Moneybox

Why Is Tower Records Coming Back Now, of All Times?

It’s trying to offer something Amazon and Spotify can’t.

Glowing neon outline of a vinyl record on a turntable
Photo illustration by Slate. Photo by Getty Images Plus.

Comebacks is a series about businesses that have made dramatic turnarounds during the pandemic, in partnership with Slate’s Thrilling Tales of Modern Capitalism podcast. The following article is a written adaptation of an episode of Thrilling Tales.

In 1965, Heidi Cotler got a job at Tower Records. She worked in the books department, which had opened not long after the record store did. The job suited her countercultural style. “There was no dress code. There was no hair code. As long as you didn’t smell and your butt wasn’t hanging out, you were pretty much good to go. You had to wear shoes, most of the time.”

Advertisement

Cotler says the vibe at Tower—what we’d now call its corporate culture—all came from its founder, Russ Solomon. He was cool, he was free-spirited, and he hired lots of cool and free-spirited young people to create the kind of company he wanted. He didn’t care much about rules as long as the job got done. “We ran on basically just sheer idiocy for a long time,” Cotler says, “and it worked because we adored Russ. He had respect for us, and in a business where you’re being paid $1.25 an hour, to be respected at 19 or 20 years old is a pretty heady thing. You really have to respect that and not screw it up.”

Advertisement
Advertisement
Advertisement

Tower staff of young misfits managed to make the business run, even if they sometimes used unorthodox methods. For instance, there was a line item in some expense reports listing money spent on “hand truck fuel,” aka cocaine.

The rowdy mood at Tower was infectious. Customers came in to be a part of it. “You could spend hours in those little steamy record booths,” Cotler recalls. “You could make out, you could get loaded, you could do obscene things to each other. And the only thing that you had to do eventually was to get out and let somebody else use the booth.”

Tower’s rise coincided with the rise of youth music culture. The store became a sort of church where young people would gather to talk about music, look at album covers, and, with any luck, buy something. And they did buy. As Tower’s revenue grew, Russ Solomon looked to expand beyond Sacramento—first to San Francisco in 1968, then to Los Angeles in 1970, where he established a legendary store on the Sunset Strip, a place where even famous musicians like Elton John would come to shop. In choosing where to expand, as in every other part of his business, Russ Solomon trusted his instincts about what was cool or would soon be cool. “He had this great talent of finding a really good, cheap location in a place not yet discovered and make a lease on it that made sense,” Cotler says.

Advertisement
Advertisement

By the end of the 1970s, Tower stores were popping up all over the Western U.S.—Seattle, San Diego, Phoenix, Tempe. Then Tower moved east, starting in New York City, in a then rather bleak spot at Fourth and Broadway in 1983. Though Tower was a chain, its stores, in cities or in suburban retail quarters, were given a remarkable amount of autonomy, choosing inventory based on local tastes and leaving the decor to young employees, who often saw storefront displays as an opportunity for creative expression. It somehow felt like your neighborhood record shop and like a window into the counterculture. Heidi Cotler became head of Tower’s books division and got an office in the corporate headquarters. But even as Tower grew and its executive ranks swelled, she says, it still operated like a family: “We all felt that we were part of the company. We all had a stake in it. It was not just Russ’ company, it was our company as well.”

Advertisement

When compact discs became popular in the second half of the 1980s, Tower sales boomed again, with people replacing old vinyl and cassettes with this new wonder technology. Tower stores lured foot traffic in with their absolutely massive inventory of CDs, sometimes four or five stories’ worth of merchandise—classical, jazz, obscure indie bands. In the pre-internet era, the ability to browse such a wide selection of music and to ask for recommendations from Tower’s knowledgeable, if slightly gruff, sales staff was a real draw. Tower continued to ride each new wave of youth music culture—alternative rock, hip-hop. Tower sales hit $1 billion in 1999, but it was right around then that everything seemed to go south.

Advertisement
Advertisement

Russ Solomon’s heart surgery in 1998 sidelined the company’s No. 1 asset, the founder who’d guided it unerringly from the start. His son was, by all reports, overmatched. But no one, not even Russ Solomon, could have overcome the new obstacles in Tower’s path. First, big-box chains like Walmart and Best Buy started selling CDs at deep discounts, undercutting Tower’s prices and stealing its foot traffic. Then, as more people got broadband internet connections, they started sharing music illegally on services like Napster. It’s hard to compete with a music library many times larger than any Tower store could hope to fit, especially when all the music is free.

Meanwhile, Tower continued to expand its brick-and-mortar model, including internationally. At its peak, it had about 200 stores worldwide—London, Tokyo, Hong Kong, Taipei, Mexico City, Buenos Aires. The company borrowed a lot of money to finance its big ambitions, and when sales started shrinking, the debt became unmanageable. Tower lost $10 million in 2000. It lost $90 million in 2001. In 2004, it went bankrupt. Its last U.S. store closed in 2006.

Advertisement

“It was rough,” Cotler says. “And when it all went down the tubes, we all felt that we’d been left, kicked to the curb as it were. And I think there was a lot of anxiety, a lot of sadness, and a lot of depression. … I can’t imagine you’re going to break into tears over Amazon. I look at Tower as Brigadoon. It came, it was all over the place, it was great, it was there, it was joyous, it was fun, it was irreverent, it was a blast—and it was gone. And people that still remember it are old people like me.”

Advertisement

Russ Solomon died at age 92 in 2018, reportedly with a glass of whiskey in his hands. Tower had lain basically dormant for more than a decade at that point. Given the trends during that period, it made no sense to revive Tower in its old form. People were abandoning brick-and-mortar stores and moving their shopping to the internet. Physical media became a relic of the past, with streaming and downloads taking over from compact discs. But now it turns out that maybe Tower wasn’t fully dead, just in a cocoon waiting to be reborn.

Advertisement

Danny Zeijdel, the new CEO of Tower Records, is trying to bring the brand back. As a teenager, Zeijdel loved Tower Records for its wide selection, sprawling square footage filled with bins of every kind of music imaginable. “I would go in with something in mind, let’s say a Bob Dylan album that I want to buy, and end up leaving with Fela Kuti, with William Onyeabor, with a David Byrne that I’ve never heard of, and with 10 CDs at a time, that I listened to constantly for weeks.” Zeijdel was raised in Curacao, a small island in the Caribbean, and he says that whenever his family went to the U.S., “I would drive my parents crazy to go to a Tower Records store.”

Advertisement
Advertisement
Advertisement

Zeijdel ended up working in technology, helping to develop software for financial applications. He moved around and eventually settled in Brooklyn. Along the way, he worked with and befriended a guy named Roald Smeets, a Dutch businessman whose family runs a huge, extremely lucrative financial services company. Zeijdel says that Roald Smeets acquired the Tower Records brand back in 2007, in an auction after the original Tower went caput. News reports from the time suggest the price was a little more than $4 million for the name, the logo, the website, all the intellectual property.

For many years, nothing much happened with Tower, as people were getting their music from iTunes and then Spotify. But then an opportunity seemed to arrive: the unexpected comeback of vinyl records. People are rediscovering the pleasures of having a record player. Last year, for the first time since 1986, vinyl outsold compact discs. “Customers seem to want a more physical experience, like touching something, listening to a vinyl, a sense of community,”  Zeijdel says. “When we were doing market research, a lot of kids, basically, what they’re doing with vinyl is that’s their alone time and their quiet time. They put the phone away, they listen to a vinyl, and just then decompress.”

Advertisement
Advertisement

Tower planned to relaunch with a big coming-out party at the South by Southwest Festival in 2020. That didn’t happen because of COVID, so it’s been a bit of a soft launch, but Tower Records is back in business. You can visit the website, buy a vinyl record, a CD, even a cassette tape, or slake your Tower nostalgia with a logo T-shirt. Everything comes to you wrapped in that familiar yellow bag that, if you’re of a certain age, will bring back fond memories of taking home the new Liz Phair album.

If Tower can become the place people go to buy vinyl, it might carve out a nice niche. But there are a lot of problems here. First of all, streaming and digital downloads still make up about 90 percent of music revenue. To sell records is to play in a relatively small sandbox. And even within the world of physical media, you’ve got a vicious competitor in Amazon, a tough foe for anyone selling and shipping anything. Danny seems to think that for Tower Records to become the place where people choose to shop for music, there will have to be some emotional connection with the brand, some added value, some tribal bond.

Advertisement
Advertisement

One idea is to have in-house music experts—maybe customers pay a monthly subscription fee to access them, talk about records, get suggestions for new artists to try. “Just like when I was a kid, going into the store and learning about music and the store clerk or store specialist telling me, ‘You need to buy this, you need to buy that. Have you heard of this person and this artist?’ That’s the stuff that we want to bring back, and we’re trying to do that online as much as we can,” Zeijdel says. “Yes, maybe for a dollar cheaper, you can go to Amazon. But that’s it, that’s where it stops. You’re not really interacting. We’re building out a site where it becomes something more.”

Advertisement

Once in-person shopping becomes widely possible again, Danny would love to open a few Tower Records pop-up stores. Then, if things go well, perhaps a few flagship locations. For now, given the pandemic, this is on hold. But even when normalcy returns, it’s hard to argue that brick-and-mortar retail, particularly on a large scale, will be a winning play. That sense of community that the old Tower had, the place where people want to work because they love the scene, where people want to hang out and shop because they want to be around other people who love music, will mostly need to be re-created online. And that’s a tall order.

Listen to the full episode using the player below, or subscribe to Thrilling Tales of Modern Capitalism on Apple Podcasts, Overcast, Spotify, Stitcher, or wherever you get your podcasts.

Advertisement