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David | January 16, 2013
HMV Nipper
For those of us who have worked in the music industry and care about it, we are very sad to see that the iconic dog, (Nipper) of a well loved brand, will no longer stare into the phonograph, but now is looking down the barrel of the receivers.
 
HMV has long been criticised for over-exposure to the high street and a tardy move into e-commerce, but the fact is that the music industry has changed forever and indeed is still metamorphosing.
 
What the UK music industry does need however, is some government intervention to break up current online monopolies and prevent their formation in the future.
 
Why?
Because labels and artists are being forced into accepting whatever margins they are given.

Take iTunes for example. They call the shots and set the rules for anyone with an iTunes device and now Amazon is doing exactly the same with the android market, snatching at content distribution control.
 
It's fair to say that this is a problem across all publishing and has been happening in books more seriously for some time. If you want to distribute content you simply have to accept the terms proffered. The alternative is to promote and distribute the product yourself, but the modern consumer is becoming less motivated to go through the e-commerce process for just one product. The convenience of the single wallet anyone?
 
So selling in-store is an option, but a far more costly one and the high street it lives on is also succumbing to another significant challenge - Print On Demand.
 
Music had already jumped whole heartedly to online distribution, because delivery is a simple digital download with no manufacturing involved; far simpler, less costly and with better consequences for the environment too. This quickly brought about the irreversible change in consumer behaviour that is thumping the high street and the likes of HMV today. Why?  Because no inventory is needed. (I'm not against the efficiency here, but simply aware of its consequences for both the high street and the content creator).
 
So moving forward here's what I think needs to happen to safeguard the music slash creative industry.
 
Governments needs to launch some anti-monopolistic measures for the online publishing world; taking action to ensure that content remains king and that artists, writers, musicians etc can receive a fair share of the margin for their work. If they don't, it’s going to reduce the viability of artists releasing new work and that will stifle creativity around the world...
 
Here's some practical suggestions:
 
1. Open up the monopolist distributors’ platforms: Make companies like iTunes operate like pubs with guest beers. A ‘guest’ label should be able to use say the iTunes platform and set the royalty they will pay, in return for positioning/location of goods - breaking the iTunes fixing of prices.
 
2. Cap the royalty allowed to be earned by a distributor to 15% - it's more than enough and ensures that the returns go back to the content creators. This must not be recouped by any other ‘hidden’ charges such as listing services and should be monitored independently.
 
3. Provide an interface to every publisher, so that real time sales can be monitored independently. At present these platforms provide cumbersome APIs only.

4. In certain cases (and this can certainly be applied to books and film), a physical distribution partner should have to be identified and supplied with a minimum amount of the product. This would ensure adequate circulation of works across broader channels and remove the unfair online advantage over the high street. This also caters to the unbanked market - people without credit cards - for example children, or those with poor credit.
 
In short - if we don't do anything, eventually all content creators will work for monopolistic online distributors and content creation & quality will be affected, and potentially diminish.

And who will lose out then?

The consumer, the artist and the high street.
 

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