A Towering Anachronism?

I couldn't help doing a double-take when I read that Tower Records has launched an online bookstore to complement its online music store. Given rapid industry shifts, I would have thought that Tower might hit us up with something a little bit more innovative. Instead, it appears to be jumping on a bandwagon that took off in the '90s when Amazon.com (Nasdaq: AMZN  ) broke onto the scene.

Tower's online bookstore doesn't seem to bring anything particularly new or compelling to the screen. For example, it offers free shipping on orders of more than $20. That's an Amazonian idea if I ever heard one. To create buzz and goodwill, the Tower book site is offering credits toward future book purchases. For example, if you spend $50, you get $5 off your next purchase, and so forth. Um, that's nice. But it's hardly exciting.

The challenges facing the music-store industry have been clear for quite some time. In fact, in early 2004, I wrote about Tower's troubles right before its bankruptcy. Tower is a private company, so there's little the public knows about its financials, but it's not hard to imagine that Tower and companies like it have had monumental challenges for the past 10 years or so. That point was underlined once again in January, when Musicland -- once a subsidiary of Best Buy (NYSE: BBY  ) , now struggling with its Sam Goody and Suncoast chains -- filed for bankruptcy. (Trans World Entertainment (Nasdaq: TWMC  ) , which runs stores like mall-based F.Y.E., is acquiring Musicland.)

It's not just about Amazon's online mall. Nor is it about Borders (NYSE: BGP  ) and Barnes & Noble (NYSE: BKS  ) offering books and music both on and offline, just like Tower does. It's also about Apple (Nasdaq: AAPL  ) , whose iTunes Music Store appears to be quickly becoming one of the premier music shops, with a storefront as close as your computer screen and the killer draw of instant gratification. It's addictive. Late last year, Apple vaulted into music retail's top 10, ahead of several old-school purveyors of music -- not just Tower, but Borders and Musicland's Sam Goody as well. It's no wonder.

So why am I harping on Tower when it's privately held? Because its situation is a poignant sign of the times. And why am I talking about music when Tower's opening an online bookstore? Because I can't help thinking that Tower's still floundering in its attempts to retain relevance as online rivals chip away at it and gain in their cool factor the whole time. Sure, this might provide an additional revenue channel for Tower, but in the long run, there's little excitement here in terms of the company's competitive outlook. Of course, that's good for companies like Apple and Amazon.

Granted, Tower has tried to get with the program, selling MP3 players and video games. It's also dabbling in podcasting, at least addressing some of the hot media that consumers want these days. Musicland, on the other hand, has experimented with selling ringtones and inserting a store-within-a-store called Graze into some of its shops. Graze is an experiential concept that includes lounges, a video wall, and even a scent machine. That's a little bit more along the lines of what I'd hope for from struggling old-schoolers trying to get their groove back. In the bricks-and-mortar world, with limiting factors such as how much of a selection can even be carried in-store, maybe you'd better give people another good reason to go out, and hang out.

If you're like me, you find the industry changes not only exciting but also interesting to watch. Old-school companies like Tower and Musicland clearly still have some fight left in 'em -- but it seems so far that digital dominators like Apple and Amazon have little reason to worry.

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Alyce Lomax does not own shares of any of the companies mentioned.