Tower Records Is Bankrupt... Again. Is It The End Of The Pure Play Music Retailer?
from the so-much-for-those-new-plans dept
It really was just a little over two years ago that we talked about Tower Records declaring bankruptcy, hoping that with music retailers having less of a say about distribution methods, the recording industry would become much more open to new means of distribution. Of course, Tower Records came back from bankruptcy with big new plans, and just a few months ago we were writing about their slightly odd idea of reinventing the music store with free music podcasts. Apparently, that plan wasn't shaping up as particularly successful as the company has declared bankruptcy again, and it's not clear if it'll come back this time around. The most likely scenario is that someone ends up buying the brand, ditching the brick and mortar stores and using the brand somewhere else (either online or as part of something else). This, of course, shouldn't come as a shock. Just last year we noted that all of the top music sellers simply used the music as a loss leader to sell some other type of product. While some people still like to pretend otherwise, it's time to recognize that this is the future of music. It will continue to act as a loss leader or promotional item for some other product. That's not a bad thing, as it's likely to increase the amount of music available -- but it does change how people should look at music as a product.
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Hmmm...
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Double Hmmm...
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Failed Model
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Triple Hmmm...
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Just Music?
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Re: Hmmm...
I have seen the same thing happen with a garden center chain here in Canada. It went bankrupt because every grocery store and department store had their own garden center. That's how the free market works. You either adapt or you call it quits. Quitting or failing should not necessarily be seen as a negative or bad thing.
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Re: Hmmm...How are they doing?
You wonder how the other guys are doing. Not very well. CompUSA has all but shut down their CD/DVD/Video Games section; Musicland inc. (Sam Goody's, Suncoast, Media Play) is gone. Folded earlier this year. Transworld (FYE, Coconuts) is unofficially reorganizing its debut. And Best Buy and Walmart have made no secret they they sell new release CD's and DVD's as loss leaders just to get people to come in.
I do not think there is any one reason why Brick-and-Mortar stores are closing. Mismanagement? Pricing of product? Changes in taste how media is purchased? Who knows? All of these. Maybe none of these.
The two Tower Record stores I have been in recently were smelly, grungy pits. Poorly managed with expensive general stocked media. Full retail for a DVD is crazy when one can go to the companies own website and get it for 40 percent of that price.
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"Wall to wall mini-tunes, you used to call them co
I would rather that the companies continued with the online market, priced their CDs better, eliminated a good deal of overhead and paid the artists what they should.
That would drive up sales, quality and a genuine interest from the customer base.
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How many times does it take to learn
I mean, even Best Buy and Wal-mart and other big box stores sell CD's consistently for 9.99 - 15.99, and the upper end of the price range is usually for CD's that come with bonus material or DVD's. Amazon.com is slashing prices from 18.99 to under 9.99. I would much rather pay $11.99 for a CD at a big box store then to go to iTunes and buy it for $9.99.
Tower, HMV, all these dedicated music stores stores consistently are selling music way over priced and I avoid them. They sell DVD's too like 35 - 40 each.
I don't have any compasion for a corporation selling a product for much more then competitors, and then going bankrupt. This is the second time around I have heard Tower go bankrupt, how many more times before they realize they don't have a clue as to how to sell music.
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Re: "Wall to wall mini-tunes, you used to call the
That boat has long since left the harbor and is halfway to India already. Most if not all of the songs that are getting prime radio time are 3 minute jingles written for 14 yr old cellphone owners.
Don't kid yourself, money doesn't make art better.
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B & M
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overpriced
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tower
Sure, ordering online is nice, but it just doesn't have the same feel of digging through the bins to find the gem, then walking out of a brick and mortar store treasure in hand.
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music is not loss!!!
kids aren't going to want to be rock stars if music is secondary to other products. then there will be no american idol, or britney spears!! oh noes!
/sarcasm off
seriously, when i was a teenager, i spent almost all of my money on tshirts and posters and concert tickets. some times i bought my own albums, some times i copied my friend's stuff, especially if it was rare or imported, or on vinyl. i was way more likely to buy tapes at a show because that was often the only place you could find those artists. they damn sure weren't available at tower records, i can tell you that.
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It Happened In Publishing, Too
That this would happen to the music biz is not unexpected, but losing the human interaction of a real store and the ability to handle the product before buying and see professionally designed cover art is something I personally will miss.
I suspect the next generation will someday realize what they're missing too, I won't be surpprised if the opening of a stand-alone "record" or music store will become a celebrated event.
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Re: It Happened In Publishing, Too
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Book stores have a better chance probably because you can scan the whole book instead of a few pages online, but with CDs you only need to hear a snipit of the other tracks to realize the rest of the disk sucks. Most of the books at Tower are also at Borders or Guitar Center.
We all hate the cost of CDs period. I will always have at least six or more CDs in my hand, but only buy two or three, and one of them is always a classic I've been meaning to add to my collection (and then get home and hate one of them anyway).
Oh well, I'd go to the movies far more often if $5 would buy more than a drink or popcorn, but not both, so they suffer and raise prices to compensate, guaranteeing that I wait for the DVD.
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Re: Re: It Happened In Publishing, Too
In contrast, the music stores I've been to treat me like some sort of criminal. If I linger by a CD for too long, but walk out without purchasing, I'll get stopped and searched by security. If I want to listen to a CD, I get a 30 second sample of the song already on the radio - nothing of the rest of the $20 CD. If I spend more than five minutes listening (if by some miracle they acualy let me listen to more of the CD) I get an annoyed salesperson pressuring me to buy or get out ("This isn't a library." *scowl*). I get the impression I'm supposed to fall in reverent awe that they allow me to purchase their products, because when I don't, I'm treated to angry stares.
Bottom line: I'm happy to shop at B&N or Borders - my wife and I occasionally make a date night of it, getting coffee and reading books together, and we usually purchase two or three at the end of the night. I refuse to shop Tower, MediaPlay, Sam Goody, etc. because they make the entire process miserable - and iTunes is wonderful.
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No music stores any more
The tower records was gone.
I went to the mall a few blocks away thinking there woudl be a music store ... nope. Not a single music store in the mall.
There are a few retailers like Barnes and Noble or Fred Meyer (a Seattle area wal-mart-esque store) that happen to also sell music, but the selection never includes what I'm looking for.
I did a web search and the closest music store to where I work is miles away. Not worth my limited time to go out of my way for an impulse music purchase.
On-Line is the only alternative left for my music it would seem.
Annoying, but a fact of the times.
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Great...
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Re: Double Hmmm...
Um. The point is that they didn't really embrace using music as a promotional tool... The companies that have (Apple, Wal-Mart, Best Buy...) are the ones who are selling the most music.
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B&N
The difference is that books are almost always the same price at different stores. You can't very well find the same book $5 cheaper at the next bookstore down the street. Everyone's right about Tower dying out because of discounters using CDs as loss leaders. I'd also agree that the drop in the quality of music has eroded the urge to buy an album as opposed to buying or pirating the 4-6 tracks you actually like.
I prefer to buy the album, but I'll hitch a ride to Target where it's $8 cheaper and they're not bending me over for a 40% profit.
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What they really need to do.......
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Re: What they really need to do.......
Look, people. Tower has definitely made some poor decisions over the years: over-expansion and aquisition of debt, lack of customer service (which has dramatically improved in recent years), ego. The fact of the matter is that Tower is paying for years of mismanagement during the 80's and 90's. Today's current business model is much more along the lines of how Tower operates.
As for prices, it's not a TOWER thing that is the problem...it's a global ability and market for expanded options. I love record-store shopping, and have done it for nearly 30 of the years I've been alive. That said, I don't always have an opportunity to jump in the car and go see if a record store has what I'm thinking of at that moment. BUT...I can certainly jump online and check, and whether a good thing or bad thing, I can find a used copy of just about any record (cd) for $3 somewhere. Tower (and its constituents) don't have the luxury of selling $3 cds. The general public blames Tower for high prices- anyone who does that is ignorant beyond reproach. The average $18 cd costs a brick an mortar store $12 to purchase (not counting any applicable discounts). Tack on shipping charges, manpower to shelve the product, and the price of that product just went up another 10-15%. Before you even begin talking about payroll and operations costs, you're down to a measely $5 profit per cd. Factor in costs of operations (payables, salaries, etc.) and that profit is even smaller...and all that is contingent on the $18 sell price. I'd be willing to bet that 60-70% of what Tower sells is priced at sale-prices, meaning the entire scenario above needs to be gone through with a $12 cost, and $13 or $14 sell price. You do the math.
Look, blame this on whatever you will. Tower certainly has made mistakes, but they are victims of a global economy. Independent retailers are closing down at a faster rate then ever before. Hell...there is a page in the Barnes & Noble manager manual that states bonuses will be handed out if indie book stores shut down due the competition. There are many consumers who would normally be willing to pay a few dollars more for an item at a specialty store, but I said NORMALLY. In the days of $2 gas, affordable rents and liveable economics, that was doable. Today's living demands greater care, and with $3.50 gas, $2k+ rents/mortgages, huge overall COL, people have less desire/will/ability to support retail stores that sell the same product that can be had elsewhere for nearly 1/2 price. I don't blame this on anyone...it's just the current state of economic development. For Tower to survive, they'd need to drastically rethink store count, and technology. Store count could certainly diminish, but to upgrade stores and make them more appealing would take more money than I bet they have. Call me pessimistic, but even with a sale of the company, I don't see how they can operate outside of their top 20-30 stores, and their online store. Good luck to 'em...I will miss the ability to browse in a record store if they go away.
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Re: Hmmm...
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Re: overpriced
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speaking as a recent tower employee
is there mismanagement going on? i think that is the case with most retail stores, as my experience goes. but i do like to comment that it was by far the most professional atmosphere i've worked in a very long time.
loss leaders killed tower. do the math...10.99 or 16.99 down the street? not a brain buster for most folks. i'm not angry. i am sad that the little guy...small label artists featured and promoted through tower are getting less opportunity than they would have elsewhere.
lastly, tower reminded me to speak my mind at every given chance.
well...we'll see. expect the worst, hope for the best.
cheers you fucking soul-less robots reading this.
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Re: overpriced
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tower records
the pay was low, but the perqs were great
it was one big family, employees could be true to themselves, lots of room for personal expression - and everyone just loved music and knew so much about it - it was a lifestyle to be in the music business back then
i was hired away by a record company and tower was my biggest account in norcal - everyone was great to work with
a few years later i moved to hawaii for 2 years, and when i came home and needed a job, the manager at the sf store hired me on the spot
it's just too bad tower did not keep up with the times - for its day, the depth and breadth of the stock was revolutionary
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My warning fell on deaf ears...
If I wanted to add more to the order, I had to e-mail the buyer and EXPLAIN my decision. Did I forget to mention that my former store posted sales increases every month (we were up for the month of 9/11).
We all knew that Classical music was taking a nosedive in sales, and that more than half of the stores were losing money. As a way to help generate traffic back into the stores I proposed selling the full-price classical at just a dollar above cost. Other words, instead of $18.99, sell them for $12.00. Mid-priced Classical (Generally $12.99) for $2 off, $9.99 a dollar off, but keep the budget stuff as-is. My District Manager was not impressed, let alone the General Manager.
Tower management forgot how important it is to have local buyers speaking and listening to their customers. No two stores had the same inventory, because each individual buyer tailored his/her buying patterns on the community that supported that specific store. By removing the local buyers, they lost their ability to be proactive in their buying decisions.
Of the dozen or so (I forgot how many) stores in the Los Angeles region, only four stores were profitable throughout the end of 2003. Amazingly, the Sunset store is the one who lost the most money (double-digit) every month. Once Amoeba Records opened their store next to the Cinerama Dome, Sunsets' losses were as high as 22-25% on top of the previous years double-digit losses to Virgin. I never signed a non-disclosure agreement, so there!
I also told my GM, RSM, and the District Manager the following: "Music+ used centralized purchasing...where are they now? Wherehouse used it as well, and so did Sam Goody's/Musicland. Where are they now? When it comes to music retail, centralized purchasing is a failed model...unless you want all the stores to look the same." This was back in 2001. Tower used their newfound sales model in an attempt to make the chain more lucrative to a potential buyer, but we all know what happened. Two years ago their "fix" cost them 85% of the company.
I was offered a position as Product Manager for my former store, but it was made clear that my buying decisions would be restricted. It was described more as doing inventories and sending the data back to someone else who would decide what we needed. Could you imagine someone who does not set foot in the store or makes contact with their customers making buying decisions? Instead, I refused the offer, went back to school, and got out of the retail business.
Three years ago, as I was "ousted", I told my former co-workers that I was glad to know that nobody lost their job because of a bad buying decision on my part. Nobody.
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Tower
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The Demise of Tower Records and Video
I live in Chicago, Illinois, where until very recently we had two Tower Records stores, one downtown in the Loop, the other on the North Side in Lincoln Park (on Clark Street at Fullerton Ave.). Both were nice stores with loads of inventory of every musical description which put the usual mall-store and big-box retailers (such as WalMart and Best Buy) to shame.
Tower also offered an amazingly wide selection of otherwise hard-to-find periodicals and magazines from all over the world.
Now (as of Saturday, December 16, 2006) the downtown store has closed and the one in Lincoln Park is shutting its doors this coming Thursday the 21st..
Farewell to Tower Records !!
From reading all the other postings above, it is clear to me that many things have changed in the business and retail worlds since Tower reigned supreme, as well as the evident fact that its top management made some fundamentally bad business-model decisions - and as for me, for the past two years, every time I passed by a Tower store, I found myself always wondering if I would find it closed. My premonitions were correct: that Tower Records would be history sooner rather than later.
The best Tower Records store IMO was the one in New York City on Broadway (66th Street near Lincoln Center for the Performing Arts and the Juilliard School of Music) where the classical music selection was second to none, and there was plenty of choice in every other genre of music as well.
Here in Chicago we still do have Virgin Records, but its music selection is nowhere near as comprehensive as Tower's was.
The demise of Tower Records is a sad day indeed in many respects, although in recent years, as noted above, a number of their stores had become dirty and seriously mismanaged.
Somehow, however, despite the price advantages offered by today's technology and the Internet, downloading mp3 files onto our i-pods will never quite measure up to the rewardingly satisfying feel we get from holding in our hands a well-produced CD complete with its printed program booklet and cover art.
Who knows? Maybe some day we might get to see the revival (to some extent anyway) of the brick-store approach to music retailing - if it's done right and done well.
Eric.
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Re: My warning fell on deaf ears...
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wat
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unfriendly service
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