More competition for JB Hi-Fi

JB Hi-Fi Limited (ASX: JBH) has been in the investing sin-bin over the past year or so, with short-sellers piling in and the share price heading towards half of its 52-week high.

There’s been plenty of bad news on the horizon – slowing same store growth as JB builds out its network, huge deflation in consumer electronics and continued migration of music retail to online.

To add insult to injury, that’s not even counting the growing market share of Apple devices, with their wafer-thin retailer margins compared to other laptops and tablets.

JB Hi-Fi recently launched ‘NOW’, a subscription music service which gives consumers access to a library of music in ‘the cloud’ for a monthly fee. It was an adventurous (and necessary) move into the digital music world.

Just when the company had found a way to capitalise on the movement of consumers to digital music consumption, the news came today via The Australian Financial Review that popular US music streaming service Spotify is believed to be planning an Australian launch in the near future, on top of improvements from competitor (and current market player) Rdio.

So if JB Hi-Fi thought it was finding some clear air with streaming, rather than trading blows with Harvey Norman Holdings Limited (ASX: HVN) in physical products, it looks like the market in its new division just got a little more crowded.

It might be a while yet before JB Hi-Fi makes its way back onto investors’ Top 40 charts after all.

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Scott Phillips  is a Motley Fool investment analyst . Scott owns shares in Harvey Norman. You can follow him on Twitter @TMFGilla.  The Motley Fool’s purpose is to educate, amuse and enrich investors.  This article contains general investment advice only (under AFSL 400691).

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