HMV Canada, the Canadian branch of a larger chain of record stores, is going out of business. The company announced in a press release on January 27 that they have gone into receivership and that as a result, all 102 of their retail stores across Canada will be closed.
“Despite a number of weeks of detailed negotiations with our key suppliers, we have been unable to obtain the assurances that we need in order to continue to operate the business,” said President and CEO of HMV Canada, Nick Williams in a press release. “Therefore, we have had no choice but to take the difficult step of appointing Receivers. This is a hugely disappointing day for the HMV Canada business, our hard-working and dedicated employees, and all our loyal customers. This outcome will have a major detrimental effect on the future of the entertainment retail sector.”
The company cites declining sales of CDs and DVDs in recent years as one of the main reasons for the shutdown, though they did point out that they had been outperforming the market in those areas. The sale of back-catalogue CDs and DVDs had led the company to over $220 million in sales last year.
In July of 2016, Billboard Magazine reported that album sales in the US had fallen to a record low. Album sales had fallen by more than 13 per cent in July of last year, with CD sales taking an 11.6 per cent hit and sales of digital albums falling as well by nearly 10 million copies. The sale of vinyl records shot up again, gaining 11.4 percent, to 6.2 million copies sold, says Billboard. According to Nielsen Music, new releases were the hardest hit last year, losing 20 per cent in sales from the previous year. The real growth has happened in the music subscription industry. Apple Music says they have over 13 million paid subscribers, whereas Spotify says they have nearly twice that. Tidal, owned by Jay Z and originally the only place to hear Beyonce’s album Lemonade, had over 6 million subscribers as of 2016. These services operate like Netflix for music, allowing customers to stream as many songs as they like for a monthly fee, rather than buying full albums.
Music collector Noah Salo says digital music has finally won over physical media.
“For casual music fans, it’s hard for even a two for $20 sale to compete with Spotify and Apple Music for $10 a month,” says Salo, referring to the highly discounted sale prices at HMV locations. Salo says he got interested in music collection from a very young age.
“One of the first birthday presents I ever remember receiving was a cassette tape of The Nitty Gritty Dirt Band’s More Great Dirt compilation. I still have it. However what really got me into music was getting my first CD player when I was 12. Ever since then shopping for CDs and listening to music have been my main hobbies.”
For Salo, he says that for consumers the loss of a major retailer like HMV means limited access to cheap music. HMV’s sales make it one of the cheapest options in the physical media market right now.
“[HMV was] able to buy music in bulk and offer it cheaper. You won’t find new releases for $12.99 at independent retailers,” he says. “HMV is also responsible for easy access to some older titles that independent stores don’t have room to stock…HMV bought a ton of stock and independent stores don’t.”
Salo says consumers and retailers should expect a lot of frustration in the coming months as the market adjusts to the loss of HMV. If you’re looking for something older or less popular, he says, you may have to have it special ordered at an independent record shop. This, says Salo, will drive consumers toward online retailers who provide discounted prices just like HMV did.
“Expect to see a lot more titles go out of print, and for prices to rise in general as records receive smaller print runs in the first place,” says Salo.
While the market for physical media is shrinking, Salo says the music industry itself is not at risk. The music industry in its present form is not sustainable, says Salo. However, “people are creative and will always create. I think the future will be fewer brick and mortar stores, and fewer major labels. They’ll be replaced with independent bands offering their music directly to fans via streaming, digital downloads, and limited edition physical products.”
Salo says being ‘alarmist’ about the closing of HMV and the rise of digital music is unnecessary. “Back when cassette tapes came out there were ads that said ‘home taping is killing music. Now people say digital downloads are killing music,” he says. “Nothing is going to kill music. Formats come and go, but music is eternal. It’s part of our evolution, part of our inheritance from our ancestors. Music persisted for millennia before recorded sound even existed. I don’t think it will have a problem outlasting a particular ‘industry.’”
“Since 2011, [HMV] has enjoyed a mutually beneficial partnership with each of its major entertainment suppliers,” says Williams. “In those six years, the business has defied the declines in the retail market, performing better than the rest of the entertainment sector in Canada and delivering a retail experience that is unique in the country. Such an amazing performance has only been possible thanks to the magnificent efforts of all of our employees and the continued support of the HMV Canada customers.”
HMV has been in business in Canada for over 30 years. Despite positive comments from the CEO, the Financial Post reports that the company has accrued more than $56 million in debt. Stores, like the three floor Young Street store in Toronto, will remain open until April 30 to liquidate remaining products.