Is HMV's strategy out of tune?

Yesterday, retailer HMV Group said sales in UK and Ireland fell by almost 15%, once again demonstrating how companies from the sector are struggling to catch up with the changing customer demands.

Similarly to record companies, music retailers are facing a huge challenge posed by the new alternatives such as iTunes, Spotify, Last.fm, HypeMachine and others.

While iTunes sells music by the album and by single track, it also sells TV programmes, as well as movies, which can also be rented for 48 hours. Spotify offers a free service as well as a premium subscription and Last.fm started to charge €3 per month from users outside the US, UK and Germany for its music scrobbling and recommendations offering.

If you think of the progress that has been made in terms of the options available for media consumption, you can’t help but think that HMV has so far been quite unsuccessful in coming up with an offering that is compelling enough to get people excited.

Apart from a couple of people I know who still like to buy physical CDs, I can’t think of many friends or business contacts that still visit the record store to buy things. Of course, I too miss the ‘High Fidelity’ days when you could have a listen to the new albums, have a chat with the store owner/customers, etc, but the paradigm has shifted: today, you buy/download music online and the conversation is also happening online and often at the place where you consume that media.

Despite the grim quarterly results, HMV’s chief executive Simon Fox says that a new focus on live events, books and games could mean things may bounce back during the Christmas period. But let’s take a moment to look at some highlights of the firm’s investment in customer-facing technology.

Last year, the company has started trialling self-service kiosks equipped with chip and PIN technology, touch screens and downloading capability so users could take media away on their storage device. I saw one of those in London Paddington station recently and thought the download feature was interesting, but in general, the kiosk still looked like an ordinary vending machine to me…

Conversely, if you look at HMVDigital, the company’s bid to rival iTunes and transform the business into a “broad based entertainment brand” offered about 10 million tracks for download at the time of launch, but if you look at it, it is just like any other transactional website. So why would I buy there instead of using iTunes or looking at other people’s playlists on Last.fm? There is no conversation taking place there and links to Twitter, You Tube and Facebook are tiny little icons at the bottom of the screen.

All of this makes me wonder what sort of technology roadmap HMV has in mind. Are they in touch with the needs of consumers they have lost a long time ago – myself included? If a music retailer is to survive in this day and age, they must offer something that will capture people’s imaginations – only then they will be able to convince people to spend money buying their products, and I am not convinced that the current approach will do the trick.

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"Last.fm started to charge members for its music scrobbling and recommendations offering." This is not correct. To listen to the radio outside of the UK, US and DE you have to pay a subscription. All other aspects of the website you mention is free.
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Hi Dan - thanks for your comment. You are right and the post has been slightly edited to reflect the facts.
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