Stan Goman: The History of Tower Records

Bio: Former COO of Tower Records, Stan Goman dedicated 37 years of employment service to this iconic record store. Today Stan lives in Sacramento California where he runs a print shop.

Stan, tell us how you entered the record store business.

S:  I started in 1967 when I was 19, and had been working for a pharmacy.  One of the accounts/chemists was Tower Drugs.  My dad had his own drug store, but he also worked part time as a fill-in pharmacist at the Tower Drug Store, and Russ’ dad owned that drug store.  I used to go in there all the time, and deliver prescriptions.  

One day I went into Tower Drugs to borrow some money from my dad.  And Russ’s dad said, “What are you doing borrowing money?  Why don’t you get a job?”  And I said, “Well, I’m in college,” and made some kind of excuse, but he said, “Well, go work in the record store.”  And I told him I had already applied.  So Russ’s dad grabbed me by the ear and dragged me across the street and told John Shire who was the GM of the company at the time to hire me.  He had no idea what to do because Russ’s dad was a very interesting character.  John didn’t know what to say and finally he gave the ‘ok’ for me to go down the Watt Avenue store and work 12-9 until they told me to stop.  So I went down to the store and worked 12-9 from the middle of November until about February.

That’s how I got started, and then about a year or so later we had this little store in the South area of Sacramento, and nobody wanted to work there.  So they sent me there as a manager, which is the only way they could get anyone to work there because it was so slow.  

I went to the Broadway store for a short stint, and I went to the Watt Avenue store for a while.  Then when they opened a store in LA, I volunteered to go down there.  The LA store was the key to Tower really exploding.  The San Francisco store was the number one store, so when the LA store opened it was number two and we were all very competitive back then.  

The other thing was that back then there weren’t a lot of releases and there weren’t a lot of independent distributors up North.  So we had access to all this stuff, and my philosophy was if somebody put out a record there’s a reason for it—someone’s gonna buy it even if it’s just the artist’s mother.  No one is going to spend money to record something that doesn’t have a chance to sell at least one copy.  So, we would buy one of each, and that got us on that selection mode.  The assistant manager in the store was basically the one in charge of buying and scheduling and all that and the manager was in charge of going to lunch.  That way we were never out of anything, and if any record yokel came in from New York, they could go in the store and see their product.

I think one of our legacies that Tower had was our personal relationships with the people in the industry.  Elton John, who had about three houses, wanted one of each of every record that was released for each one of his houses.  So every time he came into the LA store, we’d have to open the store at 8 o’clock and he’d come in and go through rack by rack, and row by row.  He had this incredible memory knowing what he had and what he didn’t have and he’d walk out with thousands of records, and of course charge it to MCA.

After three years in LA, I went to San Francisco in 1973 because San Francisco used to be the #1 store, but now LA was and the guy that was running that store had to leave the company, so they put me in charge.  It was kind of bizarre; I fired 30 people in 30 days.  But we got a crew together.  We always had 41 people. That was the rule.  We could only have 41 employees no matter how busy.  As a historic rule, we kept the 41.  That was the most people you could have at a party and not have it be too big.  Out of that group, I would say half of them ended up being managers, regional managers, execs in the office, They were all in their 20’s just kind of learning how to do stuff, and San Francisco was like a magnet for college kids from all over the country.  I hired people that graduated from Harvard that didn’t want to do anything in the straight world, but loved jazz.    

The idea was each store had to be different.  At the end of my career, the banks and the idiots that they put there to protect their interests spent all their time stopping that whole way of running things.  That’s one thing that ruined the company.  The funny thing is that to this day, I’ll go on one of those Facebook-type things, and find a group of employees in one of our stores in Long Island that still got together, and they tell the same stories about all the screwy things that would happen in the store that I remember back in the 70’s and the 80’s.  It’s just hysterical.  Since it’s a family on a store-level I still think that if those assholes from the bank hadn’t screwed it up I think the company could still be going, because everything was localized.

Stan, you just mentioned the outsiders coming in and how that influenced the company.  What did these outsiders from the banks do to undermine the success that Tower had experienced?

S:  Well the fact of it was that Best Buy had this circular that went out every Sunday and it’s going to go out every Sunday no matter what.  They thought the record guys would pay for the little square in there, which is a lot of money.  It went to the bottom line or above the line or one of those accounting tricks, and it made it look more profitable.  Well, you know, my feeling was why buy all this stuff for 25 or 30 cents a unit?  In marketing, if you don’t sell them and they send it back you’re gonna lose 50 cents plus the handling and all that crap.  Well, they didn’t get it.  They didn’t get the fact that it makes the store look crappy.  I mean you walk in and see them displaying a whole bunch of crap that the record companies were promoting.  Let’s say Rap music.  Putting a bunch of West Coast rap in the front of the New York store wasn’t really a smart idea.  It was that kind of stuff.  And everything that made the stores cool; they would chip away at.  We had this one manager that wall-papered the bathroom in Playboy centerfolds and it was the men’s room; there must have been at least 10 years worth [of centerfolds].

Our HR departments found out about it and made us take it down.  There was nothing I could do.  I talked to each one of the employees and I got them all to write a note saying it didn’t bother them, but the potential of a lawsuit was so great that it was an argument that wasn’t worth fighting over and all those little things start chipping away.

As you said, Tower Records started out as a family-owned business, and the way you got managers trained and brought people in, there was a real sense of family in that.

S: Oh, it was hilarious. <laughing>  My training was on my first day.  I walked in, and I went to the guy at the counter, his name was Mike.  He yells across the store “Hey, Charlie, the new guy’s here, let’s go.”  And then they went out to lunch.  With managers, we kind of did it the same way.  We’d usually take an assistant manager of Store A, and make him a manager of Store B.  The assistant manager usually was the good guy.  So, you put him in a new situation.  It was pretty easy.   We didn’t have too many rules, but as time went on we had to have all these rules and manuals mainly because once we got computerized it wasn’t something you could just tell people what to do.  It was a lot of little programs and things.  I wanted to keep as much local-control as possible; therefore they had to do a lot of programming at the local level.  So, it was a trade off.

How did your Tower employees and also the managers and assistant managers become so knowledgeable about the store catalog, which was one thing the store became known for?

S:  Oh, that was easy!  Because they did all the buying there!  Led Zeppelin IV is Atlantic 7204; you just knew it because you’re pals with the sales reps.  The sales reps would take a complete inventory of their line every month.  And every week you’d run through and get the hints and anything else that you might be low on.  And so you’d have to sit there and go through their catalogs, and if there was a 0, you’d say, am I gonna get one, or am I gonna get two, and that’s how you learned it.  And plus, there were tons of promos and you can play whatever you want. The salesmen would come in with new releases and you listened to that.  Also, the branches would have people come and listen to all the new releases during the sales meetings.  That’s how it was.  

There was a real interest—our classical people were really into classical music.  It was great.  The other rule that I had was know your customers tastes.  For example, you have a good classical or a good jazz section, if you have your customer’s collection in stock all the time.  I think to this day that’s always a great idea.  There are a million versions of Beethoven’s 9th Symphony, but it’s the customer’s favorite that’s always going to be the best one.  

So, part of the formula of Tower Record’s success is each store would cater to the tastes of its region as it learns what its customers wanted, and they’d keep the catalog in stock.

S:  Right, so in other words, they maybe had two [in stock] instead of one, because that’s what that demographic liked.  But they’d always have it.

Can you tell me more about how Tower Records was progressive?

S:  Well, we had this magazine called Pulse.  Pulse Magazine was like Rolling Stone.  It was all music.  We gave it away free, and also, we did mail order out of the New York store and the London store.  We decided that we were going to do more and more mail order mainly because we saw how successful J&R was.  We moved that to Sacramento and the only place we had room for them was with the Pulse people.  So the Pulse people, who were music experts—it worked out really good.  Pulse was the one that developed our first website.  And there was that whole Napster thing that was going on.  We tried it.  It was an independent product, and it wasn’t anything big.  Plus the company didn’t really want to spend any money in that area because Russ’ whole deal was stores.  

Now, as COO of Tower Records, from a Profit/Loss standpoint, Tower seemed to have a very loyal base of music buyers.  Where did the shift start to happen where customers were going elsewhere?

S:  Ok, shift into the late 80’s, early 90’s, and I’m sure Russ wasn’t? prolific on singles, so I’m not going to get into that.  There was nothing that you could buy for $1 in a record store.  But, during that time, I was on the narm(?) board, and ended up being the head of it.  We just ended up spending all of our time. I was up screaming and yelling that we’re losing the kids—we’re losing the kids—that we’re losing this generation of video gamers.  They’re not buying records.  In the meantime, all the rest of these guys wanted to talk about packaging.  There were packaging wars.  They completely took their eye off the ball, and were just concerned about packaging, because Higgins had 5 zillion stores and was too cheap to buy a new rack.  We always just had open stock.  All these people like Music Land and Transworld; they used to lock them up, the keepers.  So, the record companies would be spending their energy trying to placate these huge chains.  We were never the #1 dealer overall, we were always #1 Classical or #1 Jazz or #1 World or something like that.  So we didn’t have the clout that the Music Lands, some of those guys had.  So anyway, these packaging wars, you wouldn’t believe what that did to the industry.  

And plus you know, our customers started growing up.  Buying houses and raising kids.  Radio played the same 15 songs and disco happened.  The really great artists of the 70’s ran out of songs.  It started to fade then.

By the time you got to the 90’s, how would you describe the period of the 90’s for Tower?

S:  The 90’s was big for CD’s.  Everyone was replacing their LP collection.  So that was great for us, because there was tons of deep catalogues.  But towards the end, I don’t know when those [guys] at Best Buy opened up and started selling stuff at under cost.  I think that was in the late 90’s if I remember right.  That was a killer.  I mean, you can’t pay $12 for something and sell it for $10.  It just doesn’t work.  They were killing us.  It was the beginning of the coming down of the record industry.  It’s like what Red Box is doing to Blockbuster.  Beginning of that, four or five titles were the big chunk of the business, and these discounters were beating each other up to give it away for free.  

Plus the other thing that you also have to remember is that we started in the late 60’s, really expanded in the late 70’s and 80’s.  Well, our rent started going up.  Every year your rent goes up based on the CPI’s.  So, our rents went up.  We had these people that were with us for 25 years and we weren’t paying McDonald’s wages.  We paid 100% of every single person’s health care.  We were really generous to our employees.  Our costs were really high.  That starts catching up with you.  

So, stuff like that starts happening and you end up having to deal with that.  And then, of course, our little bean-counters, the banks, started putting on the pressure to centralize, automatic replenishment that kind of stuff, and take more and more out of the say of the stores.  There wasn’t that appeal anymore.  It started deteriorating.  The end of the 90’s was another thing.  Records were just way too expensive.  To return something cost a lot of money.  It wasn’t 100% guaranteed sales.  The stuff that we advertised was stuff that we got money on, not necessarily the stuff that we should advertise.  The guy that ran our marketing department, Chris Hobson, got Parkinson’s disease and had to retire.  He and I would go out on the road and raise tons of money for new stores and stuff.  He was gone, and everything changed that way too.  Everything started crumbling.  The industry—everything.  We had such large expenses and we didn’t have refrigerators to sell or any of that other stuff.  And Russ hated video games.  He didn’t really like video rentals.  We had big video rentals in some locations, and not so much in others.  You could see according to the charts that the number one record that would sell would go down.  Plus we started competing against ourselves.  We put too many stores in the market.  The infrastructure started deteriorating.  When you open a new store we know what it’s going to cost, but Russ liked opening stores.  We had to schedule maintenance and this and that.  All of that stuff starts hitting.

You had the phenomena of downloadable music piracy, and also, maybe the record companies not understanding that the consumer was a little worn out and a lot of the kids and older folks didn’t want to pay $16, $20 for one CD. Their price levels were out of range with where the market started to drift.

S: Those kids weren’t gonna buy them anyway!  It doesn’t make any difference.  One kid would buy a record and eight of them would tape it on a cassette.  When the blank tape business started going down we knew that these kids just didn’t like it anymore.  And it’s true, these kids today—I don’t think you can sit a kid down with Sgt. Pepper’s, and expect them to listen to it from beginning to end without texting, or playing a video game at the same time.  Plus, at the height of the record industry there was what?  There really wasn’t any cable TV.  There weren’t 8 million TV stations.  There weren’t all of these other choices.

Do you feel that the beginning of the 90’s until the mid 90’s was really healthy, and then the shift started to happen as we ended up near the end of that decade?

S:  Yeah, it’s generational.  Just subtract 20 years.  All during the 70’s, man, records were hot, man.  Twenty years later, generational, it starts going down.  

Can you talk about some of those difficult times as Tower went into decline?

S:  You don’t know what’s happening until its happening really.  Retail stores were always profitable.  You have to understand they were always profitable.  But the amount of profit that they spun off had to support the main office and the debt.  So, in my case, there really wasn’t anymore I could do to get more profit to feed the machine, so to speak.  I mean, we couldn’t raise prices.  You can’t cut the profitability. I don’t care what anybody says.  You can’t get rid of all your old-time employees that have all this knowledge and trade them for some pimply faced kid.  In my case, it just got to the point where I was just frustrated.  I did everything at least I thought I could do.  But, I couldn’t do anymore because right at the end when that time came, to be honest with you, I was probably pretty ready to leave.  I was tired of having to downsize people that worked there for 30 years.  And I didn’t want to work for any banks, they were ridiculous.  And sitting around having meetings—meetings after meetings on how to save money on paper clips or something like that was not what I was going to do.  

So anyway, how do I feel?  Just, sad, I guess.

Stan, how did the debt rate become so high with Tower if it was profitable?  Was it overexpansion?

S:  Well, it could be a million things.  Who knows?  We borrowed 175 million dollars.  It was due around 2002.  And they wanted their money.  Why they wanted their money then was beyond me, but they wanted their money.  I think the decision of trading debt for equity was not a very smart decision.  It was a short-sighted decision.  I mean, you only have so much say, you know.  Go along with everybody else.  But that hurts, because there it goes.  When you trade debt for equity, then they have a say.

So, the banks effectively took over and you left and Russ eventually left as well.

S:  Well, it was awful.  Russ stayed.  He didn’t really leave until they liquidated.

When we spoke with Russ, one thing that Russ mentioned is that the industry kind of looked upon the ruling when Tower was going to be liquidated with kind of a shrug, but they didn’t intervene in any way.  Do you feel that it was a mistake on the industry’s part to not come to the table in defense of Tower as being a valuable asset to the industry?

S:  Well, the problem was that, I remember way back when, when I told you about relationships, how our sales guys became sales managers and everybody moved up.  Well, there was also a consolidation in the distribution business and the manufacturing business, and a lot of our quote “friends” were laid off or were not there or whatever, died, stuff like that, that would’ve fought for us.  

So, we were a hard account.  We carried this entire catalog.  They were closing their warehouses.  The distribution companies were hurting too.  They were laying-off salesmen right and left.  They had to cut.  We had to have every classical record available to us.  Well, we were the only ones that were buying them.  No other account was buying them.  So in their defense if you will, they were living in the same world we were living in.  They had all these accountants on their back, and it was easier for them to have us go away, because in the short term they could close all their branches.  Get rid of all their sales staff.  And for that quarter get a bonus.  

Right.  Well, I think history will show that it was a combination of many events, internal and external, that influenced—it wasn’t just one factor, as you’ve shared.

S:  Yes, you know.  What I can’t stress enough is that every manager, every jazz buyer, thousands of people made the company.  It was them—those were the people that did it.  Those were the ones that would stay until 3 o’clock in the morning doing inventory.  Those were the ones that cared.  Those were the ones that would jump up and down to make sure that we had something in stock.  That was it.  It wasn’t the upper management, so to speak.  And I just, sometimes, get really frustrated when that part isn’t out front enough.  

Just as a tribute to what you just said Stan, it doesn’t matter what city, if one was traveling and saw a Tower Records, the employees would always give you a level of service…

S:  That you deserve.

Would you like share a personal message to the employees of Tower?

S:  Sure.  Thank you.  What else can I say?  I mean, I love every single one of them.  I’ll say this: that I never had so much fun in my life.

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