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Tottering giant inside a stumbling music industry
Tower Records: on the ropes
By Jon Newton, p2pnet.net
(more articles from this author)
2002-12-08
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Tower Records is out of sight. Almost literally.

Owned by MTS Inc, which in turn is 99% owned by Russ and Mike Solomon, a father-and-son team, Tower is yet another example of a specialty music retailer which, like the RIAA and MPAA, couldn't tell which way the digital media wind was blowing.

It's a, "tottering giant inside a stumbling music industry," as a November 30 Associated Press story described it. Tower's typical CD can cost up to $18.99, compared with $13.99 or $14.99 at Best Buy, Wal- Mart and Amazon.com, says the article, entitled Tower Records Hopes Holidays Will Save It.

And that doesn't take into account downloads and because of this, and other difficulties, it seems the company is now in dire straits.

Hoover's Online says of MTS, "with nearly 120 company-owned music, book, and video stores in five countries; its franchise agreements encompass 9 additional countries. MTS also runs WOW! stores (a joint venture with electronics retailer The Good Guys) and publishes several free music magazines. International operations account for more than 40% of sales (expected to drop dramatically following the 2002 sale of its Japanese operations)."

Among the chain's troubles: deep-discounting rivals, changing consumer habits, lack of hits and its own missteps in the 1990s as, "the music business began a dramatic shift," says AP in a massive understatement.

"The company that grew up on rock 'n' roll and matured into a hip center of world music recently cut 90 jobs and sold 51 profitable stores in Japan," says AP. "More closings are imminent. Tower has also overhauled management, begun experimenting with new non-music merchandise - and has reported its first sales gain over last year: up 2 percent the first two weeks of November."

Are you paying attention, RIAA?
But the chain has a loyal base of older, more affluent customers such as Lee Landenberger, 46, of Atlanta, an ex-radio DJ who, "spends $2,000 a year on music and liberally burns CDs for friends," says AP.

No doubt we'll soon be reading that the RIAA is suing Mr Landenberger for piracy, or some such

In the meanwhile, "Today, music fans like Eric Chu, 17, are increasingly turned off by CD prices," says the AP report. "Though record industry officials call CDs a bargain compared to other entertainment options, Chu browses at Tower for hip hop, rap and rock music, then downloads at home."

But RIAA chairman (as she describes herself) Hilary 'Reach Out' Rosen is quoted in the article as saying, "I think that shopping is a social experience and learning about new music is a social experience, and you don't get that on KaZaa. I believe retailers have to re-energize music stores as social destinations" and Tower, "set the bar for the in-store experience" where people wander aisles "checking stuff out."

Reach Out is, of course, famous for her deep knowledge of digital media - v- traditional movie and recording industry business models; and, her ability to do 180 degree turns without getting dizzy.


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