RUTH SUTHERLAND: Sour note for High Street as household name HMV collapses
HMV, one of the great names of the British music industry, is once again on the brink of collapse – and its downfall is a symbol of the failure of successive governments to protect our retailers and our creative industries from the ravages of online rivals.
For many who are, like me, in the 40-plus bracket, the demise is tinged with teenage nostalgia, memories of Saturday afternoons spent flicking through albums in record shops.
The logo, of a little terrier named Nipper listening intently to an old-fashioned gramophone, dates back even further and is based on a 19th century painting, His Master’s Voice, which gives the company its name.
HMV’s downfall: A symbol of the failure of successive governments to protect our retailers
An illustrious past counts for little in the battleground that is today’s High Street.
HMV has already fallen into administration once, in 2013, when it was rescued by restructuring firm Hilco, which has now admitted defeat.
It has suffered some familiar bugbears: business rates that are disproportionately heavy compared with the likes of Amazon, along with competition from online retailers such as the aforementioned US giant.
The company has also lost out to streaming businesses such as Spotify and Netflix and will have suffered, along with the artists whose work it sells, from online piracy. Despite receiving less publicity recently, this remains widespread.
The immediate focus, rightly, has been on the 2,200 people who work in the stores and the risks to their jobs and pensions. But the potential ramifications are wider.
In the past few years, as HMV has tried to segue from the physical market of CDs and DVDs to the digital world, it has paid more than £1.3billion to film studios and music labels in the UK.
If the chain does go under, that is money which could be lost to our creative industries for ever.
New trends: HMV has suffered due to the rise of streaming businesses including Spotify & Apple Music
Arguably, two of the greatest names in British music, the Beatles and Sir Edward Elgar, would not have made such an impact on national consciousness without HMV.
The Fab Four’s manager Brian Epstein visited the flagship Oxford Street store in 1962 with the then unknown band to use its recording facilities to cut a demo.
The tracks were heard by a publishing company in the same building and the rest is history.
That store was opened by Elgar in 1921, who, according to contemporary newspaper reports, said modern gramophone recordings of virtuosi would be a welcome alternative to the ‘wild and virulent piano-playing’ by suburban amateurs.
It certainly helped build an audience for his works.
New companies have arrived with technologies as novel as the gramophone once was. The question is whether they will play anything like this role in backing the creative talent of the future and shaping national culture.
Administrators from KPMG are looking for a buyer. Would any purchaser want to take on such a challenging business, and why might they succeed where Hilco failed?
A successful rescue is not impossible. Few would have put money on Waterstones, which was owned by HMV until 2011, surviving the onslaught of Amazon and its Kindle.
Yet under the leadership of visionary bibliophile James Daunt, it has gone from basket-case back into profit. It has recently been sold to the private equity arm of Elliott Advisors, who are not known for backing duds.
Perhaps a similar miracle will happen for HMV. It will be a sad day if His Master’s Voice is finally silenced.
Good for Gadhia
After the precedent set by Fred Goodwin and former HBOS chief executive James Crosby, there is good reason to be wary of giving honours to bankers.
At the least, it might be prudent to wait a decade or so after they retire, just to be sure they have not left behind any unexploded bombs.
Jayne-Anne Gadhia, who was until recently the chief executive of Virgin Money and who is being made a dame in the New Year’s Honours List, may be the exception.
She is one of the few financiers who emerged from the credit crisis with an untainted reputation, perhaps proving the suggestion at the time that if only Lehman Brothers had been Lehman Sisters, the disaster wouldn’t have happened.
In a sometimes soulless industry, Gadhia has spoken out bravely about the difficulties of being a working mother.
Well done to her and the other women in banking – Alison Rose at RBS, Shriti Vadera at Santander and Anne Boden at digital bank Starling – who are breaking the mould.