UK media retailer HMV has announced that it will close 60 of its UK stores following very disappointing Christmas period sales (normally the most important sales period). Sales were 10% down compared to 2009. The cold snowy weather has been blamed in part, but that is like blaming a common cold for a plague sufferer’s demise. The rot set in long ago and largely (though not entirely) due to factors outside of HMV’s control.
HMV is a victim of the Media Meltdown. Consumers are falling out of love with physical media products and unfortunately are not yet anywhere close to entering into whirlwind romances with premium digital products. The net result is declining sales across massive swathes of HMV’s product portfolio.
Of course consumers still love media. They’re even paying for a lot of it (e.g., Pay TV). But the Media Meltdown loosened the monopoly of control enjoyed by media companies and retailers. We are currently in the midst of a painful transition, and we don’t yet have a set of next-generation media products that consumers will pay for on the scale they paid for physical products.
It may be that people will never pay directly for media products in such numbers ever again. It’s certain the media retailers will have a vastly diminished role to play on the high street and in the mall. If they want to be major players digitally they have to reinvent themselves as content destinations rather than just digital retailers. Selling digital downloads of content is a temporary fix. A third way is required.
Take the case of Amazon. Amazon’s continued failure to topple Apple as #1 digital music retailer coupled with terminal CD decline means that Amazon’s music business will disappear unless they find a third way. The damp squib that is BluRay means that the writing is on the wall for physical video products too. Amazon’s rumoured bid for complete control of LoveFilm suggests they’re already planning on a third way for video products. And of course with the Kindle Amazon is already well on the path to a third way for books.
Consumers now value access to content rather than paying for units of it, but the contagion of free means that few are willing to pay. Successful digital media products must combine:
Those three assets imply a synthesis of product and channel. So the role of retailer becomes much more than just selling. The respective destinies of digital media products and digital media retailing will become increasingly intertwined. HMV’s store closures don’t mean the end of media retailing, but they do mean the start of the end for much of the role of the high street.