Music and video retailer HMV Canada currently owes $39 million to its British parent company HUK 10 Ltd. HMV says it’s losing $100,000 per day, and hasn’t been profitable since 2013.
The company has declared bankruptcy, and will soon fade into oblivion. The retailer has been forced into receivership, and will close all of its 102 stores by the end of April.
Observers say it’s a last stage after years of decline.
“HMV haven’t really played the role of taste-makers or influence shapers in the Canadian music scene for the last five to 10 years,” said Dr. Andrew Scott, Associate Dean of Humber College’s School of Creative and Performing Arts.
Scott believes that in an effort to stay viable, HMV moved away from being a record store in the past decade, and switched their focus to merchandise and memorabilia.
Most shocking to many was how quickly the receivership company, Richter, made changes. On Jan. 27, HMV was granted receivership by the Ontario Superior Court of Justice; the next day, HMV stores no longer allowed customers to do returns or exchanges. On Feb. 2, Richter terminated HMV’s Pure Rewards points system. This information can be found in downloadable legal documents on Richter’s site under the “Insolvency Cases” section.
According to these documents, HMV’s liabilities as of Nov. 2016 were approximately $132 million, which dwarfed the value of their assets, which sat at $64 million. Over $56 million of the latter was in inventory, leaving Richter with plenty of merchandise to liquidate in the coming months.
HMV is no longer offering customer service, and their head Canadian office in Etobicoke is no longer processing phone calls.
HMV’s closure is not just a challenge for its customers, but could have a massive impact on the Canadian music industry as a whole. With the largest physical retailer in Canada going out of business, artists and their labels will have to decide if a physical release is still viable financially.
With the country’s dominant music retailer having already changed its focus from album sales to other means of generating profit, Scott says the modern music listener no longer owns music, but accesses it.
“Previously we used to own a record collection or a cassette collection, or even a hard drive of downloads, and now we’re moving away from this idea of ownership and fully embraced the idea of access. The closing of HMV is just symptomatic of this change,” said Scott.
A poll of 50 Humber students showed that the vast majority of them are using streaming services like Spotify and Apple Music to listen to music, with paid downloads and torrents filling up the rest of the results. Only one student said that physical CDs are their usual form of music consumption.
Still, this isn’t exactly the day the music died. Surveys show that music consumption is at an all-time high, with streaming services reaching staggering numbers, and despite the closing of major retailers like HMV, vinyl record sales continue to skyrocket.
According to research compiled by Deloitte earlier this year, vinyl is set to become a billion-dollar industry by the end of 2017, a mark that vinyl has not surpassed since the ‘80s.
Scott says that there will always be people who “fetishize the physical product as a symbol of authenticity.” These people are not limited to consumers, but include such musicians as Jack White, whose record company Third Man Records recently announced a new, state-of-the-art vinyl pressing plant in their Detroit location.
“The kind of people who are out there purchasing Jack White are the kinds of people who have bought into this whole idea of independent recording studios, analog gear, old tube amplifiers, vinyl releases,” said Scott. “They’ve really bought into this idea of authenticity in music, and I think that’s probably less relevant frankly if you’re a fan of Carly Rae Jepsen or something. That’s not a disparaging comment, it’s just a different set of aesthetics.”
Still, vinyl sales comprise a relatively small piece of the overall music industry and the current surge in such sales is not expected to sustain major retailers. As streaming numbers continue to surge, retailers will have to get creative to stay viable in the future.