Via another mailing list to which I subscribe, came an item from
the Musical America website, that reports a memo that Tower Records
headquarters sent out to all of its stores.  I don't have subscriber access
to musicalamerica.com, and the quoted article had a bunch of HTML garbage
in it that I do not wish to inflict on the List here.  So I've done some
snipping and trying to edit for readability (sorry Dave, if I've failed to
fix everything).

The gist of the article is that effective 1 May, Tower is not buying CDs
from the follower distributors/labels: Allegro, Harmonia Mundi, and
Qualiton.  So says the article:

   "Thus, if Anonymous 4 records a new CD on its label, Harmonia Mundi
   USA, you won't find it in Tower Records.  Nor will you find any new
   discs from Chanticleer or on the Dorian and Nimbus labels (among the
   Allegro stable) or on CRI, Hungaroton, BIS, or Supraphon (some of
   the larger Qualiton-distributed labels.)"

   "Of course the major distributors -- Universal, Sony, BMG, and EMI
   -- are on no such hold.  All have agreed to give Tower deeper discounts
   on classical product, as well as, in most cases, to let Tower have
   360 days to pay them for any product sold (called '360-days dating').
   'It's like selling records on consignment,' said one label exec.
   WEA is the only large distributor that has turned Tower down, which
   for the moment could put the status of any new recordings on Nonesuch,
   Teldec, and Erato in limbo with the chain."

   "Waiting a year to be paid my be possible for the majors, all of
   which are affiliated with larger entertainment conglomerates, but
   the smaller indies simply can't wait that long and stay in business."

   "...Tower, which has 183 stores worldwide, is one of the few, if not
   the only, retail chains that carries a substantial array of classical
   recordings, especially back catalog....In recent years, Tower has
   been having financial difficulties.  Just last month, a major bank
   loan--by some reports as high as $275 million--came due.  The company
   has been given an extension, but that has not quelled rumors that it
   may be headed for Chapter 11.  Wiser heads say that is unlikely, that
   the distributors would sooner come to Tower's aid than let it file
   for bankruptcy.

   'They're certainly not the force they once were,' said one executive.
   'They're closing some stores; the book division is hemorrhaging money.
   But going Chapter 11 would really surprise me.'"

   "In any case, if Tower did file for Chapter 11, all of its current
   inventory would, by the banks' reckoning, be considered an asset and
   would be liquidated.  Which in turn means that the distributors would
   not be paid for any of the product that happened to be sitting on
   the shelves at the time of the filing.  Once again, the smaller
   distributors stand to lose their shirts were that to happen.  The
   chief executive of one of them is so concerned about Tower's financial
   condition that he has offered to personally remove his companies'
   inventories from various Tower outlets."

   "Recognizing the potential reward in taking the risk of 360-days
   waiting for its classical and jazz product, Universal/Vivendi was
   the first to agree to Tower's terms.  It also agreed to lower some
   of its wholesale prices.  (Under the Universal Classics umbrella fall
   Deutsche Grammophon, Philips, and Decca--homes to such big sellers
   as Andrea Bocelli, Pavarotti, and Renee Fleming, to name a few.)

   'In theory, when you offer to extend the dating like that, it means
   an account [Tower] is going to take in more product,' explained one
   highly placed label executive.  'Tower would be willing to take a
   gamble on larger volumes of product because it is not going to have
   to pay for it for a year.'

   'I see it as a desperate attempt to get some quick market share on
   the part of Universal,' offered another executive, adding that the
   Washington, D.C.  Tower store 'looks like a Universal outlet.'"

   "Sony last week followed Universal's lead, agreeing to extended terms
   and lower prices, and EMI and BMG are apparently not far behind.

   It is not clear precisely what will happen to the recordings distributed
   by Allegro, Harmonia Mundi, and Qualiton.  Several messages left on
   voice mails at Tower's corporate headquarters in Sacramento went
   unanswered, including one with a personal referral from the chain's
   New York based national classical buyer, Ray Edwards.  The Lincoln
   Center classical buyer referred this writer to the store manager,
   who also did not return calls."

   "Freezing out the independents--the rugged pioneers in a field that
   so desperately needs rugged pioneers--is unfair, not to mention
   unhealthy for classical music.  But, as one realist pointed out,
   'Tower is a privately held company.  They can do whatever they want.'

      Classical labels distributed by Allegro:
      Arabesque Records
      CBC Records
      Chanticleer Records
      D'Note Records
      DOREMI Music
      Dorian Records
      Four Winds Records
      John Marks Records
      Marquis Classics
      Nimbus Records
      Opening Day Recording
      Reference Recordings
      Stradivarius
      Summit Records
      Well Tempered Productions"

Bill H.