New owner AID hopes there may be life in the old HMV dog yet

The music shop looks like a fading business model, but the new owner of HMV stores in Hong Kong clearly has a survival plan

PUBLISHED : Monday, 18 March, 2013, 12:00am
UPDATED : Monday, 18 March, 2013, 2:13am

Kelvin Wu and his colleagues at AID Partners were quick to identify the potential of acquiring the Hong Kong and Singapore shops of the failed music and video retailer HMV.

Like other entrepreneurs, they apparently see opportunity arising out of failure.

However they face a formidable challenge, because HMV's music shop, with its Nipper the dog logo, is a fading business model.

Interviewed by this newspaper, Wu outlined how he saw the stores being transformed and linked with an internet platform. Yet it remains a fact that selling music has moved very quickly away from the high street onto the net. Even more challenging, much of the content or product can now be obtained, albeit with dubious legality, without having to pay.

Book-selling has also moved rapidly away from retail stores, and bookshops seem to be falling like ninepins. Over in the United States, one of the mightiest of the book retailers, Barnes & Noble, is preparing to move its physical book-selling operation out of the listed company as Leonard Riggio, the company's boss, plans ways of keeping a more slim-line operation alive by taking it private.

Riggio is one of the biggest names in book-selling and presumably knows what he is doing. He managed to build Barnes & Noble into a behemoth but has seen it falter as new technology made the bookshop model increasingly problematic.

The book trade follows others that found new technology killing off their way of doing business even as it builds new opportunities. However, some businesses, confidently declared to be dead, keep defying their fate.

Take the automobile industry based on petrol-propelled engines: when I first started covering this industry in the 1980s, I kept coming across people who confidently declared that it had little more than a couple of decades to survive, yet global car sales have remained doggedly strong.

A more problematic case is the way computers transformed the communications business. No one doubts the carnage new technology has caused in postal services, and for makers of typewriters and pens. However, by and large, the "old technology" means of communication have not been entirely eradicated and the more savvy entrepreneurs in these industries have found ways of either securing a niche or adapting.

Meanwhile I am acutely aware that the death of the newspaper has been announced ever since I started working in the business, and although newspapers have not died yet, they are facing profound survival issues. Two of the biggest players in this field, News Corporation and Time Warner, are in the process of spinning their newspaper assets off into new listed companies which leave them apart from the group's other, far more profitable, communication assets.

It may well be that we end up with newspapers that do not resemble the printed paper or even the internet editions of today, but both companies believe that by focusing more closely on their survival they have a better chance of success.

As we keep being told, it is possible to read the Chinese character for "crisis" as a combination of the characters for "danger" and "opportunity", which has led to a host of platitudes on this subject. Kelvin Wu is clearly on the opportunity side of the equation, but must realise he faces even stiffer challenges than someone like Riggio who knows his industry inside out. However, Wu, who brings a fresh eye to an old problem, might be able to work wonders.