No CDs for you, Tower: The Los Angeles Times reported August 4 that Universal Music Group, Warner Music Group, and EMI have cut off CD shipments to Tower Records because the record chain has stopped paying its bills. Sony BMG may have also stopped shipping to Tower, but the Times was not able to confirm those reports.
The Sacramento-based retailer has been struggling to stay afloat and had just named "crises management and bankruptcy specialist" Joseph D'Amico to its chief executive post a few days before the report. The retailer may have run out of money or, speculated some insiders, it may have been trying to force the labels to extend better terms—a fairly common Tower tactic back when it actually had clout.
As is almost required in any article describing recording industry travails, the Times implies that Tower's hard times result at least in part to "pressure from international piracy and chains such as Best Buy Co. and Wal-Mart Stores Inc." Possibly, but the Times should take a closer look at some other contributory factors that it actually passes over in its article, such as Tower's disastrous $110 million expansion in the 1990s, in which the company's debt grew faster than its market.
Tower's growth and popularity weren't fueled by its mega-store concept as much as by its deep catalog and always-open policy. When it began to feel the pinch from its too-ambitious expansion, it abandoned both, and the public discovered other options, such as Amazon.com, which really was open all the time and really did have everything.
Yes, people did abandon Tower for lower-priced options like WalMart and Best Buy, but only after Tower stopped stocking the niche recordings that lured customers in the first place. Except for brief blow-out sales, particularly when the company was attempting to establish a foothold in new markets, Tower never offered the lowest prices out there—as its erstwhile Chairman Russ Solomon used to brag to record labels.
This ex-Tower employee may be a tad biased, but I suspect there's yet another reason for the chain's decline—again one alluded to in the Times article, but given scant attention: the demise of Tower's policy of hiring "passionate and knowledgeable staff." Indeed it did—but it never valued us, groomed us for the long haul, or attempted to retain us. If it seems like nobody there knows how to run a record store, perhaps it's because all of us who learned how had to go somewhere else to do it.
iPods hit the road: On August 3, Apple announced agreements with Ford Motor Company, General Motors, and Mazda to deliver seamless iPod integration across the majority of their brands and models' stereo systems, meaning that 70% of 2007 US automobiles will feature iPod connectivity, battery recharging, and control.
Think about that for a minute—that's iPod integration, not MP3 player integration. The pint-sized player's market dominance is so pervasive that 70% of all new cars will be wired for it and it alone. Look for a free iPod to feature prominently in car ads soon.
My first thought when I heard the announcement on American Public Media's Marketplace was this can't be good for satellite radio, since new cars account for most people's first exposure to either XM or Sirius.
I could be right, and I'm sure not alone in my thinking. Many business analysts seem to concur, including The National Post's Barbara Shecter, who bluntly asks, "Will iPod kill satellite radio?" Ms. Shecter quoted Desjardins Securities analyst Carl Bayard, who called iPod integration the "most worrisome" competition to satellite radio, because "it offers better control over music selection."
But isn't the point of satellite radio that consumers get a broader range of music than on terrestrial channels and hear new stuff? That's how it was billed, but listen to satellite channels these days and you hear a fairly tight playlist, except for a few freeform platforms. That may be why Sirius and XM only retain 56% of the listeners who opt for the free trial period after purchasing satellite-capable cars. If people are going to listen to the same songs over and over, I'm betting more of them are going to opt for the songs they've chosen in the first place.
If satellite radio wants to grow, it's going to have to start convincing people that it has a product more compelling than the music they already own—and after all this time, you'd have thought they'd have started to do that, now wouldn't you?
Another new format? On August 4, The Wall Street Journal reported that Warner Music Group has begun "an aggressive attempt" to "push" consumers to buy their music on "specially outfitted" DVDs.
Warner, the paper said, is in the final stages of securing the technical licenses that will enable it to release feature-laden DVDs, which will include stereo and surround-sound mixes, ring-tones, video, and remixes. The new discs, a format we industry experts like to call "DVDs," won't play on CD players, of course, nor will they play in cars, boomboxes, or some computers. The "main" audio mix, apparently, will be crippled by DRM so purchasers will not be able to save it on their computers or transfer it to their portable players. The discs will have "pre-ripped" tracks, presumably at lower resolution, that can be transported to the device of the consumers' choice.
Boing-Boing writer Corey Doctorow, formerly of the EFF, likes to say that nobody ever woke up in the morning and said, "Today I'd like to do less with my music." That product that nobody ever woke up wanting, in this writer's opinion, is precisely the one Warner is now trying to sell us. All I can say is good luck with that.
