HMV, a tale of hubris, tax and monopoly

HMV, the UK’s leading bricks & mortar creative industries retailer has gone into administration. Lets hope that its winding up is not as brutal as at Jessops which also failed last week. The FT reports in an article, published yesterday, entitled, HMV calls in the Administrators that the rug was pulled when their suppliers of the music, films and computer/console games refused to extend credit terms to allow them to refinance their debt.

So 4000, jobs in the UK are risk.

Companies like HMV have been up against it ever since Amazon launched, and Phillip Beeching in his Blog shows why HMV were uniquely unqualified to respond. The cultural supply chain is now dominated by multi-nationals such as Amazon, Sony, Universal, Warner Brothers, Google, Apple & Entertainment Arts. Vertical integration and consolidation is occurring meaning that smaller players are being driven out of business, the internet is becoming the distribution channel, obviating the need for shops and vans and internet attached devices such as phones, consoles, laptops and other devices are becoming the consumer interfaces. Consolidation is a result of the deliberate strategies of the large players. They can and will dis-intermediate the retailers, retain more profit for the publishers and maintain a role as barriers-to-entry to their respective businesses, inhibiting both new acts, films and games from reaching consumers, and inhibiting consumers from using a selection of publishers. They propagate a lottery labour market where a minority are as rich as Croesus, while the majority of musicians and actors end up doing something else, having spent their youth trying to break through, consistently taking home less than average earnings. The monopolists dominance of the markets is based firstly on their size, but is reinforced by the world’s copyright laws which are written in the USA, and propagated by their lobbying machines and budgets.

It is a matter of record that many multi-national companies use international transfer pricing to repatriate profits to low tax domains avoiding sales, payroll and profit taxes in the process. It’s becoming crucial that consumers work to ensure that their consumption tax payments aren’t appropriated to other tax collection jurisdictions. We should note that the real cost values of digital media is near to zero, which makes transfer pricing a simple moral issue.

The continued industrialisation of music makes live music harder to perform and to attend. I nearly always enjoy my trips to the Bird’s Nest and while not the biggest music fan ever, I did visit the Montague Arms, one of South London’s top music venues before it closed.

How are we going to defend the UK’s creative industries? Stronger copyright will just increase the power of the publishers, who are in fact, both parasites on the creative, and barriers to entry to the businesses. Copyright isn’t working!

It’s the copyright monopolists that finally pulled the plug on HMV, but one has to recognise, that it had failed. Creative Destruction aided in this case by hubris, had wrought its path.

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