What The Closing of Tower Records Means

The Nation reports:

Despite the company's illustrious history, it hardly came as a shock when Tower announced in August that it would file for Chapter 11 bankruptcy protection for the second time since 2004. After recovering from its first bankruptcy, Tower had failed to improve on desperate sales numbers amid fierce competition from retail chains, popular online sellers like Amazon.com and, most significant, the rapidly growing digital market. The company started losing money in the late 1990s, at about the same time that CD sales began declining and music downloads took off. Since then, retail music sales have dropped roughly 20 percent. Last year alone, album sales fell nearly 8 percent, while legal digital downloads increased by 200 percent. By the beginning of August, three major record labels had stopped shipping CDs to Tower because the music seller had stopped paying its bills, and when Tower filed for bankruptcy later that month, it was $210 million in the red.

Anyone interested in music should read this one.