Record stores thrive despite surge in downloads

The old-fashioned record store is still alive and kicking, and weathering the online music onslaught.Despite predictions that downloads would spell the death of music retailers, CD sales last year increased by 2.4 per cent in the UK, and many stores are expanding to meet what they believe is an undiminishing demand for music bought over the counter.

UK chain HMV recently opened its 200th branch, in Galway, part of a "record phase of expansion" which has resulted in 25 new HMV stores opening in the UK last year.

The Galway shop is the eighth Irish HMV store and, Gennaro Castaldo, head of press and promotions, says the company plans to add more Irish branches, with Waterford and the new Dundrum Town Centre top of the list.

The company opened its first stores in Dublin's Henry Street and Grafton Street in 1986, when CDs were starting to become the standard recorded music format.

"Downloading is a media buzzword," says Castaldo. "It makes for sexy headlines but it's somewhat misleading. There's a strong culture in the UK for buying, owning and collecting music, whether on CD, DVD or vinyl.

"There's an emotional attachment to the physical product but people are changing their shopping patterns and are buying music online and in record shops.

"People appreciate the versatility of downloading music, but the idea that it will replace retail sales is rubbish. If that was true, we wouldn't be expanding."

Golden Discs is also expanding in the Republic after withdrawing from the Northern Ireland market. The group is opening its 28th store, in Mahon Point in Cork, and moving its store at Wilton Shopping Centre in Cork to a larger premises.

Golden Discs chief executive Tony Killoran expects the firm to keep expanding over the next few years. In the financial year to March 2004, it had a turnover of €38 million, an increase of 3 per cent on the previous 12 months.

Both retailers are benefiting from a buoyant albums market and from exponential growth in DVD sales.

While CD singles sales continue to dwindle, albums by artists such as Keane and U2 are keeping the market afloat.

Although internet piracy is still a major issue for the music industry, the International Federation of the Phonographic Industry (IFPI) estimates that legitimate sales of online music have grown tenfold in the past year. Consumers bought more than 200 million downloads in 2004, and the number of legal download sites has expanded to more than 230.

Apple's iTunes is the market leader, its growth mirroring the global success of its iPod player. In the third quarter of 2004, Apple sold almost four million iPods and signed a deal with U2 that allowed them to use the band's Grammy-winning single, Vertigo, in ads for the iPod.

Other popular legal download sites such as MyCokeMusic are continuing the upward trend for online music.

However, some observers believe that music downloads are not having a detrimental effect on CD sales - and that they may help to increase sales.

Castaldo sees the online and retail markets growing in tandem, with consumers purchasing CDs, DVDs and games in-store and "topping up" with legally purchased downloads.

Most music retailers already sell their CDs online and many are moving into the download market. Later this year, HMV will relaunch its digital music store, investing £10 million (€14.5 million) in a bid to catch up with iTunes.

"Our remit is to deliver home entertainment to the public, no matter how they want it," says Castaldo. "We're confident that people will still want to come to our stores to buy music."