Music retail, as we all know, has been on the back-foot for sometime. However we have recently seen the music retail industry take some real body blows. Major retailers such as HMV, Zaavi and Woolworths were already moving music to the rear of the shop and films/games to the front. The supermarkets were even putting more shelf space to games and videos and less to music.
2008 though saw an increase in this practise coupled with the economic crisis. First, Woolworths went bust which meant that not only music retail (mainstream music and cheap, bottom end product) loost a major presence but, Woolworth’s distribution arm also went under. It was responsible for a major cut of all music (and games/DVDs) distribution in the UK and left many major stores without product to sell. As a consequence Zaavi (used to be Virgin) went under as it was not able to fufill demand and at a time of the year when it would do most of its business, thats not good!
Seperatly to this Pinnicle, a long standing independant distributor went under. This would have hit the small music shops and of course many, many independant labels. Once again, it was happening at the most crucial time in the industry, whether you are a label/publisher or a retailer. This is the time to sell product.
Where does this leave us? Well, I think well see a number of labels go bust over the next 3-6 months, and many small shops leave the market place too. Zaavi might be saved, but if it is, the new owners will speed up the type of changes shops such as Zaavi and HMV have been pushing - i.e. relegating music and creating more interactive spaces for gaming and selling hardware and other physical product (clothing and what not). We will of course see a number of labels suffer too.
Once the dust settles, we might find that apart from the top 20 product, there is a much reduced demand and supply chain (to meet that demand) for CD/physical music product. I would be surprised if anyone takes the following decision, but perhaps its time for the majors to consider dropping the CD product in the UK, except for really specialist music, or music with a demographic who are not IT friendly, or for music which is clearly top 10/20 (and then, only sell it on CD for a very limited period of time).
Either way this bad (Awful) holiday season for the UK, physical music scene has to been seen as a watershed and an opportunity to redefine the business model permanently.