HMV is arguably the largest independent high street retailer of CDs and DVDs in the country. The first store was opened on Oxford Street in 1921 right at the genesis of recorded music and so has literally been supplying the country with music since the word go. With the demise of so many small independent record shops and multi-product shops such as Woolworths (it went into liquidation in early 2009), HMV has been promoted to become one of the only major UK record chains still operating.
With HMV being on the edge of collapse it raises the issue of how the public will obtain their music if not physically. Obviously there are many options, with online purchasing being the most popular and convenient for the consumer. The 2012 music sales statistics are interesting and very much show a trend towards online streaming. On-demand services like Spotify and We7 generated approximately £696 million for the global music industry in 2012 – a rise of 40%. This shows that streaming music is the fastest growing sector in the industry, overtaking downloads which increased by approximately 8.5%. Globally, CD and Vinyl sales still dominate, accounting for 61% of worldwide sales but in the UK physical sales dropped by 30%, as opposed to the worldwide percentage of 12%. Indeed, at the start of 2011, the largest international digital services such as iTunes, Tunecore and AWAL were present in 23 countries. One year later they were present in 58 countries – a massive increase.
High Street food shops such as Sainsburies stock music but in no way near the quantity or variety that HMV stock. These high street stores are great for finding albums that are in the UK top ten and maybe a Christmas number one album but they are in no way willing to risk putting out less popular bands or even popular bands that are outside of the mainstream pop/easy listening bracket.
So what do these statistics mean for musicians in the UK? Most HMV stores stock a huge variety of music allowing the public to browse and discover new artists and styles with relative ease. This can be done online (iTunes are very proactive in this area) but online services are normally used for finding specific artists rather than to search out new ones. This loss of exposure would obviously affect record sales and possibly ticket sales for tours – a real source of bread and butter for musicians. Aside from that, the royalties generated by streaming services such as Spotify are next to negligible (roughly 0.00359p). Many different distributors vary the amount of royalties depending on location and what subscription they have (basic, premium etc) but it all more or less works out as the same amount. To be fair to Spotify, they do try to treat the artists fairly. About 70% of Spotify’s revenue (advertising and subscription) goes to the rights holders of the music. This is before Spotify cover their operational costs (which are still higher than the remaining 30%). Spotify had roughly $30 million of revenue in 2011 and had 350 million streams. As Spotify pay 70% of their revenue $21m divided by 350m streams works out at about $0.006.
With so much music being online the problem of piracy very much comes to the fore. Pirating is a big problem throughout the world regarding illegal music downloads and, whilst it is extremely difficult to plug, it is being tackled. In June 2011 in China, arguably the worst country for illegal downloads, a partnership between three major record conglomerates (Sony, Universal and Warner) was announced with local internet search giant Baidu. This move was designed to make it much harder to find illegal download sites and promote proper sales that would actually benefit the artists who were creating the music (it would be fair to say that this move would also benefit the record companies….).
Online streaming and downloading of music is set to rise yet again worldwide and it will be interesting to see if the UK’s physical sales drop by yet another massive percentage, and whether or not it will be double the global percentage again. If HMV is lost then I suspect this will happen. Either way, bands and musicians are increasingly having to rely on tours and gigs to provide them with their often paltry income with album releases slowly becoming merely a bench mark to show where they are in their musical growth. It shouldn’t be like this but times are a’changin’ and, unfortunately, there isn’t a lot we can do about it.