Tower
Records has filed for bankruptcy for the second time now in just three
years. This comes just a few weeks following reports of Tower Records facing
supply cut-offs from four major music labels for failing to pay its
debts. As a result, this was a clear sign that the company is running into
financial problems and there is now speculation that the music store and its
legendary Sunset Strip store may have to liquidate its stock and close
down.
At this time, Tower officials have just confirmed
that they do not have plans to close any of its 89 stores. They are in the
process of trying to find a buyer and has filed for Chapter 11 bankruptcy in
order to help make it more attractive to a buyer and keep its name & brand
going. According to court papers, Internet sales and large retailers were
behind Tower's falling business. Between 2002 and the first half of 2006,
it fell from being the 9th largest seller of physical music to the 12th most,
tying with another store. Its Sunset Tower was at its peak in the 70's and
early 80's attracting large groups of fans for record releases and
bands completely packing into the rooftop.
According to industry insiders, with its decreasing
popularity and the music market moving towards online stores and large retail
chains, Tower Records may have a tough time finding a buyer to keept it
running. According to a senior analyst for Inside Digital Media Inc. while
he reckons the chain will find a buyer, there is a good chance that the stores
will not survive this latest bankruptcy and thus may have to sell off its name
and liquidate its stock.
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"That's kind of a bummer 'cause that was the place to go to get imports and of course all the books and magazines," said longtime KROQ-FM (106.7) disc jockey Rodney Bingenheimer. Tower officials denied plans to close any of its 89 stores. "At the present time we have no plans to close any stores," spokeswoman Lisa Amore said. "We went into Chapter 11 to make the business and the store attractive to a buyer and it is our great intention to keep the name and the brand going." Tower is slated to go before the bankruptcy court today, according to wire reports. Its revenue fell to $430 million for the fiscal year ending July 31 from $476.1 million a year ago. |
With Tower Records already having its supply cut off
from the four major labels, it will be interesting to see how long it takes
before its stores run dry of releases by these major labels.
Unfortunately, if this latest bankruptcy does mark the ending of the chain, it
will quite a significant disappointment to see what was once a very popular
store lasting for around 46 years come to an end.
While the music industry may be blaming online piracy for falling CD sales,
it is already becoming clear that the real problem for the high street music
stores is actually legal music download services! For example, consumers
who sample music from file sharing networks have a much greater chance of going
into a shop to buy the CDs of what they sampled than the same consumers who
purchases their tunes from an online store such as iTunes. In the latter
case, the music industry is happy as they get paid, but this is of no benefit
what-so-ever for the high street shops that are now struggling, particularly
since it is the labels that set the prices of their supplies to the shops and
online music download services.
Source: LA Daily News
