Sounds music stores in liquidation - blames illegal music downloads

By Steve Biddle, in , posted: 22-Nov-2007 07:54

For those who haven't kept up with the news in the past day or so on Tuesday Icon Digital Entertainment who own the Blockbuster Video store and Sounds Music store brands in New Zealand went into voluntary liquidation on Tuesday, the first such company to enter voluntary administration under new laws that came into effect on the 1st November.

What astounds me is that the company seems to only have one explanation for this situation - illegal music downloads are apparently damaging the music business so badly they were unable to continue trading.

What BS!

Somebody tell JB HiFi who are currently in the middle of a huge store rollout program in both New Zealand and Australia that the music industry is suffering and they'll laugh at you. There is plenty of money to be made selling music. If Sounds are so happy to blame illegal music downloads then why aren't they also blaming legal music downloads? The fact that it's illegal in NZ to rip a CD to an iPod leaves people with no choice but to buy music online if they want to legally listen to music on a portable device so logically they don't want to pay for music twice - once for their iPod and again for a CD. And what about their pricing? Who wants to pay $33.99 for a new release CD from a Sounds store when JB HiFi and The Warehouse can sell me the same product for somewehre around the $22 - $25 range? With the $US at it's current level it's also cheaper to buy CD's from the USA and ship them to NZ than to buy product from Sounds.

I'm sorry that your business failed guys but don't go blaming illegal music downloads. They are the least of your problems. Despite illegal downloads existing music company executivies are still waking up each morning and going to work and running extremtly profitable businesses and there are plenty of very music retailers such as JB HiFi who are doing extremely well even with legal music downloads now taking a huge chunk of the music market.

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Comment by paradoxsm, on 22-Nov-2007 17:31

Sounds stores were always rippoffs from back when I first built up my collection.

Charging $34.95 for a CD all the time was just idiotic and their service was usually horrid, rather than trimming their margins down they continued to try and sell a $22.99 CD(Warehouse Price) for $34.95.

Sadly many good music stores are vanishing and it's a real shame as (legal) downloads are usually poor quality and I refuse to buy anything at The Warehouse.

Comment by Megan, on 24-Nov-2007 09:33

I have just been made redundant by Sounds and I do agree that our prices were extremely high.

The only reason why head office are blaming their $20 million debt on illegal downloading is beause it's an easy excuse and simply because they have no other excuse to hide their failure.

Comment by Renee, on 24-Nov-2007 15:33

Sounds made several crucial mistakes, even before Icon came on the scene, but I believe it was the sale to Icon of the Sounds chain that really sealed their fate here. Yes, their prices were too high, and admittedly their service sub-standard, but the killer was that they were no longer competitive, and they seemed paralysed by the notion of change. The key rule about retail is watching, and successfully predicting changes in the market. What do people want now? What will they want next? What do I have to do to be one of the first to provide it? Speaking from experience here: I've worked at record company level, then for Sounds themselves, and now for JB HiFi. I stress here that this is MY opinion, and mine alone, but from my experience in this industry, and from various parts of the machine or system as it were, Sounds appeared to never really pick up the pieces after the untimely death of Shaun Joyce, Marketing Director in title, but more like the glue for the company, and the one with the vision to know where to steer the company next. It is my belief that were Shaun still here, the situation would be far different, and Sounds as a company would have morphed into the next viable business model, and the next and the next. And I think thats what it comes down to: vision. This is after all a creative industry - yet what is creative about refusing to move with the times, into the digital era. Rather than blame digital downloads for the demise, why not jump on the bad wagon? They were a perfect vehicle for it, what with an already recognised household brand name. And without saying "I told you so", well, to all those that I worked alongside that asked my opinion at the time, "I told you so". It's like they say: 'If you can't beat 'em, join 'em.' And now I work for a giant of a company, who knows how to work the machine, and as far is recorded music retail in the southern hemisphere is concerned, I think that JB will be one of the few left in as little as 5 years time. They are competitive, they have edge, and they have vision. They are prepared to do whatever it takes to offer the market what the market wants, when they want it. And isn't that just what retail is about. Sounds: you have been struggling for years, and you have lost your edge, along with many staff that could have made a difference. This is the price you pay, and unfortunately alot of us saw it coming. RIP.

Author's note by sbiddle, on 26-Nov-2007 16:12

Hopefully we'll be seeing JB HiFi hit Wellington in the not too distant future!

I loved their stores when I first visited one in Oz a few years ago. Since then they have gone from strength to strength in a market that other people are claiming is saturated and declining and their recent financial results show there is still plenty of money to be made.

I just wish I'd purchased some shares during their initial IPO! :-)

Comment by Tim, on 28-Nov-2007 13:56

I also worked for Sounds for a number of years in the late 90's/early 00's. For being retail work it was a really fun experience and I met a lot of knowledgeable and hard working people. All the workers though bagged the company big time. Sounds put a lot of stress on there staff and the pay they got did not reflect the hard work they put in at all. For years the full time staff had to work a 6 day week. Eventually this changed to a 6 day / 5 day week on alternate weeks, but it had to average out to 45 hours. As for pay, well the fulltime staff got $9 or $10 an hour, while shop managers got in the region of $12-$13 an hour. Obviously it became harder finding good knowledgeable employees to work for this pittance and over the years the good staff diminished. There was also next to nil chance of making it to a head office position. And if you did you had to have either a) Worked for HMV b) Like Soccer c) Be a family member As Renee posted earlier, after the loss of Shaun Joyce the company just didn't seem to know what to do. The silly thing is that a few years earlier they had a couple of experienced managers that were trained under Joyce that could have easily slotted into his role. However, there was one particularly short sighted bean counter who worked as the regional manager at the time who knew next to nothing about music and whose primary objective was to cut costs. Everyone disliked him, even most of the staff at Head Office. This individual got rid of these managers when he figured he could pay minimum rate to less experienced staff. Then when Shaun Joyce died, coupled with the fact that minimum wage increased to $11 an hour, Sounds sold to Icon. I'd already jumped the ship by then but I remember at the time thinking this will be great for the workers that are there. How wrong I was.

Comment by TinyTim, on 5-Dec-2007 08:40

Here's another reason that probably contributed to the closure (probably ties in with Tim's comments above) .

Consumer report on 'top shops'. CDs, books and DVDs category, ranked in order of satisfaction:

Unity Books
Real Groovy
Paper Plus
The CD & DVD Store
The Warehouse.

Second last.

They also ranked below average for each of product range, value for money and shopping environment, with an average for staff helpfulness. The Warehouse was the only other place to receive three below average scores (but they at least scored above average for value for money)

Comment by Darryl, on 1-May-2008 11:51

I Managed a Sounds store for 6 monthsuntil it was closed down. Despite their excuses it is clear that H/O were simply too retarded to innovate any change. At our store we gave really good service. People always diss the service at sounds... After the store closed i decided to apply for finance to re-open it as an owner-operator. When our accountant looked at their books it was a load of garbage written that "looked as if it had been written in a day" They also wanted an insaine price for their shitty stock and half of it was sell or return. I still have not recovered from losing my job at sounds. We got no notice at all, some drab accountant just turned up during a stock take one day and i left an hour later...leaving them to try and finish the stock take. Such a waste... I will never forget how good it was at Sounds Whangaparaoa for those last 6 months...

Comment by superdooperman, on 31-Aug-2008 11:51

Hey this sucks. I have $90 worth of sounds vouchers. Can these be redeemed anywhere? Is any other retailer accepting these? ta Super

Comment by Tyllah, on 20-Nov-2008 20:54

I agree. I have HEAPS of sounds vouchers!! i know that the cd and dvd store isn't accepting them but is there ANY place they can be redeemed or exchanged?

Comment by Ivan, on 25-Nov-2008 18:23

Hey For anyone that still have Sounds vouchers that haven't expired click on the link below of the receiver and dated the 23 Nov there is a voucher & rewards claim form which you can fill out and send back to BDO Spicers and you may get a refund.

Comment by Laraine Anne Barker, on 21-Jul-2010 14:25

Interesting. I've just bought for $6 a 2-disc set of CDs on trademe that has a Sounds sticker on it for $12.95. As for JB Hi-Fi, last time I was in there I found no CDs, just stereo equipment and computers. Mind you, I wasn't looking for CDs. CDs are the last thing I'd expect to find in a "Hi-Fi" store. However, if I want new CDs that aren't re-releases or "budget" labels I still have to pay around $36 (much the same as I had to pay when CDs first came out). I have to agree that this is indeed a rip off.

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Steve Biddle
New Zealand

I'm an engineer who loves building solutions to solve problems.

I also love sharing my views and analysis of the tech world on this blog, along with the odd story about aviation and the travel industry.

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+My views do no represent my employer. I'm sure they'll be happy to give their own if you ask them.

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