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End of the line for national music stores?

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The end could be in sight for national music store chains in Canada.

The country's last major national retailer, HMV Canada, was sold to British restructuring specialist Hilco UK for $3.23 million earlier this week. So far, the company has not made any announcements regarding closing any of HMV's 121 Canadian stores, only that it would inject $25-million into the brand to continuing funding HMV's evolution from a music store into a broader entertainment retailer with a greater emphasis on digital content.

The odds are, though, we'll be seeing fewer HMV stores in malls across the country.

The consumer's continuing preference to purchase and/or steal digital content has struck a heavy blow to traditional retail music stores as more people are now out of the habit of making weekly trips to a retail outlet to purchase new music; instead they stay home and buy music on digital sites like iTunes and Amazon or get it free from numerous peer-to-peer sites that blossomed after Napster was shut down in 2001.

The top 50 debut album unit sales fell 77 per cent between 2003 and 2010, according to the London-based worldwide recording industry association International Federation of the Phonographic Industry (IFPI). In Canada, which the agency decried in 2009 for having some of the world's weakest legal defences against piracy, it said music sales dropped 50.5 per cent between 1999 and 2009.

No one from Hilco or HMV was made available to comment this week. The company issued a statement saying future plans would be forthcoming within weeks.

There are four HMV stores in Winnipeg at Polo Park, Portage Place, St. Vital and Kildonan Place malls. Over the years the stores have evolved to sell more than just music -- today you can walk into a store and purchase DVD movies and concert films, books, video games, T-shirts and various accessories. HMV still sells music, but the racks of CDs that used to be the store's main draw now take up a much smaller space as other products demand attention.

If Hilco does decide to close some stores, it won't come as a surprise. Disheartening, yes, a shock, no.

Winnipeg, like the rest of North America, has slowly seen the loss of retail music outlets as more and more traditional businesses shut down. HMV took over the Virgin retail store business in Canada in 2005, iconic Canadian music chain Sam the Record Man closed its last store in 2007 and western Canadian chain A&B Sound shut down in 2008.

Earlier this year, Winnipeg-based CD Plus closed its last two Manitoba stores when it was forced to shut down outlets in Winnipeg and Brandon. At the height of its operations in 2000, it had 133 stores across Canada, including 11 in Winnipeg, two in Brandon and one each in Portage la Prairie, Winkler and Thompson.

Today the chain has just 31 outlets left and it's anyone's guess as to how long they will continue to operate.

It appears, and I'm hopeful, that local niche retailers like Into the Music, Music Trader, Planet of Sound, Sonus Musica, Sound Exchange and the Winnipeg Folk Festival Music Store will survive the current wave of devastation that has also claimed other global entities such as Tower Records and most Virgin Megastores.

There are no signs the trend is reversing. Digital sales continue to increase while demand for physical product shrinks as the new generation of music fans hasn't come to appreciate the nuances of holding a tangible product, which for older fans, includes cover art, liner notes and credits, not to mention sound quality.

These days "cloud players," i.e. storing music on a central server you can access anywhere, is the next step by some companies to make some money in the market and it looks like Swedish music streaming service Spotify could finally arrive in North America this summer. Spotify works something like an Internet radio station, except consumers program the music themselves from a database of music totalling several million songs, which are only streamed, but can't be saved.

I first saw Spotify in action in England in 2009 and was amazed by the amount of choice it offered and how easy it was to use. Beside each song or album there was also a link to take you to a site to purchase the music, and it appears people in Britain are following those links more and more.

This week, Billboard published a story that said digital album sales in England have reached 10 million units in 169 days this year and account for 22 per cent of albums sold so far in 2011, according to data compiled from the Official Charts Company.

It appears people in Britain are still buying albums, but more and more people are purchasing them online, which might be good news for HMV if it rolls out a competitive digital service, but could be disastrous for mall customers looking to grab a CD.

-- With files from the National Post

rob.williams@freepress.mb.ca

Republished from the Winnipeg Free Press print edition July 2, 2011 G5

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