It took longer, but the retail music business in Europe is headed the way of the business in the US: into oblivion.
The same technological and economic forces that wiped out record stores in the US are at work in Britain, France, Italy, and beyond. The rise of iTunes, Amazon.com, and illegal downloads — coupled with continued economic malaise in Europe — has contributed to several recent high-profile failures.
Earlier this month, UK-based HMV Group entered administration (the equivalent of bankruptcy in the US). Formed in 1921, the stalwart British chain, whose name is an acronym for His Master’s Voice, cited competition from online rivals and the weak British economy as contributing to its collapse. HMV is looking to sell off as many as half of its 230 stores.
In France, the Virgin Megastore there was declared insolvent and also placed in administration. In true French fashion, workers at the store went on strike to protest threatened closures.
Fnac, the music and books division of French luxury goods retailer PPR SA, sold its eight stores in Italy to a private equity firm there late last year. The new owner is expected to close stores. Parent PPR has also announced plans to spin off unprofitable Fnac and seek a separate listing for the chain, as it seeks to quarantine its healthier luxury and sports brands from the ailing music seller.
Indeed, brick-and-mortar retailers of music, books, film, and video games are the ugly ducklings of European retail these days as shoppers increasingly buy these products online, or maybe not at all.
Adding insult to injury is the fact that the forces undermining music retailers in Europe are foreign. In fact, they’re mostly American-owned Internet firms that don’t pay the same taxes as the chains they’re replacing. A recent article in The New York Times noted that Amazon routes its European sales through Luxembourg, where corporate taxes are lower than in Britain or France. For its part, Amazon says that the practice complies with EU law.
Facing lower sales tax revenues, thousands of job losses, and empty store fronts, it’s a dark — but unavoidable — reckoning for Europe’s fiscal and cultural health. What took so long?