Physical Music Distribution Fails To Beat Downturn As Digital Expands


Will the high street have any CDs to sell this Christmas? Last week Woolworths’ music, games and DVD distributor Entertainment UK fell in to administration, leaving many retailers without stock. And now a similar outfit, Pinnacle Entertainment, has gone the same way, with 94 staff made redundant.

Pinnacle supplies physical CDs, games and DVDs for stores like HMV (LSE: HMV) and Amazon (NSDQ: AMZN) and also offers a series of digital download micro-stores for the indie labels whose physical music it handles. The download stores, though, are powered by e-tailer 7digital (here’s the one for indie label Bella Union). Whilst there is unlikely to be a stock problem with digital music, it’s unclear whether 7digital will continue supporting Pinnacle’s download efforts, given its uncertain future. Music distributed by Pinnacle claimed a 3.8 percent share of Q308 album sales.

A victim of Woolies/EUK administration, Zavvi yesterday turned off its e-commerce site due to unavailability of physical products. The site’s back now with limited supply, but, in timely fashion, Zavvi says its own “brand new download store” is under construction – the company has bought the domain to launch the site “very soon”. No wonder – while E.UK, Pinnacle and their clients must now be wondering why much of their physical stock is stuck in a warehouse in the Channel Islands, you don’t need a fleet of trucks to get your MP3s to customers.

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