A lot of things seem to be coming to an end right now. Maybe it's the season. First is the downfall of legendary mega-sized CD chain Tower Records. I guess alongside Yankees pitchers' planes, school shootings and a congressional pedophilia scandal, a company bankruptcy isn't all that sexy, but it's a big deal for the music industry and signals, as Dylan said, that the times they are a-changin'.
The story goes like this: In 1960, entrepreneur Russ Solomon opens the first Tower Records in Sacramento, Calif. The store is popular, and quickly morphs into a couple of stores, which quickly morph into a multi-national chain. During its peak, Tower has over 200 locations in the United States, Japan, Hong Kong, Malaysia, the Philippines, Ireland, Israel, Colombia, Ecuador and Mexico. In the early 1990's Tower was worth approximately $325 million and doing $1 billion a year in sales.
On October 6, the entire franchise (the stores, the website, the products, the offices, etc.) was sold for about $150 million—less than half of its worth just 10 years ago. So the question on everyone's lips is: what happened?
Well, in 2004 Tower filed for bankruptcy. The reasons, according to industry experts, were competition from discounters (Wal-Mart, Best Buy, et al.) and the Internet (Amazon, Kazaa, Limewire, iTunes, et al.)—in other words, Tower Records became the first major victim of what some are calling the ""tectonic shift in the music industry;"" that is, the digitization of the industry. Jewel cases and liner notes just don't draw a crowd anymore—and if they do, crowds go to where the CDs are cheapest. Oftentimes people just download ""Toxic"" from a P2P or file-sharing program and never get around to actually purchasing the album it's on (a wise move, incidentally).
Tower tried to keep up—they offered digital downloads on their website, installed listening stations in all of their stores, introduced a customer benefit program—but it was all for naught. Tower filed bankruptcy again in August 2006, and a bidding war began. The two main contenders were Trans World (this is the corporation behind all those f.y.e. and Suncoast stores you see in malls) and the Great American Group of Woodland Hills, a company that, in part, liquidizes death-bed-ridden corporations for any salvageable profit. Interestingly, even though Trans World bid $500,000 less than Great American, lawyers from the big record companies and Trans World themselves made a plea to the judge: let Trans World get Tower—they'll keep them open and eventually make up the money Tower owes its creditors. The judge rejected this argument.
Which means Tower is now going to be stripped for parts, like an '84 Chevy in a backroom chop-shop. About 2,700 employees will be out of work, to say nothing of the almost incomprehensible ripple effect the liquidation will have on record companies, distributors, label representatives, etc. It is without a doubt a huge blow to the record industry as we, or at least our parents, knew it. In an e-mail to employees, Solomon wrote ""the fat lady had sung...she was off-key.""
Following the trend, another musical landmark is shutting its doors this week: New York's punk venue, CBGB. No one has ever described CBGB as a nice place to play or a nice place to listen—it's a hole in the wall, really—but it's famous for starting careers of legends like the Ramones, Lou Reed, Talking Heads and Patti Smith. The lease for the club had expired, and owner Hilly Kristal couldn't come up with the cash to sustain another contract renewal.
This story has an upside, though, which is that Kristal is going to attempt to re-open the club in Las Vegas, hoping to attract entirely new audiences. He plans to strip the New York club so thoroughly—""right down to the urinals,"" he said—that he can replicate it for generations to come.
If only Tower could say the same.
