Labels rethinking marketing, staffing in wake of chain's closure.
With independent labels slowing down their releases for the fourth quarter, the long-term effects of Tower Records' closing may not be realized for a while in the indie realm. In terms of the major independent distributors, sources say Tower accounted for somewhere between 3% and 6% of their business.
But that tells only part of the story.
One indie distribution executive says: "When you look at it on a label-by-label basis, Tower can be as much as 25% of a label's business or 30% of a title that's 10,000 units or below . . . They became a relatively small player in the scheme of things, but if you analyze it on a piece-by-piece basis, especially on our level, there are some very key big numbers that show up."
One region that could be particularly affected is Southern California, where Tower outlets between Los Angeles and San Diego would regularly account for nearly 20% of a label's sales on a particular title. "If you have a Southern California-based marketing plan, it's going to be a lot more difficult to implement on a developing artist without Tower," one high-placed distribution source says.
Other indie distribution execs say they're already hearing from buyers at Best Buy, Borders Books & Music and Barnes & Noble, among others, about initiating more catalog programs. With some estimating that the typical Tower outlet carried 100,000 more titles than most other stores in a region, it's a sign of hope, but one to be viewed skeptically.
"I don't believe that the sum of the parts will ever equal the whole," says Rob Scarcello, senior VP of sales and marketing at Koch Entertainment Distribution. "We won't lose 100% of the product that goes to Tower, but we'll lose a significant portion of it."
And some may even lose staff members. Scarcello says he had to cut one staffer who dealt solely with managing Koch's inventory with Tower. He then relocated his California-based sales rep who worked with Tower to the company's corporate offices in Port Washington, N.Y.
At RED Distribution, executive VP/GM Bob Morelli says he shifted his Tower sales rep over to Amazon, and the existing Amazon rep will now assume a "secondary role." "I get to superserve Amazon now," he says.
"Business in general is tough, and Tower leaving makes it tougher," Morelli adds. "I hope others will be picking up the sales slack, but thus far I have not really seen it. I'm bullish, though, it will happen as the holiday season kicks in."
Tower's demise might accelerate some companies' plans to go with a national, rather than a regional, sales force-a tactic that seems to be under way at Caroline Distribution (Billboard, Nov. 4). But Alternative Distribution Alliance head Andy Allen cautions against such a move and says his company is adding a rep in Detroit.
"You can probably cover the entire country these days with six or eight people calling on national accounts," Allen says, "but you lose the ability to check on compliance and the ability to make sure the computer is in sync with what's in the store. It would seem to be possible, and I'm sure some [distributors] are looking at it, but our view is still having eyes and ears in the marketplace is the right way to approach things."