Tower Records Turns to Podcasts With Ads

Retailer Tower Records is seeking ways to profit from downloaded formats. (By Robert A. Reeder -- The Washington Post)

Hoping to lure back some lost customers, Tower Records is looking to give away some music.

A new service from the music retail chain, which will be unveiled at the South by Southwest Music Festival in Austin next week, will allow users to download Internet radio programs, or podcasts, at a Tower-branded Web site, TowerPod.com.

The move might be the first time the retail chain has acknowledged the popularity of podcasts and music downloads, now that the popular iTunes online music store from Apple Computer Inc. has started to outsell its "brick-and-mortar" competitors.

Tower hopes to generate revenue from the service by inserting commercials at the beginning and end of the free, downloadable half-hour programs.

At its launch, TowerPod.com will not feature the sort of recording stars guaranteed to bring in big numbers of downloads. Listeners will not hear, say, the Black Eyed Peas or U2 on Tower's podcasts because the "big four" labels that dominate the music industry -- Universal Music Group, EMI Group PLC, Warner Music Group Corp. and Sony BMG Music Entertainment -- are not participating in the service.

Tower's deejays will assemble shows from a library of 6,000 songs from independent record labels. The tracks will be provided by San Francisco-based Independent Online Distribution Alliance, a digital music service that represents more than 1,500 independent music publishing labels. Kevin Arnold, founder of the service, said his organization is working with his client record labels to make more tracks available on the service.

"We think this is a natural progression for media," said Dave Toole, chief executive of Outhink Inc., a San Francisco firm that developed the technology that will be used by the service. "Media has always had an advertising sponsorship."

As the music industry has moved away from selling records, 46-year-old Tower Records has suffered. The company once generated nearly $1 billion in annual sales but has been hit hard in recent years as large competitors such as Wal-Mart and Best Buy undercut prices -- and as consumers have gotten used to downloading music off the Web.

The chain filed for Chapter 11 bankruptcy protection in 2004 and has been seeking a buyer for its 90-store business. Last month, the Annapolis store closed its doors for good.

Analysts and music-industry types gave a mixed reaction to news of Tower's upcoming service. It is tough to tell whether the Tower brand on a podcast will be enough to lure in listeners. After all, there are already plenty of free podcasts on the Web devoted to nearly every kind of music. A search for "bluegrass" on a podcast directory site from Yahoo turns up 30 results, for example.

Phil Leigh, senior analyst with Inside Digital Media Inc., a Tampa-based market research firm, said he thinks such a service is a matter of being "too little, too late" for the chain. If a service is going to compete with commercial radio, it should be better than commercial radio -- and not feature ads, he said.

Local music producer Chauncey Canfield said that he found the proposed service interesting but was skeptical that it would actually win much of an audience.

Canfield worried that the kind of artists with enough prestige to draw an audience for this service would require more payment than such a service would be able to offer. "There would have to be an ad between every song," he said.

But tech industry analyst Rob Enderle was more optimistic. Tower's upcoming service takes the old model of commercially supported radio and simply puts it on a new gadget, he said. That business model worked before, he said. Maybe it will work again.

"Sometimes the tested ways of doing things turn out to be the best ways," he said.