Tower Records founder still not singing digital tune

Tower Records founder Russ Solomon was on hand last March when the 30-foot neon sign above the landmark Watt Avenue store – the first outlet in what grew into a global chain – came down.

Russ Solomon remains cheerfully old-school, running a brick-and-mortar record store in an age of digital downloads.

But even Solomon, the self-described “eternal optimist” who founded Sacramento’s legendary Tower Records, acknowledges some doubts about the future of record stores. In a rare public appearance Sunday night, he indicated that R5 Records Video, the store he founded as an unofficial successor to Tower, is still trying to find its footing. He said he hopes – but isn’t sure – that record stores can coexist with downloading.

“Maybe I’m believing in something that’s drifting away,” Solomon told a Sacramento audience.

The 84-year-old Solomon captivated an overflow crowd at Time Tested Books in midtown Sacramento with stories of the rise and fall of Tower and candid talk about the state of the music business.

Above all, he lamented the fact that big record stores are a thing of the past, supplanted by the Internet, big-box discounters and a sprinkling of independent stores like R5.

“It is a missing cultural thing,” he said.

Solomon opened R5 in 2007, less than a year after Tower went out of business, at one of Tower’s flagship locations – the store at Broadway and Land Park Drive. The store is across the street from the Tower Theatre, which housed the drugstore where Tower began.

“Now if I can only make it work,” he said.

In an interview afterward, he said, “R5’s doing OK. The record business today is tough. We’ve got our heads above water.”

He said he expects to keep the store going even as the recession has made things more difficult.

R5 operates a Web site, but its focus is to draw people into the store. There’s no e-commerce, no downloads.

“I don’t know how to download and I’m not going to learn, either,” Solomon told the audience.

He said his store appeals to “the collector mentality,” the idea that consumers want to own the physical product instead of just a digital version. But he said “it’s a good question” whether physical sales can thrive in an era increasingly dominated by downloading.

The short-term outlook isn’t great, judging by national data. Sales of physical CDs dropped 21 percent through the first eight months of last year, according to Wall Street credit-rating firm Fitch Ratings. Digital album sales rose 18 percent during the same period and accounted for one of every five albums sold.

Tower was among the most spectacular victims of the rush to the Internet. Once a $1 billion-a-year global chain, it was unable to compete against a host of competitors that emerged in the mid- and late 1990s, including the Internet and big-box stores. It went out of business in December 2006 following a bankruptcy liquidation.

Yet Solomon said Tower contributed to its downfall by borrowing tens of millions of dollars it couldn’t repay.

“We borrowed too much money,” he said.

Much of the borrowed money was plowed into expensive overseas stores, including a five-story building in Buenos Aires that failed miserably, he said. The store generated only $100,000 a month in sales, one-tenth of what was expected, he said.

Solomon’s 90-minute talk, the inaugural event of the Sacramento Living Library series, was moderated by David Watts Barton, a former Bee staff writer who is editor of the online news service Sacramento Press.