French entertainment retailer Fnac is to stop offering MP3 music downloads through its Fnac.com website and will instead sell via Apple’s iTunes platform, it has been reported.
Despite being the largest music retailer in France and having sold MP3 downloads online for eight years, Fnac has been unable to gain sufficient market share in the category.
Details of the changes have not yet been officially announced by Fnac, but the retailer is thought to have signed a contract of affiliation with Apple that will allow it to earn commission by redirecting online customers to the iTunes portal. The change is expected to take place from January 1 next year.
On the one hand, the decision has an air of defeatism and resignation. Digital music should be a key category for Fnac, particularly in light of rapidly declining trends for physical entertainment products (CDs, DVDs, games and books) and soaring device sales.
If it is not relying on music to drive sales, Fnac will need to boost sales of consumer electronics and other categories in order to compensate, or face falling revenues.
Yet, on the other hand, it could be a shrewd move by the retailer, which may end up with more revenue in commission from Apple than it has been gaining from MP3 sales. The underlying issue for entertainment retailers is that customers buying digital content want convenience. When they decide to download the latest track by Muse or Adele, they want to do so instantly, for the lowest price and with the least number of steps. The seamless integration between Apple devices and iTunes, not to mention storage in the iCloud, suggests that any other means will always be a hard sell to Apple users.
For Fnac, the initiative is experimental and comes alongside parent PPR’s plans to float the company next year and franchise some of its stores.
Yet it is similar to the recent UK tie-up between Waterstones and Amazon on Kindle devices and ebooks, and could provide a solution for store-based entertainment retailers such as Fnac, HMV and Hastings as they struggle to keep up with trailblazers such as Apple and Amazon. The question remains whether partnerships forged with these internet powerhouses give entertainment retailers a new revenue stream for the digital age, or whether they are in essence signing their own death warrants by collaborating with them.
- Lisa Byfield-Green, retail analyst, Planet Retail.
For more information contact us on: Tel: +44 (0)20 7715 6000 Email: firstname.lastname@example.org
No comments yet