How digital killed Look & Listen

2014-06-15 15:00

If ever there was any doubt that digital has truly taken over, retail music company Look & Listen’s filing for business rescue should make the message clear.

According to a business-rescue notice filed earlier this month, the company, which has 19 stores across the country, took the resolution to voluntarily file for business-rescue proceedings.

In a sworn affidavit by director Howard Lazarus, 14 of these stores have been trading unprofitably and the company failed to make a profit for the financial year that ended in February.

Look & Listen said it had also incurred monthly trading losses for March, April and May.

Lazarus said the current financial position had made it impossible for the company to secure further financial commitment or support from its shareholders or associate group companies.

He listed the escalated migration of customers away from physical products in music, gaming and movies to digital downloads as a major contributing factor to the company’s poor performance.

The growth of digital in music cannot be denied.

In a report released earlier this year by the International Federation of the Phonographic Industry, a music industry nonprofit organisation based in Switzerland, more than 28?million people worldwide now pay for a music subscriptions, up from 20?million in 2012 and 8?million in 2010.

“Downloads are helping drive digital growth in some developing markets, including Hong Kong, the Philippines, Slovakia and South Africa. Revenues from downloads globally fell slightly by 2.1% in value, the decline being offset by increases in streaming and subscription revenue,” it said.

A key theme in the report was the huge potential of emerging markets following the expansion of licensed digital services in the past three years.

“Many smaller emerging markets are starting to post significant increases in revenues as digital channels open new opportunities in countries that had a weak physical retail infrastructure,” said the report.

The report noted a 107% increase in digital revenue in South Africa last year.

Revenue from subscription services like Deezer and Spotify grew 51.3% to more than $1?billion (R10.8?billion) for the first time.

South African mobile operators have recognised how lucrative this market is and Vodacom is rumoured to be in talks with music-streaming service Spotify, while MTN is also in talks with a similar service, Simfy.

Lazarus said Look & Listen’s woes were also due to “a depressed economic climate, specifically within discretionary retail product categories such as music, gaming and movies”.

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