Tower Records filed for Chapter 11 bankruptcy protection for the second time late last month, which stirred as much emotion in us as the passing of Arbor Day. And why wouldn't it? We're down for the little guy, the local, the unbranded. We rock an Amoeba shoulder bag to show solidarity, but really we shop only at Aquarius.
Let that Tower of Babel fall, right? The problem is, the wrecking ball might take out a few local microlabels along with it.
Background first: It turns out that that hallowed independent music supply chain has a weak link. Frequently, the indie album at your favorite local shop got there via one of Big Music's unctuous tentacles. Distributors are often mere fronts for corporations like Warner or Sony; they're notoriously funny with the numbers when it comes to paying the little guy, and the vast majority of them are definitely not “in it for the music.”
That's why veteran San Francisco-based dancehall promoter, producer, and label owner Steffan Franz founded the Independent Distribution Collective two years ago. He spends his days on the phone, foisting new CDs on mom-and-pop shops, wrangling with them to send money when they sell, and coaxing them to send the goods back when they don't. That way, the hundred or so artists he represents don't have to sully their grass roots with a corporate distributor. His current roster includes reggae chatter Rocker T, local hardcore label Wondertaker, folk singer/songwriter Karney, and soul jazz outfit Table 4 5ive.
Franz, in his eternal bid to get the collective's members a steady paycheck, forged a relationship with Tower a year and a half ago. It was his only large retail outlet, and because his catalog was shallow compared to those of the major labels, the only reasonable deal he could finagle was consignment — IDC got paid only when the CDs sold. Soon he had product in about 15 stores, and Tower began accounting for around 10 percent of his sales each month.
Tower, though, had for years been feeling the pinch on three sides — Amoeba had the street cred and the vast used selection, Wal-Mart the ubiquity and the aggressive pricing, and the Internet had, well, limitless free music. So on Aug. 4, the majors, owed upward of $100 million by the retailer, decided to stop sending it product — cold turkey. Three weeks later, Tower filed for Chapter 11, which usually entails a cashless company freezing its debt and reorganizing in hopes of selling itself off.
“When I heard that, I instantly called my contact there,” Franz recounts from IDC's Polk Street office. “She told me that all unpaid invoices were frozen and all unsold products were being treated as Tower's assets during the reorganization. So I said, 'What about my CDs? Can I come pick them up?' And she said that would not be possible.”
Franz's translation of this legalese: “stealing.”
“IDC and its artists own 100 percent of those CDs, but Tower is just continuing to sell them like business as usual,” with no intention of paying the labels for them, he says.
Christina Nemeth, his contact at Tower, did not return calls. The consignment buyer at Tower's Market Street store, Brian (who wouldn't give his last name), also had no comment, but did confirm that the store is not accepting new consignments.
“For me, the total loss is around $15,000,” Franz says. “For a little guy like me, that's operating expenses for three months. And I'm sure I'm just one of a thousand small-business men getting screwed on this. Just think of the indie hip-hop labels that sell 300 copies a month through Tower and eat only on that.
“What's unfortunate is that Tower could have gone the way of Amoeba and Rasputin and embraced the indies and probably succeeded,” he says. “But now it's like they're just kicking us off their shoe.