According to the former SVP of Publishing and Electronic Marketing, much of the decline of Tower Records wasn’t because of the inability to think about the digital technology as the future, but the inability to bring the music labels alongside with them. Thus, much of the early digital offerings were limited to public domain songs.
One of the very real problems we ultimately faced was the reticence of license holders. Even though Liquid Audio (whose visionary founder Gerry Kearby died in a car accident in 2012) had created a secure digital wrapper, we could not persuade the powers that be at major labels to license us the content, so we were stuck selling the equivalent of musical shovel ware, old public domain songs no one really wanted. (Source)