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Tale of the Tape:

Audiophiles Bemoan

The End of the Reel

As Quantegy Shuts Plant,

Purists Snap Up Supply;

NASA Feels the Crunch

By ETHAN SMITH and SARAH MCBRIDE

Staff Reporters of THE WALL STREET JOURNAL

January 12, 2005; Page A1

Jeff Tweedy, leader of the rock group Wilco, prefers to record music on reel-to-reel tape rather than on the digital equipment that has overtaken the music industry. Purists like him think it confers a warmth and richness to recordings that a computer cannot. But last Friday, Mr. Tweedy hit a snag as he prepared for a session in Wilco's Chicago studio space: Nobody could find any of the professional-grade audio tape the band is accustomed to using. "I was under the impression that there was a shortage of tape in Chicago," Mr. Tweedy says.

What he didn't yet realize was that the shortage is global. Quantegy Inc., which may be the last company in the world still manufacturing the high-quality tape, abruptly shut down its Opelika, Ala., plant on Dec. 31, leaving audiophiles in the lurch.

Quantegy filed for Chapter 11 bankruptcy protection on Monday and hopes a restructuring will eventually revive its operations. But its future is uncertain, inasmuch as demand also is dwindling for its videotape. The news has set off a frantic scramble in the music industry as producers and studios seek to secure as much Quantegy tape as possible. By the middle of last week, most suppliers around the country had sold out their entire stocks of reel-to-reel audio tape.The supply that remained came at prices rapidly escalating above the usual $140-per-reel wholesale price of Quantegy 2-inch tape. Walter Sear, a prominent New York studio owner, quickly snapped up 60 or 70 reels, some at prices that had ballooned by as much as 40%. "We'll have to change our approach to life without tape," Mr. Sear says.

Quantegy is hearing from customers all over the world trying to secure the professional-grade tape. A Japanese musician e-mailed from Tokyo, eager to get more for a recording session. Richard Lindenmuth, Quantegy's president and chief executive, says he'll try to help. Some customers are trying to organize their own bailouts of his company. Andrew Kautz, president of the Society of Professional Audio Recording Services, called Mr. Lindenmuth Friday hoping to get a one-time special order, a request Mr. Lindenmuth is considering.

The crunch reaches far beyond the recording industry. The National Aeronautics and Space Administration uses Quantegy tape on its space shuttles to record information ranging from pressure to temperature. This week NASA has been trying to buy 20 reels from Quantegy. Even Hollywood is affected. Some die-hard moviemakers believe voices sound better recorded on analog tape. In making "Spider-Man 2" and the Harry Potter movies, digital recording technology has taken the front seat, but backups of dialogue were recorded on reels of Quantegy tape. Engineers are also worried about how long digital recordings will last. Tape was used to record most music after World War II. In the heyday of tape recording, it was common for rock bands with big recording budgets to run through hundreds of reels of tape in making just one album.

But over the past decade, the tape has been rapidly outmoded by cheaper, more convenient computer-based digital recording. People in the music industry say that as few as 5% of albums are recorded and mixed using audio tape. The purists have a romantic attachment to the taping process. "It's a much more musical medium than digital could ever dream of being," says Joe Gastwirt, a mastering engineer who has worked with the Grateful Dead and others. "It actually does something to the music." Most of the industry gravitated to the cheaper digital technique, however, transforming tape from a commodity to a boutique item. That changeover has wiped out a once-hardy field of competitors.

Quantegy was founded shortly after World War II by John Herbert Orr, a former Army major who called the company Orradio Industries. Ampex Corp., a maker of recording equipment, bought Orradio in 1959 and renamed it Ampex Magnetic Tape. Over the years, Quantegy went head-to-head with various competitors, including European brands like Emtec Magnetics and BASF. But as the market began to fall off, Ampex decided to get out of the tape business in 1995, and spun off Quantegy that year. As computer technology overtook the recording industry in the late 1990s, Quantegy's competitors bailed out. Some tapes are manufactured in China, but audio professionals generally don't consider them to be of consistently high quality.

Quantegy's audiotape business in 2004 was still profitable, accounting for $6 million of the company's $30 million in sales. But the company fell into trouble because of other obligations and when Quantegy lost one of its major videotape customers in July, it suffered a cash crunch. By year's end, it couldn't meet payroll and sent its employees home. Mr. Lindenmuth believes an injection of $10 million would save the company, and is hoping a Chapter 11 reorganization will give him time to find investors.

When Wilco's Mr. Tweedy found himself in a bind, he telephoned Steve Albini, a Chicago producer and studio owner who is known for his work with Nirvana and the Pixies. Mr. Albini's Electrical Audio Recording is one of the last major studios in the country to rely exclusively on audiotape. Mr. Albini had been stockpiling tape for more than a year, worried that the end of manufacturing was near. But when Quantegy closed its doors, he redoubled his efforts to secure as much as possible. Working through normal sources, he tracked down around 65 reels, enough to make about 10 albums. He also began "looking in the weeds," as he puts it. He tracked down contacts who buy odd lots of electronic equipment on the salvage market. Through one, Mr. Albini hit the mother lode: nearly 2,000 reels of 2-inch magnetic tape, enough to fill a small warehouse. Mr. Albini bought 100 reels and is trying to keep the supplier's name and whereabouts to himself. He says he doesn't want to see a better-funded competitor move in on the remaining stock.

Mr. Albini estimates he now has a year's worth of tape, or about 500 reels, on hand. So when Mr. Tweedy called last Friday, Mr. Albini volunteered two reels of tape -- as "a professional courtesy." But, he says, "I don't want to go into business supplying tape to people." Looking ahead to a tape-starved future, Mr. Tweedy has a fallback: The band has an archive of around 100 reels of tape it has used in recording its various albums. By splicing out and saving the final version of each song, he figures they can maintain the archive and also generate a supply of tapes that can be recycled for future recording sessions.

Still, Mr. Tweedy jokes, if the tape scarcity continues, even some of the archived recordings might become expendable. "I'm just fearful that all the master tapes at the loft would be worth more if they were blank," he says.

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