THE NEW MUSICAL BOX

A LITTLE RAY OF SUNSHINE

It's been a rather dispiriting few months in the music industry with the continued decline in physical music sales and the troubles affecting HMV. 

Added to this has been the news that 2012 saw a slowing in the growth of digital sales, which although still on an upward trend, are no longer sufficient to plug the gap left by the fall away of CD purchases.

There's still plenty of good music around with bands and artists doing all they can to get their musical endeavours out in front of the public - but there's no doubt they have to be smarter and work much harder to earn a decent income. 

So, why am I a little optimistic?

A number of factors are coming together which might enable some sort of stability in the music business, a stability which would be most welcome by creators and consumers alike. I'm not suggesting that there is a problem-solving panacea just around the corner, but I do believe that there are some real opportunities to be seized. 

Let's take a look at them.

HMV SAVED

I've written previously about the long, slow and agonising death throes of HMV (most recently right here:  HMV Store Closures Announced )

An all-too-common site at HMV
stores in the past two months

I'd tried to be positive about the future of the remaining HMV estate and couldn't believe that the music industry would want it to go to the wall and close off volume CD sales. I was pleased to see that Hilco, a "distressed business restructuring specialist" was in the frame for acquiring the business, but uncertain as to what they would actually do if successful. Over 80 HMV stores had already been closed by the administrator and whatever behind-the-scenes power-brokering was going on, it was clear that the news vacuum wasn't helping.

Today, Hilco have confirmed their purchase of the remaining 141 stores (25 of which had already been confirmed for closure), saving 2500 jobs in the process and thus paving the way for some sort of continued High Street musical presence around the UK. They already own HMV Canada and have turned that round, closing large out of town sites (expensive to operate) and majored on smaller more music-focussed stores. They note that the UK market is more difficult, but have expressed confidence that they can put the business back on to the road to recovery. Already, they've ditched the sale of mobile phones, tablets and other such accessories in a bid to get closer to the raison d'etre of the stores: selling music and movies. Hilco's Chief Executive Paul McGowan says that "HMV Canada is now trading strongly and....we believe that (the UK) has a succsseful future ahead". 

Two key things Hilco have said give me some cause for hope: they're retaining the FOPP sub-brand (nine stores which might provide a template for increased music sales) and have confirmed that they'll be increasing the range of music offerings. Admittedly, there had been  retrenchment in the past couple of years with many of HMV's specialist genre sections disappearing or being minimised into a handful of populist titles, but to see an acknowledgement that they must have the range and variety is good to hear.

With a fair wind, the Hilco
acquisition of HMV will be a Good Thing

I'm not suggesting that HMV is the lifeblood of the UK music retail industry, but it is a key component and has a critical mass which is more distinct and less amorphous than that of the independent music stores. Critical mass means that it can punch above its weight and give record companies and distributors some certainty about sales volumes. This is even more important when on-line retailers such as play.com are now struggling in the face of the removal of VAT-free treatment and they're having to compete harder with the rest of the UK.

And, whilst many people do like to buy their musical wares as digital downloads, there are still many customers around the UK who want the experience of browsing in a real store and the chance to buy a tangible product. HMV will underpin that desire and I hope that its forthcoming revitalisation works.

These are the HMV and FOPP stores that will now remain open:

Aberdeen, Ayr, Banbury, Bangor, Basildon, Basingstoke, Bath, Belfast Donegall Arcade, Birmingham Bullring, Blackpool, Bluewater, Bournemouth, Bradford, Brighton Churchill, Bristol Broadmead, Bristol Cribbs, Bromley, Bury, Bury St Edmunds, Cambridge, Canary Wharf, Canterbury, Cardiff, Carlisle, Chelmsford, Cheltenham, Chester, Chichester, Colchester, Coventry, Crawley, Cwmbran, Darlington, Derby, Doncaster, Dundee, East Kilbride, Eastbourne, Edinburgh Fort Retail, Edinburgh Ocean Terminal, Edinburgh Princes Street, Exeter, Bristol (Fopp), Cambridge (Fopp), Covent Garden (Fopp), Edinburgh (Fopp), Glasgow Byres Road (Fopp), Glasgow Union Street (Fopp), Gower Street London (Fopp), Manchester (Fopp), Nottingham (Fopp), Gateshead, Glasgow Argyle, Glasgow Buchanan, Glasgow Fort, Gloucester, Grimsby, Guernsey, Guildford, Hanley, Harlow, Harrogate, Hastings, Hatfield, Hereford, High Wycombe, Horsham, Hull, Inverness, Ipswich, Isle of Man, Isle of Wight, Islington, Jersey, Kettering, Kings Lynn, Kingston, Leamington Spa, Leeds Headrow, Leeds White Rose, Leicester, Lincoln, Liverpool One, Livingston, Llandudno, Maidstone, Manchester 90 Market Street, Manchester Trafford, Mansfield, Merry Hill, Middlesbrough, Milton Keynes, Newcastle, Newport (Wales), Northampton, Norwich Gentlemans Walk, Norwich Chapelfield, Nottingham Victoria, Nuneaton, Oxford, Oxford Circus, Peterborough Queensgate, Plymouth Drake Circus, Poole, Portsmouth Commercial Road, Portsmouth Gun Wharf Quay, Preston, Reading Oracle, Romford, Selfridges Oxford Street, Sheffield High Street, Sheffield Meadowhall, Shrewsbury, Solihull, Southampton, Southend Victoria, Southport, Speke Park, Staines, Stevenage, Stirling, Stockport, Stratford upon Avon, Stratford City Westfield, Sunderland, Sutton, Swansea, Taunton, Thanet, Thurrock, Truro, Tunbridge Wells, Uxbridge, Westfield London, Wimbledon, Winchester, Wolverhampton, Worcester, Worthing, Yeovil, York.

RECORD STORE DAY

The second trend that can aid music sales is - of course - Record Store Day.

It's now an international phenomenon and sees the third Saturday in April each year become the focus of a massive campaign to sell a wide range of CDs and LPs, many in special limited editions. The next event comes up in just over a week's time on April 20th and it's already shaping up to be a huge event in the retailing calendar. The ethos is very much one of record stores, artists and music fans joining together to preserve and promote the sale and enjoyment of a wide range of musical genres.

It all started back in 2007 in the USA when a number of fans and promoters led by Chris Brown got together to try and reverse the continuing decline in physical music sales. Their efforts were rewarded when hundreds of stores around the US found willing support from local bands and musicians who donated work, made free guest appearances and in some cases, released specially recorded or rare back-catalogue music to help make the campaign come alive.

The following year saw the UK join in when a number of our most iconic independent record stores grabbed the opportunity, stores such as Spicers in Cardiff, Jumbo Records in Leeds and (my personal favourite) Piccadilly Records in Manchester. The scale and interest in the event took off and bigger name bands and artists got involved, record labels saw a mutual interest in supporting record stores and increasing sales and the public truly embraced it.

Special Offers on Record Store Day?

There's a fine balance between it being an altruistic event, designed to help the music business survive - and even thrive - and a hard-nosed business transaction where record companies and  bands see an opportunity for profit. For every special limited edition release that is genuinely wanted by fans, how many are there which are merely opportunistic money-grabs with little redeeming value? So far, the balance has held out - albeit with a bit of tugging and pulling going on. This year's event seems set to be the biggest yet and the promotion has now spread beyond the US and UK to much of Europe too. Record stores are pinning their hopes on a bonanza day, many of them doing some excellent promotion, involving the bands and keeping their customers informed of the offers, deals and special releases they'll have.

Indeed, so popular is the event that (once again) stores won't be able to get enough stock to satisfy demand for certain of the special releases - which although frustrating, I suppose is a positive in that it maintains the interest. As long as the independents continue the good work all year round (building on the Record Store Day buzz), they'll hold onto some of the extra customers and gradually build their base - thus enabling greater sales opportunities in the future.

Jack White - Record Store Day
Ambassador

And when it comes to pass that artists such as Bob Dylan (with a 9500 limited edition new single), David Bowie (with a white label limited edition track from his new album) and Pink Floyd (with a special limited release of See Emily Play in 7 inch vinyl) are supporting it, there may well be cause to be positive for the future.

Here's a listing of many of this year's offers, so now there's no excuse, get down to your local Record Store and Do your Bit:

Record Store Day 2013 - Special Releases

KICKSTARTER

The final trend that is providing some solace to  bands and artists sits firmly in the realms of social media. It's part of what has become known as "crowd-funding", a process through which musicians can appeal directly to their fans for funds to enable them to record (for example) their next album. It's a trend that has exploded since it was first used in 2009 and whilst not a magic bullet, it has shown that it can be very effective indeed.

Kickstarter is a private-for-profit company founded in the US and they provide the infrastructure and on-line tools to artists to enable them to raise funds. Key to the process is that *investors* (usually fans) can't make a profit out of their involvement, but can receive special rewards such as exclusive limited editions or posters and T-Shirts and other items which may not cost much to produce, but are valued as "special" by the fan. Kickstarter doesn't just restrict itself to the music business - it's also been involved in fund-raising for stage shows, indie films and books and comics as well. Musicians need to approach it carefully - I can't see it really working for a band or act who don't already have some sort of following or local fan-base. They must have something that their fans want or desire, something they'll pay over the odds for in the hope that this odd sort of symbiotic relationship produces some fine new music. But work it does - and several acts have found that they've hit their fund-raising targets very quickly - all on-line and all facilitated by the Kickstarter ethos.

Kickstarter has grown in just four years to a business which has seen something approaching $400m pledged for over 75,000 projects, although there is a cautionary note that not all projects  get the green light. Kickstarter say that about 46% of initiatives raise the money that's needed, although that figure has gradually been increasing as the various parties become more used to how it works and what commitment they need to bring to it. There are a number of *name* artists who have made it work after failing to excite record labels, artists such as Tom Rush and Amanda Palmer, but I believe that the best and most exciting results are coming from emerging bands for whom the very notion of a record company taking them on board is but a pipe-dream.

Pipedream or Solution?

We mustn't always knock record companies and their labels. After all, many of them have less funding available to grow new music, are often part of large conglomerates for whom the bottom line is everything and are themselves uncertain about how they will survive. But, if new acts who have grown a local following can't see a label taking them on by offering them a recording advance, then Kickstarter could very well be an alternative route.

WHAT NEXT?

Three swallows does not a summer make, or whatever the musical equivalent is.

We are still deep in troubling economic times and there is little sign that we'll emerge from them just yet.

The underlying trends in the music business still grind onwards and are difficult to reverse.

However, the survival of a key chunk of the UK music selling business - HMV -  is a good sign. 

Combine that with the greater awareness of survivability from the independent stores (powered by Record Store Day) and the chance for bands to use Kickstarter to fund music production and we may have a chance.

The musical patient's illness need not be terminal and, given the right treatment, might make a reasonable recovery. 

I shall return to review the patient's case notes in the near future.

Alan Dorey