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Will there be any "record stores" left?
Struggling Tower Recordsfacing merchandise cutoff
By DALE KASLER
Sacramento Bee
SACRAMENTO, Calif. - When Tower Records was on the brink of a financial meltdown three years ago, the music industry rallied around the retailer.
Record-company executives, owed millions of dollars by Tower, quickly agreed on a plan to keep supplying the legendary retailer with music as it worked out a financial restructuring.
But last week, when Tower decided it wouldn't pay its debts to the record companies, the industry struck back. Industry sources said the four major music conglomerates halted product shipments to Tower, which is based in West Sacramento. The move prompted speculation among industry executives, who gathered over the weekend at their annual convention in Florida, that Tower could go into liquidation.
The record companies' response speaks volumes about how much the industry has changed in just three years. As music is more and more a creature of big-box discounters and the Internet, traditional retailers like Tower matter less and less.
"Retail is less relevant and is almost becoming irrelevant," said Barry Sosnick, who runs a music-industry consulting firm called Earful.info. "The industry can afford to let Tower go under."
Officials at Tower did not return calls seeking comment.
Ten years ago, more than half of all music was sold at specialty retailers like Tower. Now it's below 40 percent and falling, according to the Recording Industry Association of America.
Retailers such as Musicland have gone into bankruptcy in recent years; Tower itself survived a stint in bankruptcy and now owns 89 stores, or fewer than half the stores it had before its problems started in the late 1990s. Tower has three stores in Philadelphia, one in King of Prussia, and one in Cherry Hill. Another 144 stores in nine countries are owned and run by licensees.
On July 28, Tower announced it had made Joseph D'Amico, a turnaround consultant from Chicago, its third new chief executive in four years. It also announced it was for sale.
Now comes the stunning news that Tower has been cut off by the four major record companies: Universal Music Group, Warner Music Group, EMI Group and Sony BMG Music Entertainment.
The shutoff of merchandise means Tower's stores could begin sputtering in a few weeks.
Struggling Tower Recordsfacing merchandise cutoff
By DALE KASLER
Sacramento Bee
SACRAMENTO, Calif. - When Tower Records was on the brink of a financial meltdown three years ago, the music industry rallied around the retailer.
Record-company executives, owed millions of dollars by Tower, quickly agreed on a plan to keep supplying the legendary retailer with music as it worked out a financial restructuring.
But last week, when Tower decided it wouldn't pay its debts to the record companies, the industry struck back. Industry sources said the four major music conglomerates halted product shipments to Tower, which is based in West Sacramento. The move prompted speculation among industry executives, who gathered over the weekend at their annual convention in Florida, that Tower could go into liquidation.
The record companies' response speaks volumes about how much the industry has changed in just three years. As music is more and more a creature of big-box discounters and the Internet, traditional retailers like Tower matter less and less.
"Retail is less relevant and is almost becoming irrelevant," said Barry Sosnick, who runs a music-industry consulting firm called Earful.info. "The industry can afford to let Tower go under."
Officials at Tower did not return calls seeking comment.
Ten years ago, more than half of all music was sold at specialty retailers like Tower. Now it's below 40 percent and falling, according to the Recording Industry Association of America.
Retailers such as Musicland have gone into bankruptcy in recent years; Tower itself survived a stint in bankruptcy and now owns 89 stores, or fewer than half the stores it had before its problems started in the late 1990s. Tower has three stores in Philadelphia, one in King of Prussia, and one in Cherry Hill. Another 144 stores in nine countries are owned and run by licensees.
On July 28, Tower announced it had made Joseph D'Amico, a turnaround consultant from Chicago, its third new chief executive in four years. It also announced it was for sale.
Now comes the stunning news that Tower has been cut off by the four major record companies: Universal Music Group, Warner Music Group, EMI Group and Sony BMG Music Entertainment.
The shutoff of merchandise means Tower's stores could begin sputtering in a few weeks.
