Move to rescue HMV as Blockbuster jobs go

HMV's administrators say they are "hopeful" of rescuing the 92-year-old entertainment retailer as talks with potential buyers accelerate this weekend.

Deloitte was appointed administrator to HMV last week in a brutal week for the high street that also saw the DVD rental group Blockbuster collapse.

HMVs collapse was inevitable from around 1986: The switch from vinyl to CD was quite an investment for some people, and when vinyl was deliberately phased out by the music industry, CD was the only option if you wanted music old or new.  Up until then, vinyl albums had cost £6.99/£7.99.  CDs came in at £15.99 and stayed that price until the mid-late 90's when the supermarkets started to stock them at £9.99, and online music came along via Napster, etc. The excuse that £15.99 was paying off R&D wasn't valid, as CDs in the States cost well under £10 - despite fluctuating currency exchange rates. The British public were just being ripped off - and they knew it. Using the Bank of England's online "Inflation Calculator", £15.99 in 1986 is equal to:

Would you resent paying £38.44 for a chart album in 2011/2012?  Thought so.  HMV and other music retailers built up a lot of resentment back then - it was inevitable that come what may the public would make a strenuous effort to get its own back by supporting online music retailers. HMV's demise is a tale of shameless corporate and music artist greed, and public revenge.

picoduarte: I have nearly 5000 cd's in my collection, probably 60% of them purchased through HMV (I do shop around) I have never paid £15.99 for a single album. 

gary_geezer: Like a lot of people, I keep the original price sticker on the back, or tuck the receipt inside the cover.  So I'm aware HMV used to charge £15.99 as standard price for CDs in the mid-late 80's.  They were greedy.  I can remember friends going to New York for long weekends with requests for albums to bring back - that's why I mentioned (above) CDs cost considerably less in the USA.

Steve Hill: A fair point, but using the same index, a vinyl LP would now cost £19.20.   Good content costs money to produce.  I can buy (picked at random) any Adele album on CD, via Amazon, for £6. I would be the first to agree that you can produce a lot of dross for next to nothing: I've owned a professional recording studio and I know what the "competition" is and is not capable of.

picoduarte: I can buy Adele for a fiver in HMV as part of the two for a tenner deal. As I can buy most new release cd's at £7.50 in their 2 for £15 My first album in 1968 cost £4.2/6p

dourscot: David Bowie's next album has been taking good advance orders  on vinyl - £23.99 a pop. If it means something to people, they'll pay.

fry10d: Very true… And I would add that the retailers are only one part of the greedy parasites that make up the recorded music industry. The online retailers that dispense music are, in many ways, fairer to music-makers than the old fashioned record labels…iTunes, I know, only charge 30%. A snip compared to what Sony, EMI, Universal and the others charge. (The very lucky few artists could command royalties of 20%. For the most part, sub 10% was more normal. That is based on wholesale prices which could be about a third of retail. So the artists of yore could expect somewhere in the order of between 3 and 10% of sales. Now, if they are produce their own recordings will get 70%. Some difference!) I agree that they are not quite analogous. But they will be once the established labels are eradicated.

dourscot: Actually there was a bigger problem with the CD - it was no longer 'special'. How many musos do you know who care about CD albums in the way they do with vinyl? Very few. The CD killed the object, the artefact, stone dead. Not the whole reason but it did not help.

mill_a: Sure.  I think there's also been a revolt against some of the artists and their lifestyles.  It's blatantly obvious some of them have more money than sense - particularly I'd point out Madonna and Elton John, whose excesses are notorious.  I seem to remember some time last year EJ was bleating the same amount of money wasn't being earned from albums as in decades past.   Yes, that's undoubtedly the case as the large high street record shops have chased-off the geese that laid golden eggs, eg the public.  The internet's meant many things - to music artists it means fame and recognition on a much broader scale, and it also means a more competitive market.   Joe Public's not going to care about older artists' fortunes when - not once - did they pipe up about the excessive costs of CDs through the 80's/90's.  What goes around, comes around.

dourscot: I'd argue that the underlying problem is that music just isn't as cutting edge as it once was. Plenty of good artists and musicians nowadays but the level of innovation is drastically lower than it was in the aftermath of the great creative boom of the 1960s (roughly 1963-1981). Music is simply less interesting or important to young people.

picoduarte: what utter crap. open your ears

dourscot: I have opened my ears - it is crap. That's why the industry is struggling.

dourscot: In other words, HMV continues to trade and to hell with the customer. Cynically, they can continue to trade without honouring millions of pounds worth of store cards, offering refunds for faulty goods or giving exchanges. This is a legal but wrong-headed manipulation of basic trading standards. Steer well clear.

mjro: What will happen is that the asset strippers will buy it cheap, build it up by taking out massive unaffordable loans and then sell it on as a going concern to the first sap that comes along at a profit leaving them with all the debt.

Europhobe29: That is nonsense. Deloitte's main consideration will be getting paid, NOT safeguarding jobs.  Remember that they will get paid before anybody else and they will be anything but cheap. 

CocklecarrotJ: Where does it say that safeguarding jobs is their main consideration? I don't see anyone suggesting that, and why should they? 

Steve Hill: An administrator is an officer of the court which appoints him - he functions as part of the judiciary, in effect. Yes, his fees are a first charge on the assets (after secured creditors).  Otherwise nobody would be willing to do the job.  Would you give credit to a bust business, and join the list of unpaid creditors for the work you had done? The first duty of an administrator, prescribed by law, is to rescue the business if possible. A business sold on as a going concern is worth more than one which is broken up and liquidated.  The administrators therefore have a direct interest in achieving that so as to improve their prospects of getting paid themselves (which sometimes does not happen: it's a risk you take). I know and have worked with all of these people.  Lee Manning is the current President of the professional body for insolvency practitioners.  I assure you their hearts are in the right place.

rush-is-right: Steve, may I refer you to the following article? Admittedly the villain of the piece was a liquidator not an administrator but both positions are recruited from the same pool.

Guest: If it is made out of  01011010101.Selling it in shops on the high street is a one way ticket to nowhere.

MD1a: Correct it's made out of 0's and 1's and our 3 main political parties are made out of number 2's and big fat 0's.

fry10d: Very good :)

picoduarte: How many sites, music labels offer high resolution downloads? The vast majority of downloads are MP3 compressed files.

Guest: .FLAC

buffinihurley: turn them all into Charity shops, in readiness for the Migration of Bulgarian gypsies arriving next January, as their going to need good choice of second hand goods to spend their benefit pay cheques from our silly Government   

tonydartford:  Don't be silly they will be given smart phones and nike trainers as soon as they arrive.  They would not be seen dead in charity shops, that's for the tax payer as they have no money.