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When HMV Canada marketers recently tracked the music that young people were downloading online, they got a surprise. The youngsters, mostly male, weren't listening to the latest pop chart hits. Rather, they were tuning in to Pink Floyd and Led Zeppelin – the music of their parents' generation.
Now, in a bid to lure back these 18- to 24-year-olds to its stores, HMV, the country's largest specialty music retailer, is slashing prices of thousands of these older compact discs by up to 33 per cent – to $19.99 – effective immediately.
Whether it will be enough to change listening habits is another matter. It still often costs about half the price to buy the music online. Many download it for free.
“It's great that they're trying to repatriate these customers, but it's going to be very difficult,” said Duncan McKie, president of the Canadian Independent Record Production Association. “It's sort of a retailer's nightmare ... People who download chronically are hardcore downloaders.”
HMV's latest CD price drops coincide with the 25th anniversary of the compact disc this month.
In Canada, more than in other countries, online music listeners tend to do it free – and illegally, he said. That makes it challenging for music retailers to attract shoppers to their stores with price reductions.
At HMV, the older CD albums, at $19.99, are still more expensive generally than the new releases, even with the latest price cuts. The new titles sell for $9.99 to $14.99.
Some of the new prices posted by HMV: Fleetwood Mac's Rumours costs $19.99, previously $24.99, and $7.92 on iTunes; David Bowie's Rise & Fall of Ziggy Stardust costs $19.99, previously $25.99, and $10.89 on iTunes; Alanis Morissette's Jagged Little Pill, $19.99 now, previously $24.99, and $9.99 on iTunes.
HMV and other music retailers face a tough situation. Since 1999, music sales have tumbled by about 50 per cent to $536-million last year, according to figures from the Canadian Recording Industry Association. In 2007, up to the end of June, CD sales fell 20 per cent to $149-million.
Meanwhile, online music listening continues to rise exponentially from virtually zero in 1998. In 2006, there were more than 1.3 million unauthorized music downloads, compared with 20 million legitimate downloads, market researcher Pollara has estimated.
Faced with stiff competition from online music sources, retailers are fighting back. Besides lowering prices, HMV is selling DVDs and recently introduced video games at its 118 stores. It relaunched its e-commerce site with more promotions.
The latest price cuts are aimed at tearing away young males from listening to online music, said Saundra Bianchi, HMV's director of marketing.
“It's an important target because we're trying to change behaviour and breed a culture of continually needing to go into a retail store,” she said. “They can spend their entire day doing all their shopping and querying online. It's easier for them not to be in stores.
“They're the guys that we need to motivate because they are important to the future of HMV. These are the guys who we need to be our heavy buyers today.”
HMV Canada, a survivor in a sector that has been badly bruised, is still struggling to make gains. In its last fiscal year, domestic same-store sales, which is a key retail barometer, fell 3.3 per cent, the parent company in London reported recently. Those are sales at outlets open a year or more.
CDs represent the majority of the recording industry's profits, and HMV generates about one-third of all CD sales in Canada.
The latest HMV price cuts, as high as $10 on many titles from the likes of the Beatles and Pink Floyd, average 20 per cent.
