Tower Records To File Chapter 12
The last several years have not been good for the standalone music store. Just a few years back, Tower Records filed for bankruptcy, we’ve seen Wherehouse Music also file for relief from their creditors and Sam Goody also had to file for Chapter 11 protection. Most of the record stores have blamed piracy and music downloading as the reason behind their failure, but that argument can only go so far.
Between the popularity of iTunes and the availability of alternatives like Pandora and Last FM, the music industry has gotten simply too competitve for the stand alone music store to survive. Many of the stores who fueled their growth in the 80′s and 90′s with debt underwritings are now finding that paying off their debt, paying employees and paying store leases is too much to bare. Now, after having just filed for chapter 11 bankruptcy protection two years ago, Tower Records may finally be on the brink of complete failure.
In someways this is really too bad. I’ve spent a good chunk of my life purusing through record stores looking for bargains and discovering new music. When I enter a music store I instantly become lost in the vast selection. One thing that I really liked about Tower records is that they would let you listen to any CD in the store before you bought. This saved me from buying a real bomb more then once, but with the ability to purchase a single song online and the ability to sample tracks there, I’m not surprised to see their business continue to struggle. The mp3 took a big bite out of the retail music industry and while CDs still make up the vast bulk of studio’s revenue, the end of the CD era may be drawing to a close even sooner then I expected. Between the commoditization of CD sales online, the endless music membership clubs like BMG and Columbia and a shift in consumer habits, the music store has had a difficult time innovating. I’m not sure what the solution to their problem may be, but this trend in the music industry may be an early indication of what the stand alone video store will ultimately face if the video stores can’t figure out a more efficient business model.
The video store has had a few extra years to adjust their business models, but the age of downloadable films is quickly approaching and companies with high debt, a lot of stores and an antiquated business model will soon face the same difficulties that Tower Records is facing today. While it’s possible that Tower could emerge from bankruptcy a stronger company, with this being their second time through the process, it’s hard for me to see much of a future. I’ll always remember the times that I spent wasting afternoons in their seemingly endless bins of CDs, but with the future of music being downloading, it’s hard to see how Tower Records will ever be able to overcome this latest obstacle.
Posted on August 23rd, 2006 by Davis
Filed under: Music
[...] Visit original post by davis [...]
[...] 2007 is going to mark a big change for the DVD industry and once the DVD kiosk goes nationwide, it will put real pressure on the video store. The cost of setting up a kiosk is about 1/10th the cost of setting up a video store and with demand continuing to shift online, more stores will be forced to close as they face the economic realities that the CD stores have already faced. The kiosk won’t be able to compete on titles or availability, but it can compete on instant gratification. There will always be customers who want to rent a film without planning ahead and the kiosk will be a cost effective solution to the inherent problems in the video store business model. With the growth of Redbox and TNR and the decline in the number of Blockbuster stores, it is entirely possible that we could see more Kiosks deployed by the end of 07′ then actual Blockbuster stores. [...]