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.
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