Tower Records -- the continuing collapse

From the corner of Broad and Chestnut, the future of the record store looks bleak.

Amid the holiday rush, Tower Records' Center City store went out of business yesterday, two months after the once-revered chain was acquired for liquidation. In the final days the shelves were half-empty, the selections grim - obscure metal bands such as Rorschach Test and Backlash.

"It's sad, because I used to buy all my music here," said Andy Fortson, 21, of Mount Airy. "But they just can't compete with all the downloading and competition from stores like Best Buy. It seems like it's pretty much impossible to have a record store that only sells music."

So, like Tower, is the independent record store soon to be a thing of the past, as disposable as an MP3 file that can be deleted with a click? That would seem logical in an iPod culture where CD sales are down 5 percent this year and purchases of song downloads are up 66 percent, according to Nielsen SoundScan.

But the changes remaking the music industry tell a more complicated story, and while record stores face daunting challenges, some are finding creative ways to survive in a digital world.

The music retail wreckage this year isn't limited to the 89 stores in the Tower chain. The Center City store, thought to be one of Tower's busiest, had been an Avenue of the Arts linchpin since it opened in 1999.

The Musicland chain declared bankruptcy in January, prompting the closing of stores like Sam Goody in Ardmore. Independent outlets have gone under, too, such as Repo Records, down the road in Bryn Mawr, as well as hipster haven Spaceboy on South Street.

Not all record stores are suffering equally. Many local emporiums, like hip-hop- and R&B-heavy Armand's Records in Center City, and WXPN-centric Main Street Music in Manayunk, are struggling to get by. Others, like wide-ranging a.k.a. music in Old City and Repo's South Street store, which specializes in indie rock, are thriving.

"Consumers are attached to physically owning something," said Jim Donio, present of the National Association of Recording Merchandisers, based in Marlton. "We're a culture that likes things."

Though downloading is inexorably eating into CD sales, "it still only makes up about 5 or 6 percent of the business," said Billboard magazine's Geoff Mayfield. He blames Tower's demise equally on "lowball pricing from mass merchants," meaning stores like Best Buy, Target and Wal-Mart. Those stores often sell new releases for as little as $9.99 to lure Jay-Z or U2 fans who might also pick up a digital camera or a washing machine.

Independent store owners like Armand's Steve Ben-Moyal can't compete, because it costs them more to buy Nas' Hip Hop Is Dead wholesale than the $9.99 the hit album sells for at Best Buy in Plymouth Meeting.

"It's a struggle," said Ben-Moyal, whose second-floor Chestnut Street store was all but empty one afternoon this week. Business is down 70 percent over the last few years, he says, partly due to a new computer program, the Serato Scratch Live, that lets DJs use MP3 files instead of the vinyl LPs that were the backbone of his business.

Store owners face a laundry list of obstacles. There's a music-sharing culture in which 2.8 billion ready-to-burn blank CDs were sold in 2006, according to the Consumer Electronics Association, compared with about 588 million CDs of recorded music. There's competition from the likes of Amazon.com for baby boomers who are too busy or intimidated to venture into stores.

Then there's the disappearance of the college student customer - now, happily downloading MP3s. Dan Matherson said that doomed his Main Line Repo store, which had relied on Villanova and Haverford students. But business is up 10 percent at his South Street store, where indie singer-songwriters Sufjan Stevens and Joanna Newsom are big, especially since Tower and Spaceboy went belly-up.

The loss of younger buyers does not bode well for brick-and-mortar retailers - and that will only worsen if Apple launches its long-rumored iPhone early next year.

"When I was in high school, when I was being more directly financially supported by my parents, I would love to buy CDs from Repo," Gabe Yassky, 18, a Wynnewood resident who's a freshman at Bard College, said by e-mail. "But I've lost those romantic views I had. I mean, I just don't have the money now, and everything is digital."

Raheem Palmer, 20, of Southwest Philadelphia, who goes to the University of Pennsylvania and DJs as "R to da Izza," figures that fewer than half of the 15,000 songs on his iPod come from store-bought CDs.

"For kids growing up, who've never been to record stores, times change, and you've just got to learn to adapt," said Palmer, who started working at Armand's this week. "But at the same time it hurts, because the experience of just going to the store and seeing people and telling each other what kind of music they should check out is almost gone."

Donio, of the merchandisers' group, said thriving stores are selling more than just music - video games, action figures, MP3 players. That approach is typical of f.y.e., the chain owned by Trans World Entertainment, which tried to buy Tower in October for $133.8 million.

f.y.e. spokesman John Sullivan said this week that Trans World had bought the lease of the Tower store on Broad Street, and plans to open a store as early as February. He said this store - the chain's area flagship - would be more music-centric than most, with "a good classical selection" to rival Tower's.

Another approach that works at independent record stores, Donio said, is "the High Fidelity model, where it's more about the music culture in the store."

That's the strategy of Amoeba Records, the three-store mini-chain on the West Coast, whose stores offer such a vast selection of new and used CDs that they are regarded as a Mecca to music-lovers. Co-owner Marc Weinstein calls his customers "culture hounds" - as good a term as any for the customers at a.k.a. on Second Street, where business this week was buzzing.

"We really try to carry a vast array of different types of music, and try to be as completist as possible," said a.k.a.'s Mike Hoffman, a former Third Street Jazz employee who carries 35,000 titles in his Old City store. He said business is up three percent this year. "We really cater to music heads."

That means people like Kerry Kenney, 33, of South Philadelphia, who was Christmas shopping at a.k.a, his hands full with the Beatles' Love and the Bee Gees' greatest hits, Miles Davis' In a Silent Way box set, and the African experimental collection Congotronics 2.