The collapse of HMV and of the DVD rental chain Blockbuster provide real lessons to anyone working in the content industries, whether they are retailers, creators or distributors. The Sunday Times may think otherwise (last week it reported that print books were “bouncing back”) but the reality is not nuanced: this digital train is only going in one direction, even if its pace may slow.
HMV and Blockbuster made two classic mistakes, neither unusual for companies used to living high under the old rules. They thought they could wait to see how the digital market developed before adapting; and they thought they could “do” digital without the same amount of effort that is needed in the physical world. In their heyday, both companies were peerless suppliers of physical products in environments that were carefully sculpted to meet the needs of their consumers. Online they chose a different way of doing business, thinking that their brands alone would mean customers would put up with poorly designed websites and unattractive offers.
It is to be hoped that both businesses can be saved somehow, either through an investor savvy enough to take the companies forward into the 21st century (as Alexander Mamut is doing with Waterstones) or because suppliers see fit to save the stores as showcases for their products. In general, retailers of physical products from high street locations have two options: to mine and grow profitable niches where physical products and real environments still matter to people (indie record store Rough Trade has been widely cited by the media this week); or to apply the skills honed on the high street in the virtual space, accepting that when your customers habits change so must those of their suppliers. Neither option looks easy, but the alternatives look worrisome.
In the book industry we are fortunate in having—even within our corporate businesses—an independence of thought and deed that is making the digital shift easier (perhaps this is why the HMV mind-set simply never worked at Waterstones).
New digital products and new business models are rising quickly to the surface even if not all of them work. This is not a sector waiting for digital change to happen anymore, it is driving it. Since a Darwinian analogy is never far away at times like these, we might call it intelligent re-design.