Tower Records files for bankruptcy -- again
Wednesday, August 23, 2006 7:40 AM PDT
By Washington Post
Printable version
E-mail this articleTower Records, the iconic chain where generations of music lovers have gone to lose themselves in record-store reveries, is up for sale in bankruptcy court, forsaken by consumers who favor digital music and discounts at big-box superstores.
Tower represents a time when music had a different cultural status than it does today, as songs vie for attention with newer pastimes such as video games, Internet sites and instant messaging. Its financial faltering -- this is its second bankruptcy filing since 2004 -- signals not only corporate problems but also a shift in how people shop and think about music in their lives.
Tower's operations started in the back of a California drugstore in the late 1950s, and its founder, Russ Solomon, cultivated its reputation as a communal place for hanging out to train and trade musical tastes. Its huge yellow-and-red stores became part of the music album culture. Stores hosted live concerts, and employees were hired for their expertise in music arcana.
But over the past decade, as larger retailers such as Wal-Mart, Best Buy and Target undercut record-store prices and combined shopping for music with shopping for a variety of other consumer products, the music-focused stores started to die. Although Tower began selling music downloads on its site in June, digital music sales through such services as iTunes and Amazon.com have also taken a bite.
In 1991, roughly 9,500 chain music stores were in the United States, compared with about 2,000 now, according to Billboard magazine. Although many independent stores continue to have a loyal following, those, too, are on the decline.
Tower's parent company, MTS Inc., filed for bankruptcy protection Sunday night in Delaware, putting its 89 stores on the block. The company hopes to complete a sale within 60 days. Tower's brand is used by 144 international stores, but those licensees will not be affected by the bankruptcy process.
"It's a sad day for music," said Dave DelVecchio, 20, who bought five alternative rock albums from the Tower Records store in Washington on Tuesday. DelVecchio said he is on tour in Baltimore with his band. "I used to download online for free a lot, but now I just buy CDs. Being in a band myself, I know what it's like" to lose income to illegal online file-sharing.
Lisa Amore, a spokeswoman for the Sacramento-based Tower, said the company hopes to keep the brand alive. "As of today, we have no intention of closing any stores," she said.
Many other music stores have already fallen to similar financial pressures. Chains such as National Record Mart and Musicland have gone away or been acquired by conglomerates like Trans World Entertainment Corp., which now controls more than 1,100 retail stores under the Sam Goody, F.Y.E., Strawberries and Wherehouse brands.
"Tower is an icon. In my mind, it represented our whole musical culture," said Russ Crupnick, an entertainment analyst with NPD Group Inc., a consumer research firm. "The challenge has been that the whole retail environment has changed" because people shop less at specialty retail stores, he said.
CD sales last year totaled more than 705 million, compared with 13.6 million albums sold online, according to the most recent figures from the Recording Industry Association of America. But CD sales declined 8 percent last year, compared with online album sales growth of 199 percent.
Tower's popularity extends beyond its customer base, said Geoff Mayfield, an analyst with Billboard.
"The industry wants it to survive," he said. It got a standing ovation from the crowd when it recently won retailer of the year from the major recording merchandisers' trade group, he said.
Perhaps, like some other stores, it could diversify by selling shoes, posters, games and other goods that would appeal to its audience, Mayfield said. "It needs to become a destination," he said. "Otherwise, people will just pass it by."
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Past Month's Most Commented Stories