HMV: correlation is not causation

Posted by Christie Malry on November 15, 2012 at 11:28 pm

Ritchie tells us that tax havens are bad, m'kay...

In 2004 HMV complained to the Treasury about the impact of competition on CD and DVD shipments being artificially routed through the Channel Islands to avoid VAT.

Eight years later HMV is a wreck of a company and the High Street has been denuded of record shops.

Both statements are true. But it's a step too far to conclude that one caused the other.

The reason record shops are dead is that Amazon and other online retailers are simply far better at selling "long tail" products than high street stores. Physical stores need to stock loads of items in store, which costs a lot of money. Inevitably, they can't sell lots of niche products. Whereas Amazon can sell everything.

So HMV is indeed toast. But it's not the tax havens that did it.

And how many high street stores would sell a niche book like The Courageous State? Despite his high profile and mean spirited campaign to boycott businesses that don't pay the right amount of tax, you can still buy The Courageous State on Amazon. Hypocrite.

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