Report: Tower Stops Paying Bills as Music Biz Suffers4 Aug, 2006 By: Erik Gruenwedel
Tower Records reportedly stopped paying outstanding invoices, prompting several major record labels and vendors to suspend shipments of product, including DVD.
Universal Music Group, Warner Music Group Corp. and EMI Group were among several vendors that had halted product shipments to West Sacramento, Calif.-based Tower, according to the Los Angeles Times.
Tower last week named investment consultant Joseph D'Amico as interim CEO, succeeding Allen Rodriguez, who left the company. D'Amico, who is a senior managing director with FTI Palladium Partners, has been instructed to help expedite the sale of Tower.
The retailer's travails come on the heels of the lowest recorded weekly (ended July 25) sales of physical albums in 12 years, according to Nielsen SoundScan. CD sales have fallen almost 8% this year and when offset by sales increases of digital albums, overall music sales are down 0.7% for the year compared with last year.
During opening comments at last week's National Association of Recording Merchandisers (NARM) confab in Kissimmee, Fla., president Jim Donio lamented an ever-changing entertainment retail landscape while reiterating that music retailers have to become more creative with their marketing and merchandising efforts to ensure their customer's shopping experience gives them a desire to return.
“It pains us all when any independent store or chain location is shuttered, or when any label or distributor is forced to lay people off,” said Donio. “But what hurts just as much is when those who continue to not only survive, but thrive, are still written off as irrelevant.”