By: Max Fraser
If you are one of those few remaining souls who still gets music the old-fashioned way, and if you live in one of the twenty states home to at least one of Tower Records's eighty-nine American stores, chances are you've heard the news: Tower, the last and largest of the great "brick-and-mortar" record store chains, is going out of business. After more than four decades as one of the leading music sellers in the country, Tower Records is just weeks away from death, leaving many in the industry--from label executives and independent record store owners to music critics and fans--wondering just what it all means.
Despite the company's illustrious history, it hardly came as a shock when Tower announced in August that it would file for Chapter 11 bankruptcy protection for the second time since 2004. After recovering from its first bankruptcy, Tower had failed to improve on desperate sales numbers amid fierce competition from retail chains, popular online sellers like Amazon.com and, most significant, the rapidly growing digital market. The company started losing money in the late 1990s, at about the same time that CD sales began declining and music downloads took off. Since then, retail music sales have dropped roughly 20 percent. Last year alone, album sales fell nearly 8 percent, while legal digital downloads increased by 200 percent. By the beginning of August, three major record labels had stopped shipping CDs to Tower because the music seller had stopped paying its bills, and when Tower filed for bankruptcy later that month, it was $210 million in the red.
But if Tower had become an outdated relic, it remained a cherished one, and the dirges began soon after an October auction left the fallen music industry icon in the hands of a liquidation firm. Anthony Tommasini, who writes about classical music for the New York Times, described in somber tones the "final pilgrimages" made by him and other loyalists to the "dying" and already "funereal" classical department at the Tower near the concert halls of Manhattan's Lincoln Center. Others sought cathartic release by recalling Tower trips of yesteryear--like one bereaved writer in the Philadelphia Inquirer, who described journeys of "self-discovery" to Philadelphia's South Street Tower and even credited the record store with bringing him and his future wife together (no, they did not work there, and never bumped into each other while browsing the stacks. The store's mojo was just that powerful).
It was the same story on the West Coast, where Tower Records got its start in a Sacramento pharmacy called Tower Drugs. A columnist for a Northern California paper, trying not to sound like "an old guy raging against the future" but doing so anyway, remembered Tower as "the ultimate in cool, hip, badness." On the Huffington Post, none other than Alec Baldwin bemoaned the loss of the famous store on Sunset Boulevard, a La-La Land institution just down the block from the Viper Room and apparently one of Baldwin's "favorite stores to get lost in." As the liquidation sale got under way at Tower Sunset, the store's marquee summed up the general mood with some well-chosen words from pop veterans R.E.M.: "The End of the World As We Know It." Conspicuously absent was the flip irony of the song's next line: "And I Feel Fine."
Therein lies the question: With Tower soon to close its doors for good, can we--should we--just feel fine? Well sure, say those who see the music industry moving away from physical media, and Tower Records--like the gramophone, vinyl records and the cassette tape before it--as destined for the dustbin of history. The industry has become increasingly digitized with the rise of the MP3 and Apple's ubiquitous iPod, so much so that a recent report by the market research firm IPSOS has found that one out of every five Americans now owns an iPod or similar portable MP3 player, an increase of 150 percent from just four years ago. Numbers like this, along with declining sales figures for CDs, do seem to suggest that the era of the brick-and-mortar store has come and gone. Music is made more accessible and affordable by online file-sharing networks and retailers like iTunes and Amazon.com, their proponents claim. Furthermore, even the shared cultural space that record stores used to provide for all kinds of music fans has been replicated by virtual communities at websites like YouTube and Pitchfork media. Only the most irredeemable Luddite would look at the demise of Tower Records with even a whiff of trepidation.
An irresistible determinism pervades much of this talk about music's digital future. For instance, an analyst at Inside Digital Media says that "Tower was one of the biggest [music sellers], and if evolution has taught us anything, it's not the biggest of the species that survives, it's the species most adaptable to change." As the market goes, so goes the world of music--and as EMI Music CEO Alain Levy recently told a crowd at the London Business School, the CD, for better or worse, "is dead." "Oh, those grand, immutable all-wise laws of natural forces," effused that great Darwinian of the Gilded Age, Andrew Carnegie. Physical music no longer sells; digital music does. If the industry wants to survive, it had better get with the program. Even Bob Dylan was shilling for iTunes in a television ad this fall.
Faced with the logic of the market, dissenting voices do run the risk of sounding like that old guy raging against the future; but this time the old guy may be on to something. Clearly, the iPod is here to stay--according to the same IPSOS report, portable MP3 player ownership among 12- to 17-year-olds is at an astronomical 54 percent. But the CD isn't really dead. In fact, in the first half of 2006, CD sales still accounted for nearly three-quarters of all retail music sales, out-earning digital sales better than six to one. And despite the growing popularity of online music sellers like Amazon.com, nine out of every ten CDs purchased so far this year were sold in brick-and-mortar stores. Just not Tower stores.
Over the last decade, big-box retailers like Target, Best Buy and especially Wal-Mart have accounted for a steadily increasing share of CD sales, and by 2003 Wal-Mart had become the largest music seller in the world. David Porter, who oversees music merchandise for Wal-Mart's American stores, estimates that the company today controls roughly one-quarter of the US market. Succeeding where Tower has failed in recent years, Wal-Mart and its ilk have extended their low-cost business model to music retailing, using their clout to bully record labels and selling CDs that would go for $15 to $18 at Tower for less than $10. Wal-Mart has even established an online presence, undercutting iTunes at 88 cents per song for digital downloads.
But the good deals come at a price. Although stock size can vary by store, a typical Tower carries somewhere in the neighborhood of 60,000 CD titles (the larger ones can stock up to 40,000 more); while an average Wal-Mart, for which CDs make up only a tiny fraction of overall sales, carries 5,000 or fewer. Greater size means greater diversity as well--one industry executive estimates that Tower sells as many as 100,000 titles that cannot be found in the stores of any other chain. Beginning in 1968, when the first San Francisco Tower Records opened as the "Largest Record Store in the Known World," Tower thrived by providing the deepest collection of music of any major retailer. The CD racks at today's Wal-Marts, Best Buys and Targets are barren by comparison.
For fans who enjoy rifling through Tower's inexhaustible collection, the prospect of a Wal-Mart-style makeover for the music industry is daunting; for smaller record labels--particularly those that specialize in "niche" genres like classical, jazz or roots music--the loss of Tower's combination of size and diversity is something even more dire. Tower's market share in specialty genres approaches 50 percent, and in some cases Tower can account for as much as 25 percent of an independent label's overall business. Tom Diamant manages Arhoolie Records, which produces blues, Cajun and gospel music, and he predicts that Tower's closing will "cut significantly" into Arhoolie's sales, while big-box retailers that "cater to the fast-moving, popular music of the day" will not pick up the slack. In order to survive in a Tower-less marketplace, Diamant acknowledges that independent labels will have to "put out less new CDs" and seek out "different revenue sources." Others in Diamant's position foresee even more ominous implications of Tower's closing. René Goiffon, who runs a classical label called Harmonia Mundi, fears that "a whole bunch of smaller labels are going to disappear completely."
Still, according to the market faithful, the big-box phenomenon is just one step along the way to an entirely digital future, and even David Porter boasts that Wal-Mart is prepared to "go where the customer wants to go." Diamant notes that for many music fans, "to own a physical object such as a CD does not mean what it once did," while the traditional record store experience--discovering new musical acts while browsing the stacks and interacting with a knowledgeable staff, at the large brick-and-mortars or one of the dwindling number of independent record stores--is giving way to the personal computer and the online retailer. Whether the music produced by Arhoolie, Harmonia and others, which relies so heavily on brick-and-mortar stores for sales, will be able to make the transition to digital is as of yet unclear. As Russ Solomon, the 81-year-old progenitor of Tower Records, remarked to Joel Selvin of the San Francisco Chronicle recently, "Who's going to download an opera?"
When the liquidation became official, Solomon sent a farewell e-mail to Tower's 2,700 soon-to-be-jobless American employees, thanking them for their faithful service and lamenting the changes reshaping the industry that his company had defined for so long. "The fat lady has sung," Solomon wrote. "She was off-key." Given the circumstances, Solomon can be forgiven for sounding a bit hokey. An era has come to an end. What comes next is anyone's guess.