Thursday, October 26, 2006

Indies hurt as Tower collapses

While the implosion of US record chain Tower might seem to be most worrying for the majors, it's also causing some major worries amongst smaller labels: Tower accounted for between five and six per cent of some indie's grosses, and, for all its faults, Tower used to take much more new music than its main rivals.

"I don't see that another retailer is going to step up to make that commitment to physical goods," said Bruce Iglauer, who operates the Chicago-based blues label Alligator Records

The main trouble is that, while online sales have been high enough to help force Tower off the high street, they're not yet at a level where they can replace through-the-door sales:

Rob Miller, partner in the Chicago-based alternative-country label Bloodshot Records, said that online sales account for just 10%-15% of the company's business. He estimates that Tower accounted for about 5% of Bloodshot's sales.

"If it was a one-to-one trade (for lost physical sales), it'd be great, but it's not," Miller said of online sales. "It's a good bandage on a much larger hemorrhage."

In time, downloads and web-sold CDs will expand to fill the gap. The question is, of course, if that will come quick enough to keep the indie sector solvent.

For major labels, the threat of the closure of Tower is added to by the chain's current 'Everything Must Go' closeout sale, forcing prices down and soaking up demand at the start of the holiday seasons.

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