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Dublin: 9 °C Saturday 25 October, 2014

HMV: What does its receivership mean for Irish music and businesses?

HMV has gone into receivership, and its future hangs in the balance – what impact could this have on Irish bands and music distribution companies?

HMV on Grafton St, Dublin
HMV on Grafton St, Dublin
Image: Niall Carson/PA Wire/Press Association Images

MUSIC RETAILER HMV has gone into receivership – so what does that mean for the Irish bands and businesses who depend on its market share to sell records?

A HMV employee told TheJournal.ie that they feared if the company folded it would have knock-on effects for Irish distribution companies and Irish bands, as HMV would have carried Irish releases not available in other stores due to its large market share.

HMV’s Irish stores were put into receivership under Deloitte last week, and at first it appeared that staff did not know if they would be paid money owed to them. After a number of stores held sit-ins, staff were paid yesterday – but it is still not known how the future of the company here will pan out.

US-based restructuring firm Hilco bought the company’s debt, but didn’t buy the company itself, saying that it believes there is a viable underlying HMV business. It is not known yet what impact this will have on the Irish stores.

The HMV employee

A HMV employee – who wished to remain anonymous – spoke to TheJournal.ie about their situation. “We’re really in the dark,” they said. “I’ve been finding out through news websites what is happening.”

The employee spoke about the impact the loss of HMV could have on Ireland:

We might be the only [music] shop within a county. I’d say it’s going to hugely impact. The [Irish band] Villagers’ album for example is selling quite well. When we closed down on Wednesday I was in a music venue and overheard someone saying that if they want the album, you are going to have to travel to Dublin to get it.

They said that when Irish artists appear on the Late Late Show, for example, HMV sees a peak in sales: “If Ray D’arcy starts playing a band, we also know CD sales increase for certain artists”. For big-selling Irish artists, if their CDs are only available in a limited number of stores, this potentially could affect their album sales.

The employee said that HMV had put a lot of emphasis on technology in the last year, but not on stocking vinyl, when figures show that vinyl sales went up by 16.3 per cent in the past year alone.

It just seemed like they spent so much money on buying headphones. They were ignoring what I always though HMV was when I first started working there.
When I first started working there we used to have in-stores, events to bring people in, they were great craic and had a real sense of contributing to the local music scene. That kind of stopped in the last while… music seemed to be left behind more and more.

If HMV did survive in some capacity, the employee says “there would have to be some kind of promise that something would change”. “We really need to innovate as a company. We need to try to look into ways to be trendy and relevant.”

The independent record store

Ray Cuddihy, who runs Wingnut Records, an chain of independent record stores that only stocks records by Irish bands, told TheJournal.ie about the HMV closure: “It was inevitable but I was still very shocked when it happened.”

Cuddihy noted that it can be difficult for smaller record stores to get deals with distributors for big-name Irish albums. Large retail stores like HMV would have had access to such albums through distributors, because of their market share.

For smaller stores, there can be more red tape to get through, mainly because the distributors tend to be Irish branches of British or European companies. This means that now, some popular Irish bands may not see their album sold in certain cities where HMV is no longer open, unless smaller stores – of which there is already a small number – can get new distribution deals or HMV survives.

“I really got worried for people working in distribution,” said Cuddihy.

I could see people losing their jobs locally. Is this going to have a knock on effect up the ladder? It might, especially people in distribution.

“What we have always done in Wingnut is what you cant find in HMV,” said Cuddihy. “It might bring more attention to us, but I don’t want to think about it yet. It throws a ball into our court and I will be looking into it. But in the immediate future I don’t think it will have a massive impact on us. We are fiercely independent and I want to keep it that way.”

Cuddihy said that he felt HMV was “slow to react” to the changes in music sales, which came about after music became more readily and easily available online, legally and illegally. This resulted in lower sales of physical albums and singles, which had a knock-on effect on record stores. Physical music sales dropped overall by 20 per cent between 2007 and 2011.

According to Kantar Worldpanel, Amazon increased its share of the entertainment market to 23.4 per cent in the run up to Christmas. In April of last year, HMV’s share was 19.2 per cent.

The distributor

Seamus Carroll is a label manager Indi Entertainment, a distributor for indie, Irish trad, folk and other smaller musical genres, as well as DVDs.

From our point of view, all the eggs wouldn’t be in the one basket. We’re still looking to find out the situation with HMV. It would be a fairly big sea change if all the stores were gone. It’s probably more relevant with sales of indie rock and chart stuff, which I guess a certain amount [of] had moved to supermarkets anyway.

Carroll said it is “going to be a drastic time, but not as drastic as happened a few years earlier” when supermarkets began stocking CDs. He said that with popular indie music, the main places that would sell the records are HMV or other big stores like Tower (which has two stores in Dublin) or Golden Discs, but they might not stock the same amount HMV would have.

Carroll works a lot with online sales. “You are probably never as ahead of the game as you would like to be,” he said. “From however many years back we were aware changes were happening in front of us.” He described much of the response to this as “reactive rather than proactive”.

“It’s understandable,” he said, “when it was technology that was driving so much of what was changing. The ball was going to be in the court of the people who understand technology best.”

Carroll said he hopes that HMV survives, but added: “I don’t think it can go on in the form that it was”. He sees smaller pop-up stores and stalls being one answer to the selling of physical records.

“If one of the stores is taken out, maybe not as many people are likely to go into the city centre at all for music stores,” said Carroll.

You’re gaining with one hand, you’re possibly losing with another. What it probably serves to do is push more people to shopping online.
What really hurt the record store was online CD sales. I still think it is a little underestimated in the series of events that led to where we are now.

He gave the café in Tower Records on Wicklow St, Dublin, as an example of stores diversifying and bringing in new customers. “I think the next 10 – 15 years will be more interesting…  in terms of the changes we are going to see [in] retail and society as a whole,” concluded Carroll.

The record store manager

Joseph Plunkett, manager of Tower Records on O’Connell St, Dublin, said that “everything is price-driven these days. There is no point in stocking a product if it is overly expensive”.

He described Tower Records as having always been a catalogue store.

We do try to compete as best we can. It hasn’t really changed in that way. Vinyl has made a massive comeback for us – we have massive sales in vinyl in Ireland.

Tower does still stock best sellers and chart releases. “We needed to be a bit clever about it, we took in as much as we can.” He added: “There is definitely a big market there. Maybe new releases aren’t selling as well. That might be for number of reasons.”

But he said that there are a lot of younger customers out there who are getting into collecting records.

In what could serve as an example to HMV, the two Tower Records stores in Ireland were part of the UK chain, and when that ran into trouble they were bought by Irish investors.

In the UK [Tower Records] suffered the same fate as HMV – a similar fate as the supermarkets took on selling products as loss leaders not making any profits. That hit big time in the UK. So we were still profiting stores [in Ireland] and we were bought over by Irish businessmen. It’s a different market we are in. We are in for the fight, we are in for the long haul.

For now, it remains to be seen what will happen to HMV, and the businesses and bands that rely on its market share.

Read: US restructuring firm Hilco takes control of HMV in the UK>

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