Tuesday, January 15, 2013

HMV faced perfect storm

Sad news to see HMV go into administration. It seems that they faced a brutal competitive environment and four major factors going against them.

1. Shift to digital purchase via Amazon and Itunes
2. In addition to legitimate competitors competition from the IP pirates offering the latest content for free via sites such as pirate bay (still accessible via proxies)
3, Overall recession putting pressure on disposable incomes
4. Management team who did not fully grasp issue 2 above.

It is very interesting to hear the current fashion for creative destruction - i.e lots of business going bust is a good thing as they can then somehow achieve re-birth as something else. Perhaps this would apply in normal credit conditions but seems like a very callous attitude right now and cold comfort to the employees and suppliers to HMV.