Earnings: As Revenue Falls, HMV Plans Social Net With DRM-Free Music Downloads

High street entertainment retailer HMV is to launch a “social network” including DRM-free music in a bid to halt falling revenue from physical sales. In results for the year ending April 28, pre-tax profits fell from £98.2 ($196) million to £48.1 ($96) million despite a 3.8 percent increase in sales. So HMV.co.uk will from September begin offering DRM-free MP3 downloads for sale, with material coming from EMI’s DRM-free repertoire (previously iTunes Plus, PassAlong, 7Digital and VidZone) as well as from independent labels. Prices from £0.79 ($1.58).

The social network was referred to back in March. From today’s statement: “Delivering film, music and games-related content to its online community, our new site will allow users to create home pages, meet like-minded people and access film previews, behind-the-scenes footage and music performances.” HMV.co.uk already offers digital music downloads. Now it is aiming for 20 percent of UK sales to come from the site and for nine percent of Waterstone’s sales to come from the books retailer’s website by 2010. It expects digital music players and digital radios will account for 13 percent of store sales by 2010; coupled with a retail partnership with 3 UK, “these initiatives will further reduce our dependence on the declining physical music category”. In books, HMV will move to stock more children’s titles as these are “less prone to online purchasing”.
Release | Financials