Tower Records

[Claude Schlouch]

Tower Records died out in my town three years ago.

Figures.

At $18-20 bucks a pop....nobody is going there.

When I was in San Francisco on buisness I used to like to go to the Tower which wasn't too far from the hotel that I stayed at(the St Francis Westin). Is that the Tower you were referring to?If it is that's too bad because it was pretty good.

When I was in San Francisco on vacation I used to like to go to the Tower which wasn't too far from the Howard Johnson hotel where we stayed. It was the first time I saw a so big record store. Sad to hear about their situation.

[Dave James]

There used to be two Towers here in Portland. One on the westside and one on the eastside. The westside location has been gone for years. The other one is still there. It used to have a passable jazz section, even some odd lot Japanese imports, but I was out there for the first time in a while the other day and, at least as far as jazz goes, they're down to the seeds and stems. Other genres are still well represented, including classical. The only B&M in these parts that's worth even half a hoot is an independent called Music Millenium. They've been around since the '60's.

Up over and out.

[ejp626]

I'd say things do look bad for Tower Records in the US, but I happened to be in Tokyo this week, and I stopped in at the one in Shibuya. It was hopping, and well stocked. So perhaps there will be a liquidation of the US stores and a spin off of the international ones. Who knows...

Anyway, the prices were a little bit better than typical Tower Record prices, but I tried to refrain from going crazy. I'm trying to only get Japanese pressings where there is a significant savings. Perhaps the coolest thing is that a fair number of the Blue Note TOCJs in the 1500 series are being sold for 1500 Yen, which is a bit under $15. I picked up three Duke Pearsons which don't appear to be widely available. That was it, though I was tempted by a few other things, including some hard to find Archie Shepps. I may still go back.

[brownie]

From Reuters today.

TOWER RECORDS FILES FOR BANKRUPTCY AGAIN

By Chris Morris

Tower Records filed for Chapter 11 bankruptcy protection for the second time in two years Monday, weeks after word surfaced that the iconic music retailer had been cut off by major suppliers for failing to pay its bills.

MTS Inc., the corporate parent of the 89-store chain based in West Sacramento, Calif., said in court papers that it aimed to keep Tower up and running as a "going concern" while a new owner is sought.

Many in the industry had feared that, given the severity of Tower's situation, a Chapter 7 liquidation could be in the offing. The possibility still exists that the company's assets could be sold off piecemeal if a buyer can't be located.

As the biggest and one of the last free-standing, deep-catalog music retailers -- with Virgin Entertainment's 20 stores as its closest competition -- Tower occupies an important position in the world of brick-and-mortar sales. Its flagship store is a landmark on Los Angeles' Sunset Strip, but it no longer draws crowds.

The company acknowledged in its filing, in U.S. Bankruptcy Court in Delaware, that its same-store sales declined 9% during the past year. It cited the industrywide slump and "intense competition" from legal and illegal downloading, as well as from "big-box" retailers, such as Best Buy and Wal-Mart, which sell music as a loss leader.

In 2004, the company underwent a prepackaged Chapter 11 filing in which bondholders assumed control of 85% of the debt-wracked firm. The family of founder Russ Solomon continues to hold 15% of MTS.

As a result of the current filing, the company will now receive $85 million in debtor-in-possession financing from its primary lender CIT Group.

Tower said it had negotiated delivery terms with its principal suppliers to assure a flow of fresh product into its stores. Recently installed CEO Joseph D'Amico said: "The trade has always supported Tower through difficult times, and we recognize that their support is imperative to the consummation of a transaction."

Subject to court approval, Tower will attempt to finalize a sale of the chain -- which hired Los Angeles-based Houlihan Lokey Howard & Zukin as its sales agent in March -- within 60 days.

The clock is ticking: The filing noted that Tower is scheduled to make the next payment on its revolving credit facility in mid-December. The document stated: "Without a restructuring or the sale of substantial assets, it is unlikely that the debtors will have sufficient liquidity to pay the portion of the CIT facility that becomes due on December 15."

The year's fourth quarter, in which record chains traditionally do the majority of their business, also is looming. D'Amico said, "Tower Records has conducted an extensive sales process, and this step will allow buyers to complete a sale in time for the holiday season while maximizing the value for stakeholders."

Sources said that a sale of the company to a consortium of unknown equity firms fell through in the days before Tower's current fiscal crisis became public knowledge.

"We're praying they'll reorganize successfully," one veteran music executive said. "We're praying they'll come back to life. Do I feel they're going to do it? Yes. Tower's enough of a brand, they can come back."

The executive added that the dissolution of Tower could have a dire impact on the public's perception of music retailing: "Can you imagine Tower Records with boards on the windows on Sunset Boulevard? It'd be horrifying."

"Everybody's rooting for them," a longtime sales executive said. "We all need as an industry for people like Tower to be around."

The list of potential buyers for Tower is a short one. Beyond equity firms, the likeliest purchaser might be Trans World Entertainment, a largely mall-based chain that operates more than 900 stores out of Albany, N.Y.

One observer believed that Trans World, which specializes in buying troubled chains' outlets at fire-sale prices, could swoop in "at the right price. . . . Trans World tends to wait until the right time to pick up these accounts. They're very smart and very astute people."

[Eric]

I can't say that I will mourn the loss if they don't emerge or go Chapter 7. Their economics have not allowed them to be competitive for many years. Hopefully we will see independents fill the void. I travel the US quite a bit and have been pleasantly surprised how many indie record stores still exist and seem to thrive (as measured by busy stores and deep catalogs in the bins).

[ghost of miles]

A Broken Record Store

Industry icon Tower is bankrupt and on the block

by Yuki Noguchi

Washington Post, August 23, 2006

Tower Records, the iconic chain where generations of music lovers have gone to

lose themselves in record-store reveries, is up for sale in bankruptcy court,

forsaken by consumers who favor digital music and discounts at big-box

superstores.

Tower represents a time when music had a different cultural status than it does

today, as songs vie for attention with newer pastimes such as video games,

Internet surfing and instant messaging. Its financial faltering -- this is its

second bankruptcy filing since 2004 -- signals not only corporate problems but

also a shift in how people shop and think about music in their lives.

Tower's operations started in the back of a California drugstore in the late

1950s, and its founder, Russ Solomon, cultivated its reputation as a communal

place for hanging out to train and trade musical tastes. Its huge yellow-and-red

stores became part of the record album culture. Stores hosted live concerts, and

employees were hired for their knowledge of musical arcana.

But over the past decade, as such larger retailers as Wal-Mart Stores Inc., Best

Buy Co. and Target Corp. undercut record-store prices and combined shopping for

music with shopping for a variety of other consumer products, the music-focused

stores started to die. Although Tower began selling music downloads on its site

in June, digital music sales through such services as iTunes and Amazon.com have

also taken a bite.

In 1991, there were roughly 9,500 chain music stores in the United States,

compared with about 2,000 now, according to Billboard magazine. Although many

independent stores continue to have loyal followings, those, too, are on the

decline.

Tower's parent company, MTS Inc., filed for bankruptcy protection Sunday night

in Delaware, putting its 89 stores on the block. The company hopes to complete a

sale within 60 days. Tower's brand is used by 144 international stores, but

those licensees will not be affected by the bankruptcy process.

"It's a sad day for music," said Dave DelVecchio, 20, who bought five

alternative rock albums from the Tower Records store in Foggy Bottom yesterday.

DelVecchio said he was on tour in Baltimore with his band. "I used to download

online for free a lot, but now I just buy CDs. Being in a band myself, I know

what it's like" to lose income to illegal online file-sharing.

Lisa Amore, a spokeswoman for the Sacramento-based Tower, said the company hopes

to keep the brand alive. "As of today, we have no intention of closing any

stores," she said. The company has two interested buyers, according to Bloomberg

News.

Many other music stores have already fallen to similar financial pressures.

Chains such as National Record Mart and Musicland have gone away or been

acquired by conglomerates like Trans World Entertainment Corp., which now

controls more than 1,100 retail stores under the Sam Goody, F.Y.E., Strawberries

and Wherehouse brands.

"Tower is an icon. In my mind, it represented our whole musical culture," said

Russ Crupnick, an entertainment analyst with NPD Group Inc., a consumer research

firm. "The challenge has been that the whole retail environment has changed"

because people shop less at specialty retail stores, he said.

Randall Henderson spends some of his lunch breaks browsing at the Foggy Bottom

store, near George Washington University Hospital, where he works.

"I don't even know how to download music," said Henderson, who prefers instead

to browse the selection at Tower every other week for anything from gospel to

R&B records. "The selection is very good -- exceptional," he said, but if Tower

were to shut down, he might be forced to shop digitally. "I would have no other

choice. There aren't too many record stores."

Henderson would be following a broader music industry trend. CD sales last year

totaled more than 705 million, compared with 13.6 million albums sold online,

according to the most recent figures from the Recording Industry Association of

America. But CD sales declined 8 percent last year, compared with online album

sales growth of 199 percent.

"They're going to force you to going online now; it's like forcing you to ride

the subway," said Ernest Feaster, 50, who lives in Northeast Washington and

yesterday shopped at Tower for albums by Luther Vandross, Weather Report and the

Dramatics. "It's the last of an icon around here," Feaster said. "At Circuit

City and Best Buy, they're just throwing whatever up on the shelves. Here the

selection is wide."

Tower's popularity extends beyond its customer base, said Geoff Mayfield, an

analyst with Billboard.

"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.

Perhaps, like some other stores, it could diversify by selling shoes, posters,

games and other goods that would appeal to its audience, Mayfield said. "It

needs to become a destination," he said. "Otherwise, people will just pass it

by."

_____

Staff researcher Richard Drezen and staff writer Chris Kirkham contributed to

this report.

[trane_fanatic]

I got this in my e-mail today:

August 23, 2006

A message from our C.E.O.

A message from the CEO of Tower Records:

I’d like to personally update you on what’s happening at Tower and why this is such good news for you.

As the CEO of Tower, I announced Sunday night that Tower is filing Chapter 11 reorganization. That might not sound like good news, but for the over 3,000 employees of Tower and Tower.com, as well as for our millions of loyal customers, it’s actually very good news. Here’s why:

We have the financing in place to continue operations as usual and have the product you have come to expect in our stores. And if we don’t, we can get it for you. It also means that we are now positioned to sell our company within the next 60 days or so, in time to have even more product for the holiday season. Most importantly, as usual, Tower gift cards are still good in any of our stores or on Tower.com.

And now the best news of all: take advantage of our "Buy 4 Get 5," in store promotion and, when you bring this email in to any store between now and September 4, we’ll give you an additional $5.00 "CEO Discount" as a token of our appreciation for your loyalty. More savings for you!

Russ Solomon, the founder of Tower Records, recognized the need to cater to you, the music and movie junkie, by opening the world’s first music superstore in 1960. Today Tower is still the industry leader, thanks to you, our customer.

So come by and see what’s new in our stores and we’ll continue to keep you posted on our progress.

Joe D’Amico, CEO

[Chuck Nessa]

Too bad Joe didn't extend some offer for his online customers. That's where his future resides, if there is one. I do think it's fine to reward store customers but I have to drive 200 miles to get to one, so I buy online. In fact I made a purchase last night and received shipping confirmation today.

[trane_fanatic]

Too bad Joe didn't extend some offer for his online customers. That's where his future resides, if there is one. I do think it's fine to reward store customers but I have to drive 200 miles to get to one, so I buy online. In fact I made a purchase last night and received shipping confirmation today.

I had purchased your Art Ensemble box there a while back, Chuck.

[Chuck Nessa]

Too bad Joe didn't extend some offer for his online customers. That's where his future resides, if there is one. I do think it's fine to reward store customers but I have to drive 200 miles to get to one, so I buy online. In fact I made a purchase last night and received shipping confirmation today.

I had purchased your Art Ensemble box there a while back, Chuck.

You da man.

[trane_fanatic]

Too bad Joe didn't extend some offer for his online customers. That's where his future resides, if there is one. I do think it's fine to reward store customers but I have to drive 200 miles to get to one, so I buy online. In fact I made a purchase last night and received shipping confirmation today.

I had purchased your Art Ensemble box there a while back, Chuck.

You da man.

Tell me something I don't know. Loved the AE set, BTW.

Phillip Wilson is a revelation on the tracks he is featured on.

[Chuck Nessa]

Phillip is why I started my company - to record him with Roscoe.

[Aggie87]

And now the best news of all: take advantage of our "Buy 4 Get 5," in store promotion and,

Does that mean 9 for the price of 4?

[Hardbopjazz]

More on the demise of Tower

Demise of Tower Records sign of new digital agestory

by Rob Lever

Sun Aug 27, 6:02 PM ET

WASHINGTON (AFP) - Who killed Tower Records?

ADVERTISEMENT

The Internet seems to be the prime suspect in the demise of the pioneering music retailer, which filed for bankruptcy earlier this month for the second time in two years for its US stores.

But analysts say the rise in digital music downloads is only one of several factors in the failure of Tower, which started music superstores in California in the 1960s and expanded to global markets.

Tower, whose non-US operations are not affected by the bankruptcy filing, failed to keep up with a fast-moving landscape involving online retailers such as Amazon.com and discounters like Wal-Mart, as well as a move to digital music, say analysts.

The collapse of Tower "is a sign of the evolution of music," said Phil Leigh, senior analyst at Inside Digital Media, a market research firm.

"It's pretty clear that recorded music is going to Internet distribution and right behind it will be video entertainment."

Global sales of music CDs fell 6.0 percent in 2005, according to the London-based International Federation of the Phonographic Industry, while digital sales rose 188 percent. This trend has been similar for the past few years.

But digital music downloads made up only about five percent of overall music sales, the data showed.

David Card, analyst at technology firm Jupiter Research, said blaming downloads from Apple's iTunes and others for Tower's demise is "just ridiculous."

"The transition to digital music has not happened by any stretch of the imagination," Card said.

"Music sales have been declining steadily since 1999, for a number of reasons, such as competition with DVDs and video games, aging baby boomers, maybe a bit of file-sharing, and only very recently digital downloads. Digital music is chump change compared with sales of CDs."

Card said he and other music fans still enjoy music CDs, which have several advantages over digital downloads because they have better quality, can often be copied without restriction and backed up.

"If I want to buy something cheap or try a new band, maybe I'll go for the cheapest which is digital, but all else being equal I'd rather have the physical product, and I'll pay a few dollars extra for it."

Among the problems facing Tower and other retailers are shrinking sales of music and thin profit margins.

Wal-Mart probably hurt Tower by slashing prices on music CDs, using this as a "loss leader" to get customers in stores, said Card.

At the same time, Apple has dominated the online music business with a price per song of 99 cents, of which 70 cents goes to record labels, said Leigh. Even though this generates little profit, Apple uses this to promote sales of its iPod music players.

Still, the analysts say there may be ways to make money in music retailing for companies like Tower, which hopes to find a buyer for its US operations.

Card said a company like Tower needs to marry the advantages of stores for promotions and appearances with the convenience of online sales and digital delivery.

"If you have physical stores and digital service I think you can do things," Card said.

"A store is a place where you can show things, make an entertainment experience. I believe music retail can make it if someone can put together a one-two punch with digital stores and physical products. For example, you could buy an album online and pick it up in the store."

Leigh said Tower "could have done a better job of leveraging their brand in cyberspace," to compete with Amazon.

Overall, he said the lesson is that companies must adapt to changing market conditions.

"Tower was one of the biggest, 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," he said.

[JohnJ]

I'd say things do look bad for Tower Records in the US, but I happened to be in Tokyo this week, and I stopped in at the one in Shibuya. It was hopping, and well stocked. So perhaps there will be a liquidation of the US stores and a spin off of the international ones. Who knows...

Anyway, the prices were a little bit better than typical Tower Record prices, but I tried to refrain from going crazy. I'm trying to only get Japanese pressings where there is a significant savings. Perhaps the coolest thing is that a fair number of the Blue Note TOCJs in the 1500 series are being sold for 1500 Yen, which is a bit under $15. I picked up three Duke Pearsons which don't appear to be widely available. That was it, though I was tempted by a few other things, including some hard to find Archie Shepps. I may still go back.

Tower Japan is a separate operation from US Tower with completely different ownership. Apparently they are doing very well and an IPO is planned in the near future.

By the way, did you check out the Disk Union in Shibuya? They have several of the TOCJ 1500 series on sale at 1000 Yen. HMV Shibuya also was selling them at 20% off recently. This series seems to be widely discounted.

[ejp626]

I'd say things do look bad for Tower Records in the US, but I happened to be in Tokyo this week, and I stopped in at the one in Shibuya. It was hopping, and well stocked. So perhaps there will be a liquidation of the US stores and a spin off of the international ones. Who knows...

Tower Japan is a separate operation from US Tower with completely different ownership. Apparently they are doing very well and an IPO is planned in the near future.

By the way, did you check out the Disk Union in Shibuya? They have several of the TOCJ 1500 series on sale at 1000 Yen. HMV Shibuya also was selling them at 20% off recently. This series seems to be widely discounted.

I had a few hours on my last day to do some more CD shopping. I tried to find one of the CD stores in Shinjuku but a lousy map and bad directions did me in. I made it to the Shibuya Disc Union about 15 minutes before they shut and did pick up 3 of the TOCJ 1500 series for 1000 Yen (yes, quite a bargain) and a few used CDs, including Freddie Roach's Down to Earth and Shepp's Deja Vu. What I found quite odd was that artists are alphabetized by their first name, which took some mental energy on my part to find things.

I wish I had had more time, but I think I did pretty well for two days, filling in some gaps in my BN collection, mostly Duke Pearson, Lou Donaldson, Freddie Roach's Down to Earth and Baby Face Willette's Stop and Listen.

Best of all, work paid for most of the trip (not the CDs though).

[wulfman]

Nice to see a sale on at Disk Union, I am Japan-bound this Friday for a couple of weeks, will leave some room in the luggage to load up!

[rostasi]

More on the demise of Tower

Demise of Tower Records sign of new digital age

by Rob Lever

The Internet seems to be the prime suspect in the demise of the pioneering music retailer...

Oh, and yes, the fact that the prices are out the roof! may have something to do with it too.

[Big Al]

More on the demise of Tower

Demise of Tower Records sign of new digital age

by Rob Lever

The Internet seems to be the prime suspect in the demise of the pioneering music retailer...

Oh, and yes, the fact that the prices are out the roof! may have something to do with it too.

And I'm sure the overall quality of popular music has nothing to do with it whatsoever as well.....

[rostasi]

And I'm sure the overall quality of popular music has nothing to do with it whatsoever as well.....

[rostasi]

Bye, Bye Tower...

SEATTLE POST-INTELLIGENCER

http://seattlepi.nwsource.com/business/131...Bankruptcy.html

Friday, October 6, 2006 · Last updated 4:16 p.m. PT

Group plans to liquidate Tower Records

By RANDALL CHASE

AP BUSINESS WRITER

An exterior view of a Tower Records store is seen in San Francisco, Friday, Oct. 6, 2006. After a lengthy auction stretching over two days, a federal bankruptcy judge on Friday approved sale of California-based Tower Records to Great American Group, which plans to liquidate the music retailer. (AP Photo/Paul Sakuma)

WILMINGTON, Del. -- After a lengthy auction stretching over two days, a federal bankruptcy judge on Friday approved the sale of California-based Tower Records to Great American Group, which plans to liquidate the music retailer.

After almost 30 hours of what attorneys described as "robust" and "vigorous" bidding, Great American won with a bid of $134.3 million, beating Trans World Entertainment, which had hoped to continue operating at least some Tower stores, by a single bid increment of $500,000.

Peter Gurfein, an attorney representing Tower Records, said the company will be sold for an aggregate of $150 million, including the sale of various leases and properties.

Gurfein said Great American plans to begin the liquidation process and going out of business sales on Saturday, which eventually will result in the elimination of the jobs of some 3,000 Tower employees.

"This is not an easy decision," said bankruptcy Judge Brendan Shannon, who nevertheless noted that the Tower debtors and other parties had agreed the bidding process was conducted fairly and in good faith.

Tower Records, which has 89 stores in 20 states and owes creditors about $200 million, filed for Chapter 11 reorganization in August. In its filing, the company said it has been hurt by an industrywide decline in music sales, downloading of online music and competition from big-box stores such as Wal-Mart.

Tower's Chapter 11 filing came two years after initial reorganization that resulted in bondholders forgiving millions of dollars in debt but taking an 85 percent stake in the company, leaving founder Russ Solomon and his family with 15 percent.

Solomon founded Tower in Sacramento, Calif., in 1960, starting by selling records out of his father's drug store and eventually opening the company's landmark store on Hollywood's Sunset Boulevard in 1969. As part of the bankruptcy auction, the Sunset property will be sold for $12 million.

Michael Bloom, an attorney representing Tower's secured trade creditors, urged Shannon to consider the closeness of the bids and the effect that liquidation would have before deciding whether to approve the sale.

"We can save this company or we can liquidate it," Bloom argued. "... Sometimes, the highest bid is not the best bid. In this case, your honor, we believe the best bid is the Trans World bid."

Trans World, which has about 1,100 mostly mall-based stores nationwide, has recently acquired other music retailers such as Sam Goody and Wherehouse Music, consolidating most of its acquisitions under the FYE name, which stands for For Your Entertainment.

Tim Pohl, an attorney representing Trans World, asked the judge whether $500,000 was "a material enough difference" to liquidate a company, as opposed to keeping thousands of people employed.

But Jay Indyke, an attorney for Great American, said Trans World and its bidding partners had discussed liquidating inventory and closing about two dozen Tower stores, and that they would not say how many stores they would continue to operate.

[bertrand]

Are they saying a going out of business sale starts TOMORROW?

I don't want to sound like a vulture - I'm sorry this is happening. On the other hand, it's not my fault. God knows I spent enough money there

Bertrand.

[rostasi]

That's how I read it - today actually.

Maybe the prices will be closer to normal.

I also got the impression that there was a slight -

a veeeeeeeeery slight chance that the bid could go the other way,

but I'm not holding my breath...

rod

Edited October 7, 2006 by rostasi

[rostasi]

A story:

Wednesday night I asked them about a

new Brian Eno video. The guy said that they

got only one copy of it in and one of the employees

has claimed it for himself

When I asked if they were getting more in,

the guy said that they weren't allowed to do any more orders until

the place was sold - "which should be later this month."

Still, Mode discs are at $18.98 - same with most new ECMs...

I remember a couple of weeks ago standing there with a copy of

each of Ornette's and Bennie Maupin's latest discs in my hands

trying to figure out if I wanted to pay 18 bucks each for them...

sad really....

Edited October 7, 2006 by rostasi

[bertrand]

Yeah, I read that too - it might still go the other way.

The website is mum, of course.

Prices were definitely an issue. When they had good sales it was OK, but that went away.

As I posted elsewhere, if you tweak the Borders' coupons, you can get pretty decent prices. I've managed to get some $11.99 CDs for only $6 and change.

Bertrand.