Tower Records Files for Bankruptcy

Tower's brand is used by 144 international stores, but those licensees will not be affected by the bankruptcy process.

"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.

Then again, I'm guilty (like a lot of Angelenos) of choosing Amoeba first...

Sunday nights often bum me out. After 6:00, nearly everything is closed, and the work week is looming ahead. There's been many a late night Sunday run, walk or bike ride, when I'd end up at Tower, dependably open when no one else is. Even when I don't have the cash for an impulse buy to boost my mood, it's just soothing to be surrounded by a hundred thousand albums. Sometimes I'll just check for good deals on albums I want for later, or just randomly browse and soak it all in, or skim reviews in their well-stocked magazine section.

Many blame Tower's second bankruptcy on the decline in CD sales and downloading, but that's all bullshit. Businesses close all the time, even when conditions don't seem adverse. The truth is that Tower has been obviously mismanaged since at least the 80s, from what I've heard from former employees. It's a miracle it made it this long. Even though it's had an online store for about a decade, and started doing MP3 sales recently, the execution was half-assed. Not to mention the wildly inconsistent pricing. By employing a smarter online strategy and learning from successful independents like Amoeba, Tower could have lasted longer. As it is, I'm guessing one of the two interested buyers is Virgin. It'll be interesting to see what happens, but I doubt the changes will be effective. Corporate chains have simply lost touch with what music consumers want.

But dang, I'll miss those late hours. This excludes the downtown Chicago location, which was good for a few years after buying out Rose Records' inventory. The Lincoln Park Tower had a vastly underrated Imports section. For the last couple years, Paul Kennedy, the Imports Coordinator, has written blurbs about great bands like The Associates, Section 25, Dome, Scriti Politti, Mark Stewart, Gang of Four and punk poet John Cooper Clarke. They get some of the UK releases about a week or so after their release. Some of the albums seem to be permantly on sale for five dollars under the normal price (then again, some are inexplicably $35). They even imported and displayed Simon Reynolds' Rip It Up And Start Again, nearly a year before it was issued in the U.S.

I went to Tower last night, possibly for the last time, depending on how long they keep their doors open. The current sale was typical of their odd sales -- in addition to the usual discount bins, all albums priced $12.99 were on sale for $9.99. For that price, I found these, all in the import aisle:

Soft Machine - Fourth and Fifth
Sparks - Indiscreet
Strawbs - Ghosts [Remastered]
Ultravox! [New remastered version]
Ultravox! - Ha! Ha! Ha!

Farewell Tower, R.I.P.

I still sometimes catch myself dreaming about taking a time machine back to then, and buying up every single one.

as for the store itself, kinda sad. the music mags seemed to be a month or two behind. about 10 people in the store. counter help picking their finger nails...

September 23, 2006
RETAIL TRACK: OPENING ROUND
Bids After Deadline Could Prevent Brutal Tower Liquidation
BY ED CHRISTMAN

Just because a liquidator appears to be the only bid so far in the Chapter 11 auction of Tower Records doesn't mean the chain will be liquidated. Good thing, because for many in the industry, a Tower liquidation could be devastating. But to be sure, the fact that only a liquidator put in a bid can't be painted as good news either.

At press time (Sept. 12), one of the liquidators-like Gordon Brothers in Boston, Great American in Los Angeles or Hilco Organization in Northbrook, Ill.-was expected to be the only suitor in the opening round of bids for the West Sacramento, Calif.-based chain. This comes after months of Tower Records assuring the vendor community that a private-equity firm is on the verge of signing a letter of intent.

As one bidder pointed out to Retail Track, it's too early for them to show their hand and what they're willing to pay for the chain. Even though the formalized process has opening bids due by Sept. 12, and final offers with a signed asset purchase agreement due Sept. 26, the reality is that if a qualified bidder decides to forgo those two dates and shows up in court on the Oct. 5 auction date, he will be welcomed with open arms. Yeah, other qualified bidders would squawk, but there's no getting around that cash is king.

While it seemed like there was no potential shortage of bidders when Tower Records filed Chapter 11 on Aug. 20, at least three have indicated to Retail Track that they won't step up to the plate until Sept. 26, if then. That's because things have changed somewhat since Aug. 20 and their non-action is also intended to send a message to the major vendors.

Since Tower filed for Chapter 11, every newspaper in the land has painted music retail as being completely dead. So if you bid on the chain, you can count on all those papers calling you an idiot for buying a record store in this day and age. Needless to say, that imagery has been reinforced by SpiralFrog and the notion that brick-and-mortar stores will soon have to compete against free.

Even sophisticated institutional investors and private-equity firms would have second thoughts after that initial press onslaught. Meanwhile, the remaining vulture investors-who have thick skins and are seasoned in making money even in a diminishing marketplace-are likely holding back on bidding for Tower because they have to scare the product suppliers into remembering how much they need the deep inventory superstore chain.

When last heard from, the major suppliers-those secured creditors likely to get whatever's left over after the bank gets the $78 million it is projected to be owed on Oct. 8-were touting their trump card: namely, that they could sink any new owner by not supplying credit if they are unhappy with whatever recovery they get from the $82 million they claim to be owed.

With Tower's value declining every day and bidders trying to ensure that the price for the chain remains as low as possible, if the winning bid is only large enough to satisfy the bank's claim, the new owner will still absolutely need vendor support for the chain to become healthy. That's why it's in all the bidders' best interest to put a little fear in the heart of vendors. But not too much. Any new owner has to be one that the major suppliers are comfortable with, and one that will invest in the chain so it becomes financially viable. If that occurs, vendors could be induced to back down from their stance that they have a recovery that makes them happy.

Some vendors are already thinking along those lines. The independent community is collectively owed only about $15 million, and if nothing is recovered for unsecured creditors, some suppliers will likely be forced out of business. But if Tower is liquidated, the hurt will be even bigger, according to the head of one large independent distributor.

While Tower Records is not the largest account and has an estimated market share of only about 4%, it can account for about 30% of sales on rock records from new and developing artists, that executive says.

"For anybody in the indie rock business the possibility of a Tower liquidation has to be brutal," he says. "It would mean a completely different life for companies like us. It would cause us to rethink our staffing and how we market records."

Sure, the majors are more diversified, but even they appreciate the importance of Tower Records in developing rock records and roots music from up-and-coming bands. What's more, a Tower liquidation might put the classical music business on life support until the digital marketplace grows large enough to compensate.

So with stakes that high, count on all kinds of posturing and bluffing along the way until the nail-biting finale of the fate awaiting Tower is determined.

John is referring to the Tower store in downtown Chicago on Wabash. It IS really sad. They must be really feeling the strain, because as recently as six-seven years ago the store would be jampacked on a good day. Now, if there's just "10 people in the store" (scattered amongst the three floors), bro, that is a CROWD.

Interesting note: the building directory in the doorway STILL says "Rose Records" and "M&H(?) Distributors," even though Rose has been gone for over a decade and the distributor has probably been gone longer than that.

That is what shopping at FYE! is like.

http://art.towerrecords.com/stores_new/denver.jpg

we should keep a watch on this thread