HMV is a 92-year-old music retailer which in January 2013 sought protection from creditors, after seeing its core businesses selling compact discs and digital video disks eroded by online competitors like Apple’s iTunes and Amazon.com. Known worldwide for its ‘Nipper the dog’ trademark, its first store on London's Oxford Street was opened by English composer Edward Elgar in 1921.
Big blow to local music business if Hong Kong HMV stores close (video)
Losing the stores would cut CD sales, which still account for lion's share of local music revenue
Uncertainty over HMV's fate in Hong Kong has dealt yet another blow to the already troubled local music industry.
The 92-year-old British music and DVD retailer announced in London on Monday that it would enter administration, a form of bankruptcy, and it remains unclear what will happen to its six branches in Hong Kong.
According to the Companies Registry, Britain-based HMV Group directly controls HMV Hong Kong - it owns 5,999 of the latter's 6,000 shares. If the chain were to close, local record firms would lose a major outlet to sell and promote their products, said Ricky Fung Tim-chee, chief executive of the International Federation of the Phonographic Industry (Hong Kong Group).
"The major players have a similar share [in the CD retail business], and HMV is the most well-known one due to its international influence," Fung said. Other chains in the city include Hong Kong Records and CD Warehouse, which have three and 10 outlets, respectively.
Losing HMV would further cut physical CD sales, which have been falling rapidly in the past decade. From 2007 to 2011, CD sales revenue fell 38 per cent to US$39.7 million in Hong Kong, and 41 per cent to US$1.4 billion in Britain.
And while the British have moved on to legal digital downloads, Hongkongers appear reluctant to do so. Digital sales in Britain tripled over the same period, but grew only 29 per cent in Hong Kong. In 2011, physical CD sales still accounted for 78 per cent of local music revenue.
Fung said the outdated copyright law is one reason locals have not taken to buying legal digital downloads. Under existing laws, the government faces difficulty in prosecuting people for illegally uploading videos onto streaming websites such as YouTube. An amendment planned last year was shelved after public outcry.
Music critic Wong Chi-chung said that to sustain businesses, CD shops could build a niche collection and make customised recommendations to loyal fans. "It is impossible for a shop to compete against internet sales in terms of music titles they offer but they can build on the emotional bonding and expertise," he said.
It was such a bond that drove fans to HMV stores yesterday after its bankruptcy news broke. Secondary school pupil Vera Tse, 13, was outside the Causeway Bay shop with her friends yesterday, waiting for the store to open. "It's the mood of song listening [that HMV offers]," she said.
Briton Martin Smith, 33, who worked in HMV's Manchester store in 2001, visited the store during his one-day stopover in Hong Kong. "It's sad, but things don't last forever," he said.