It will always be a matter for debate as to exactly when the demise of mass consumption of Compact Discs as the dominant musical sales model became definitively irreversible — but with the recent downfall of both HMV UK and Virgin France, I would think January 2013 has a lot of arguments in its favour.
We can of course go back in time and see that the “writing was already on the wall” as far back as 2007 – by a strange coincidence the year I joined the ranks of The Orchard (no suggestion of any direct link here ;-)) — when top retail chains who already had their own high-profile public brands, faithful client bases subscribing massively to their data bases, decided that “digital” sales were an enemy to their core “physical” business and as a result they intentionally or not sabotaged their own digital services with low investments and the refusal to cross-reference their two user bases. There have been other blog posts about this — I recommend reading Mark Mulligan’s piece – and doubtless many more to come given the fallout from the nearly simultaneous filing of bankruptcy of both HMV in the UK and Virgin stores in France.
My piece here is meant to concentrate on the future as it might be accelerated by this phenomena and offer some hints as to the means and methods that we at The Orchard — in association with our labels — can use to help “le développement durable” or “sustainable growth” of the production space in which we exist and to which we are all personally attached.
Diversification of revenue sources for all to share is key in my opinion here — and luckily it is more and more the reality of our “digital” world. When I started marketing to retail here in France in 2006, there were only four really operational digital stores (iTunes, Fnac, Virgin Mega and Starzik) — all offering à la carte downloads at very much the same prices in a very similar consumer environment alongside an already declining mobile sector with telephone companies offering ringtones from Top 50 artists.
Now we are dealing with more than thirty local businesses — and a wide variety of business models that include streaming services of many different types, an incredibly large choice of ways of possessing or gaining access to music (and video) with practically every combination currently imaginable — although I am sure more will come (and when this happens we will be amongst the first to be contacted given the variety and strength of our labels catalogues). This diversity of revenue is culturally driven too — models that work in France do not necessarily do so in the Benelux, and within the Benelux some do better in Holland than in Belgium. Very often we notice that the different models feed off each other and encourage the growth of other services providing a different type of customer with a different sort of access to the music they want. We have for example noticed that the arrival of a very strong streaming service in The Netherlands was actually accompanied by a higher increase in download sales in that territory compared to its neighbours… which would tend to show that the “cannibalisation” of one method of access by another is not currently true.