It sucks. But I'm convinced if HMV actually sold things at a little more reasonable price, they wouldn't be in QUITE the predicament they are. Anyone who's been to the metal section and seen the album they want at £15+ will often put it straight back down and give their business to the competition. Still, with HMV following suit with online retail VAT free from the Channel Islands, I think it's safe to say they will continue as an online operation, even if they are no longer a high street name.
Just shows you what kind of climate we're in when the biggest high street media outlet can't even stay afloat!