading, I can't help and wonder how much truth is in this.  Though this would of contributed, to completely blame these things alone is just plain ignorant and foolish.

Some final thoughts on HMV and a brief recap:

So with some final thoughts on this situation, I guess I have two finishing comments.  Admitfully one based on emotion - a small physical store in Sydney, and another based on reality - an online version.

The emotional part of me wishes for an HMV physical store to open again on the Pitt Street Mall, or at least somewhere in Sydney.  Knowing that the staff and rent costs are a killer, particularly where real-estate is expensive in the middle of Sydney, they could open a small store dedicated to imported compilations and singles, and accessories relevant to music.  Not iPod docks or whatever, but actually replacement sleeves and jackets, needles and styluses and replacement CD cases.  Yes, even trying to buy replacement CD cases in Sydney is becoming difficult.  People like me are really becoming alienated by the mp3 obsession, but I'm not going to get into all that again.

But my second comment in this conclusion would be much more realistic, where no physical stores would be required.  As noted through this blog, it needs to be an online store that sets itself apart from the rest.  It was a store that caters to someone like me.  After all, HMV could have been the lossless iTunes.  Trying to keep an open mind, let's consider a degree of misjudgment on my behalf. Even if demand is not as strong for flac what it is for mp3s, I still strongly feel that HMV would have been in much better shape if they concentrated on this outcome.

So yes, this has been a long entry, and it's taken me the best part of two weeks to pull together.  Hopefully someone involved with the HMV restructure can take the time to read through this, and seriously consider implementing some of the models I've proposed above.

So to finish off, HMV was a large part of my life; it just was with the amount of stuff I bought there back in the 1990s.  In the end, I hope the business can evolve itself to a more relevant model, but sadly and honestly I'm not optimistic.