Tower Records goes out of business

Good web only piece on The Nation here. People blame digital music and the iPod, but it's not that simple:

...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....

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.

So the divide is not just between digital and CDs, but also big vs. small and corporate vs. independent.