HMV’S failure was to lose track of these modern times
For many who have not darkened the door of an HMV in years, the mystery is not how the chain has gone bust but how it was still trading after its first collapse six years ago. After all, the digital winds that helped knock HMV over in 2013 are now blowing a gale. Most young people will never own a collection of music or video. The combination of almost ubiquitous access to the internet at high speed, astonishingly capable smartphones and televisions, and a more flexible approach to market by rights holders has handed final victory to Netflix, Spotify and the rest.
For music and video the future is almost exclusively streaming and payment by subscription, and that means there is no reason why HMV with its portfolio of 125 stores and its business rates bill of £15m should be sustainable.
Hilco will have done nicely out of its ownership of HMV, of course. The document trail ends in the secretive British Virgin Islands, so it is hard to get an accurate view of how much the firm has drawn in dividends, fees and interest over six years, but it appears to be comfortably more than the £50m punt it took.
That Hilco was able to keep HMV on life support so long is testament both to the turnaround fund’s skills and to the desperation of music and video distributors to maintain their last major outlet on the high street. That a specialist in lost causes has thrown in the towel suggests that administrators KPMG may struggle to attract another rescuer.
It might be tempting to compare HMV to Waterstones, which in recent years has turned its fortunes around after its own confrontation with oblivion during the last recession. It has proved with growing profits that there is a place on the high street for a smartly run bookseller, even in the age of Amazon and e-books.
The digital challenge faced by HMV is fundamentally different, however, in a way that makes similar salvation almost impossible to imagine. Sales of physical books still dominate e-books and are in fact growing faster. While Netflix, Sky and Amazon serve as a full digital replacement for DVDS, e-books occupy a niche mostly catering to commuters and holiday readers. Many who own a Kindle e-reader also buy plenty of printed books and will continue to for the foreseeable future. Young people who rely on Youtube or Spotify for music will never buy a CD, but they will buy books. As the last chain bookseller standing, Waterstones is well positioned, as signalled by its intriguing private takeover last year by the hedge fund Elliott Advisors, which normally spends its time beating up hapless public companies. The bones of HMV will be picked over for bargains – an online outlet may survive, for instance – but its days as a stalwart of the high street are surely drawing to a close.
The end of an era is always sad, and the uncertainty for staff at this time of year is dreadful, but the truth is little of real cultural value is being lost with HMV this time around.
Those HMV rituals we might be nostalgic for are already gone. Its stores are no longer Saturday afternoon meeting places for teenagers. Music fans do not queue up for new releases.
HMV’S swansong says nothing good to the landlords watching nervously as retailers hand in their Christmas reports over the next few weeks. Yet it is hard to draw many conclusions for the high street from the collapse of a chain that has been dying for 20 years.
‘For music and video the future is exclusively streaming and subscription’
Smoke and mirrors
Large parts of the technocapitalist complex headquartered in northern California are powered by purest humbug. Almost all the “artificial intelligence” currently at the centre of many marketing efforts, for instance, is nothing of the sort, and instead is highly specific applications of cheap distributed computing. The digital advertising markets are rife with fraud and fakery.
Of all the scams perpetrated by technologists in recent years, however, cryptocurrencies are surely the most egregious. Bitcoin and blockchain, the vaunted underlying technology, have only one proven application of any public significance. They have convinced many recreational drug users to buy online with more confidence they will not be ripped off or have their door broken down by the police.
Taking the drug trade off the streets is arguably no bad thing but, that aside, cryptocurrencies are a disaster for trust in technology. They are a means of separating the vulnerable, the gullible and the greedy from their money and putting it in the anonymous hands of crooks.
It has taken too long for regulators to catch up to the scale of cryptocurrency crime, although given the peak of the market was just a year ago, the likes of the Financial Conduct Authority are moving at warp speed by their standards. Reputable City lawyers and brokers approached by big Bitcoin traders have rightly shown them the door as the potential for laundering dirty money is massive.
Pointing any of this out to cryptocurrency acolytes typically leads to a long and boring lecture on how blockchain, little more than a slow database wearing a techno-utopian costume, is somehow revolutionary in myriad ways. Yet they cannot give a real example.
Everyone who has endorsed this hoodoo should be embarrassed. This New Year’s dishonours list is too long to publish in full but special mentions are due to Philip Hammond (who suggested blockchain could somehow solve the Irish border riddle) and IBM (which has led a competitive field in blockchain consultancy nonsense). Their resolution should be to stop.