I don’t normally report the music industry news on New Music Strategies. I have the Newswire for that – and there are other people who do it way better. I generally keep to ways in which independent musicians and music businesses can capitalise on the shifts in the music industries.
Here, I think, there’s sufficient overlap to justify it – and it’s very big news indeed.
You may have already heard that Entertainment UK, the single biggest supplier of all of the top DVD, music and game titles to each of the main High Street retailers in Britain is in administration. The fallout from this is, from a major retailer’s perspective, utterly catastrophic.
Directly affected, of course, are the company’s biggest retail clients: Woolworths (who share owners with Entertainment UK), WH Smith, Morrisons and Tesco. Collectively, those four command a lion’s share of the retail market for the biggest-selling hits in the entertainment field.
But add to that today’s announcement by Zavvi (formerly Virgin Megastore) that they will not be taking orders for any CDs, games or DVDs. We’re three weeks out from Christmas, and it seems that nobody can guarantee supply of Coldplay, Britney, Mamma Mia, Wall-E, GTA4 or Spore.
Together with the tight economic environment, the implication seems to be that the British public are in for a bit of hunt down the Long Tail for interesting and affordable Christmas gift ideas. Just a shame you can’t giftwrap an mp3.
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And as if to pre-empt the shift to online purchasing, Amazon.co.uk have finally launched their Amazon MP3 store
.
At least you can guarantee they’re not going to run out of Britney…
My guess is that they will turn to international suppliers for the products that local suppliers haven’t ordered. If I can get stuff that’s unavailable in Poland through Amazon, so can they. I certainly don’t expect much of a “hunt down the Long Tail”, it’s too much of a hassle and a gamble compared to just paying higher postage and waiting a bit longer.
The thing with popular entertainment products these days is that you can purchase them through the Internet from just about anywhere in the civilised world. If your local store won’t stock it, it’s merely a pain, not a catastrophe.
And you’re right, I certainly can’t see Amazon running out of Britney.
I don’t know too much about British laws concerning international sourcing in this instance.
I do recall there was an uproar about parallel importing back in New Zealand, both when there was a scandal while it was still illegal – and when it became standard practice.
What’s the deal with parallel importing in the UK?
I don’t know what the situation is regarding private imports from the US (i.e. buying from Amazon.com) in the UK, but if all else fails, you can get it from another EU country. The Treaty of Rome is our friend here, especially the provisions of Article 85.
As an interesting side note and illustration, here in Poland the major retailer of entertainment products (including music and video) is EMPiK – our version of Virigin Megastore, if you will. In the course of the past decade, it has all but eliminated the competition and is viewed as having ridiculously inflated prices (rumours speak of margins in the region of 40%). Recently, its position was challenged by unlikely competitors – German consumer electronics supermarkets, such as Media Markt and Saturn, that have their stores in most of Poland’s major cities. These import many of their CDs and DVDs from Germany and sell them for approx. half the price of EMPiK. Needless to say, they’re not making any friends among the labels or wholesalers, but the consumers love them (provided they can get the stuff they want there – which isn’t hard in the case of premium new releases or classic albums).
Can someone please clarify “in administration” for us ignorant Americans? ;-) From context, I’m guessing “bankruptcy”, but please correct me if I’m wrong. Thank you!
Not to worry – at least all of Penny’s catalog is safe and well on AmazonMP3 UK – whew!
i feel nothing but glee when i read this. maybe it’s my 10 years of living in l.a. as a struggling musician, but i love watching the industry as we’ve known it crumbling and falling like the berlin wall.
why should we listen to endless rehashings and re-inventions of artists who’s careers have played themselves out, or who were one hit wonders in the first place, just b/c the industry has had a stranglehold on radio and media and retail outlets.
it’ll be excitting to see how this unfolds. probably 1000 indy artists could support themselves on what madonna or britney make in a year.
Many smaller/mid-sized independent labels may well go down because of this – they are the ones who need the coverage the most and will not be able to get through not just a bad xmas, but one where they cannot sell any product for a whole month during the busiest time of the year
I have a £20 Zavvi voucher I was planning on buying presents with.
D’oh.
For the benefit of Darren Landrum and any other non-UK readers (or even some UK ones!) if a company is insolvent it can appoint an administrator who will act on behalf of the creditors to try and save it as a going concern.
The outcome from administration might be a buy-out or refinancing; the administrators would only wind up a company as a last resort because, inevitably, selling off the tangible assets of a company will realise less value to pay the creditors than keeping the company trading.
Okay, we call that “Chapter 11 bankruptcy” here in the States, for anyone who needs a translation. :-) Thank you for the clarification.
EUK aren’t the biggest supplier, but what’s important is that they’re exclusive provider to some retailers. Here’s what the problem is.
Insurance companies won’t insure further stock to be delivered to EUK on financial uncertainty grounds. At the moment, EUK is paying up front for all the stock it can afford to buy in. Obviously, the priority is on major record label releases i.e. the big sellers. Let’s not forget that as we enter what the industry dub’s Q4 (4th quarter of the year, the most single important time for the music industry due to the holiday gift market) is also important for EUK and the administrators. I have heard from various reliable sources that Zavvi isn’t looking too healthy at the moment. but it can all really change.
A tweet conversation I had with Pete Ashton (twitter.com/peteashton) last night was great because he pointed out his perception of Zavvi as a “bonbin”, a place for 3 for £20 cd’s (now lower). But the “bobbin” market is really important to record sales this time of year because albums are dropping in price faster, new releases such as Kings of Leon can be found there, and even though its a new release and doing well in the chart, you can get it cheap along with other cd’s that would make good gifts for other people “Oh they wanted that cd”.
I had a conversation today with an independent retailer today who said business was better than ever, so the long tail in terms of different music (more people going into independent record stores and coming across music apart from Girls Aloud), which is brilliant (because the majors, and retailers, in a sense have ruined the retail shopping experience for many due to paying for promotional space).
So yes, on some levels, the longtail market is going to do well but in other ways, it’s going to be damaged (EUK prioritizing major releases over indies).
Crumbs, and now Pinnacle…
Most of the CDs I’ve bought in the last five years have been from the High Street stores’ £5 bargain bins which are priced way below iTunes. I just bought my first Amazon MP3 download album which is cheaper than iTunes, higher bit rate than iTunes and DRM-free so I could immediately copy it from my desktop to my laptop computer without registering the second machine with Apple.
Ask any manufacturer or retailer what you need to succeed in business and they will tell you price, quality and availability (customer service helps too which is the last hope for the high street, so why are British shops so rubbish at it?). Amazon scored three out of three for me so my bargain bin search has just moved online.
“higher bit rate than iTunes ”
A 128k AAC file is the equivalent of a 196k mp3