HMV’S fail­ure was to lose track of th­ese mod­ern times

The Sunday Telegraph - Money & Business - - Front page - Christo­pher Wil­liams

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.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.