MovieChat Forums > All Things Must Pass: The Rise and Fall of Tower Records (2015) Discussion > Fails to show EXACTLY how Tower went out...

Fails to show EXACTLY how Tower went out of business

posted 8 years ago by traxrule
13 replies | jump to latest

Having worked at their corporate office during their last 5 years, I was hoping that this documentary would show what ultimately brought Tower down, but it failed to show it at all:

In 2006 it was decided to put the company up for sale. A number of bidders were interested in revitalizing it- one company would have done a few different things with the stores, adding other things that they'd sell there which might or might not have worked. TransWorld, owners of the FYE chain, was also interested in buying Tower and folding it into their company. But the highest bidder was Great American Group, a liquidator which buys companies JUST to sell them off and close them. They bid the most money for the company, so they took ownership of it and the very next day held Going out of Business sales at all the stores and proceeded to sell off the main company's assets after the stores were depleted. If they had not bought the company, it's likely it would have at least had another chance of staying in business. On the day the auction happened, I was working at the corporate office and all day we were awaiting the results as they would determine whether we'd still have jobs or not- we were rooting for the company that would have taken a different approach but they dropped out early; TransWorld would have kept Tower in business but would mean some big changes (they might or might not have closed the Sacramento offices), but we knew that Great American winning would be the kiss of death and when they were announced as the winner it was all over.

It was also rumored that Tower's last CEO had some sort of "sweetheart" deal with the liquidators, and although he claimed to want to save the company he really intended to put it out of business all along. I was very disappointed that this documentary did not address ANY of this. It basically said the company was in trouble and then cut to "Going out of Business" as if Russ Solomon and company had just given up and decided to shut down.

[–] tomokker 8 years ago

I agree. Also, as I don't understand finances, perhaps someone can explain to me why they had to borrow so much money if they were so successful?

[–] oldpunkwebzine 8 years ago

You're betting on exponential growth. It's gambling.

[–] TheOnlyVindicator 8 years ago

You're betting on exponential growth. It's gambling.

Right now a lot of those oil sands extractors are losing their shirts because the Saudis are driving prices into the ground, and since most of them borrowed a lot to keep building more oil rigs and spending money to hire workers, they are in a world of hurt. The Finance Industry encourages mismanagement.

[–] billymac72 8 years ago

The doc does mention, however, that "the liquidators got the highest bid." One can certainly get the general picture. And, there's no question what started to hurt record retailers. I managed a record store myself through college in the mid-90s and saw this happen on a much smaller scale. Everyone blames Napster, but as pointed out in the documentary, big box retailers like Best Buy, Border's and Target also took a huge chunk of business away and the small stores lost out big on the price war. So the slide was happening already and I'm still not sure what could have saved this type of retail.

Maybe the sweetheart deal allegations could have been mentioned, but I'm not sure it would have changed the story all that much. The story of Tower is not just about one company, but about how the entire culture changed in the 2000s.

[–] pcventures 8 years ago

Interesting... I felt differently. This was one of the better structured documentaries I've seen in a while. For me it was pretty clear that Russ was jazzed up by Tower's rapid expansion, and ignored Bud's advice to slow it down a bit and not borrow so heavily to finance the growth.
Tower's debt on their balance sheet kept increasing - not necessarily a bad problem if top-line revenues keep up.
But there were ill winds blowing - the film explains that although CDs were a higher-margin product, the mass merchandisers like Best Buy and even Target and Wal-Mart began selling them - at lower prices which hurt Tower's gross sales.
And then the advent of free online music and a bit later iTunes, with its glorious ability to easily parcel out the one desired song rather than buying an entire album, inflicted further damage.
Then the creditors insisted on bringing in management who really didn't know the business. They shortsightedly sold off the most profitable division - the Japanese stores - which infused some cash but killed the golden goose.
For me, the only "failure" of the film was to capture what working at the store level was like and how it changed (or didn't). It's clear to me that the initial cadre of people - Russ and his friends - had a great time. In the Tower stores I went to, usually the one in northern Yonkers, from about 1990 - 1994 - they seemed pretty corporate and the employees didn't seem all that happy, even though it was the heyday of the CD, and cassettes were only beginning to fade.

...and Mrs. Taylor sure seems to use a lotta ice, whenever he's away

[–] tdl797 8 years ago

Steve Jobs not only hurt physical media with iTunes, but they started selling Apples without CD drives at all and had links to iTunes. They didn't even let you enjoy what you already had. If you wanted music on that laptop I'm assuming you had to buy an extra external CD drive or buy it/download it from iTunes.

Weird thing about vinyl - now a lot of vinyl from the 90's is expensive. Take a band like REM. You can get any of their albums on CD for dirt cheap, but since the 90's albums had small quantities of vinyl printed, now they are very expensive.

[–] ssny13 8 years ago

Steve Jobs and Apple? The iTunes Store came out in Spring/Summer '03, and Tower filed Chapter 11 less than a year later. A company that large doesn't go bankrupt overnight. Besides, Apple still sells computers with CD drives ten years later that allow you to rip your CD collection into iTunes. Apple disrupted severely the music industry, but Tower borrowed themselves into bankruptcy through the entire decade leading up to its closure.

[–] riverroad84 8 years ago

You're right, I hadn't thought about it until now. Apple airbooks then macbooks were phasing out cd drives from 2010. By 2012 you couldn't buy any apple laptop with a built-in cd drive, you had to buy the external "optical" drive. I found it annoying at the time, but hadn't made the connection you just point out - that it was to push us towards buying music through i-tunes. You're right, that really did hurt physical media.

I do think that was another stab at Tower Records' business drop. I was glad in the documentary they pointed towards 1- bigbox retailers undercutting prices and most importantly 2- labels refusing to sell cd singles, thinking that would force consumers into buying full albums. Consumers had changed, but recording labels failed to change with them.

[–] 8 years ago

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[–] obs-2 8 years ago

Don't give so much credit to iTunes. As Russ alluded to, it was the greed of the music industry in deciding to stop releasing singles that had a lot to do with it. (I'm not talking about the CD maxis with 100 remixes, but 2-song singles that could be had for a couple of dollars.)

[–] 8 years ago

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[–] jnatch 8 years ago

Interesting, thanks for sharing. What I did notice were the Going Out of Business signs. I have seen those very exact signs (color and font and style) many times and wondered why they were always the same. Maybe thats this companies "logo" as much as the Tower yellow & red is

[–] traxrule 8 years ago

Many liquidation firms use those signs, I don't think any one company has an exclusive right to them. (I snagged one from a Levitz Furniture store just for kicks, always thought of putting it up in a wildly inappropriate place as a joke.)

Yes, overexpanding certainly did help get Tower into trouble in the first place, opening more stores than the market could support. Many of them were close together as well, while some states never had ANY Tower stores at all. I worked at the call center and took orders from all over the country, and many people in the midwest especially said that they wished there was at least one Tower store close to them.

Best Buy killed Tower and similar stores on new release pricing. They sold many popular titles at a loss just to get people in the stores to look at their more expensive stuff (TVs and such.) Some of their sale prices were even lower than what we could get at Tower with our employee discounts. The problem of course was that Best Buy wouldn't carry the more niche titles, and conveniently, right after putting so many media stores out of business, they've decided to drastically cut back on their stock- their movie selection now is a joke compared to what it used to be.

With the Japanese stores still existing, having been bought by another company before Tower folded in the US, I've hoped that company would come back and open at least a few stores here, but we'll see if that ever happens. I still think even with changes in the market, there should still be enough support for ONE really great media retail chain to do well here. (Borders could have taken Tower's place but they blew it, and Blockbuster was always an awful company that was a sitting duck when the market changed- they'd already alienated the enthusiasts like me who would have kept them in business, and when they lost Joe Sixpack's business it was all over for them.)