The Hub: Here's some GOOD NEWS from the audio biz


The darkest hour is just before the dawn. Just around the corner, there's a rainbow in the sky. Such aphorisms were used during the Great Depression to either encourage the public or delude it, depending on your degree of cynicism.

Well, here's an aphorism for the new-millenial recession: So what if times are tough? We're gonna find a way to make it anyway!

The audio marketplace has changed dramatically in the past few decades. When times are tough, there is a tendency to focus on those changes we view as negative: stores closed, familiar names gone, a lack of interest from the younger generation.

But there have been at least as many changes in the audio marketplace that are not just positive, but nearly beyond belief to audiophiles and music-lovers of a certain age. Back in the early '70's, believe it or not, the most-reliable conduit of information on new and exciting audio gear was tiny black-and-white classified ads in the back of Audio magazine. Stereophile, The Absolute Sound? They were published sporadically, if at all.

If you wanted product info, it usually meant writing a letter. Getting an answer might take weeks, if the company were polite enough to respond; many were not. Curious about the experience of others with a product, a manufacturer's history or product resale value? Good luck: there were no Forums or Bluebook. Want a record they don't have at the local store? Get out the Schwann catalog, and wait weeks after the store orders it, if they're obliging; write a letter and wait even longer, if they're not.

Let's face it: we're spoiled. Today, in a matter of seconds, we can find out about a piece of gear, see it, learn where it's available, read reviews of it, maybe buy it. Music? Nearly every band or orchestra has a website with enough information to satisfy the most obsessive fan, videos of live performances, sources for discs or downloads. Reviews or criticism? How many music sites and blogs are there? A million, literally?

Really: spoiled. Music-lovers and audiophiles today have an embarrassment of riches. Be grateful for what we have available to us.

While we've had some rough times, the audio marketplace is adapting, correcting itself. News from most dealers and manufacturers indicates increasing levels of sales, at a more consistent level than the up-and-down spikes and troughs of the last few years. Many markets avoided the drastic upheavals of the US market, and whole new areas of the world are opening up as strong markets for quality audio gear.

If those aren't enough causes for celebration, there are probably more genuinely good-sounding moderately-priced audio products than at any time in history. Feel free to cheer. Really.

Audio writer/blogger Steve Guttenberg writes, "The most promising trend is the number of great sounding affordable products on the scene. My blog today covers under $1,000 speakers, for example. I think vinyl's continuing comeback is a good sign, and the remarkable growth in high-end headphones is impressive."

Retailers, distributors and manufacturers today must focus on differentiation, creating reasons for a customer to come to them, specifically, rather than another store or brand. Those who are doing that, are succeeding.

"We're up this year, and store traffic is steady," says Larry Marcus of Ann Arbor, Michigan's Paragon Sight and Sound. "People have learned that they can't decide on a product in 10 or 15 minutes. We have to make products available in the home without the customer getting killed if it doesn't work out."

Distributor Charlie Harrison of USA Tube Audio/Ayon Audio says, "We're on the upswing, we're adding new lines, we have absolutely no complaints."

US manufacturers are actively working to enter the new markets opening up around the world. When Grant Samuelson of Shunyata Research talks about being in the west and east, he's not talking about Colorado and Connecticut. He was stuck in Moscow--Russia, not Idaho-- for a week following the Icelandic eruption.

"Few have any idea what is really going on out there," says Grant. "I do, having been West, East and back again this summer. No one I talk to is throwing in the towel, and all remain positive in their outlook. It is tough out there, but good people and businesses remain proactive and look at improving the positives and letting go of what you cannot control."

Similarly, David Schultz of Transparent Cable is traveling to newly-opened markets, and finds them to be booming.

"I’m at a show in Vietnam right now," writes David. "A large distributor has sixty dealers attending the show. Next stop is Vientiane, Laos, for dealer training.

"The two channel and home theater business is flourishing in the following countries: Singapore, Malaysia, Vietnam, Indonesia, Laos, Hong Kong, Taiwan , South, Korea, South America (mainly Brazil).
India is slowly growing and will be a powerhouse in about three years.
Japan is still struggling, but doing well."

We have new markets, new resolve, and as Anssi Hyvonen of Finnish loudspeaker company Amphion emphatically points out, new opportunities:

"The highend industry has bitched and moaned about iPod and mp3s, but iPods could be the great Trojan horse, the way we get people excited about quality again," writes Anssi. "The hard-disc space is cheap, and transmission speeds such that we do not need compression anymore. What is there to complain about? Now we just need to create systems that people can relate to, play some real music and get them excited about quality. It took me one weekend to lure my 10, 12 and 14 years olds into better sound, once I found a correct approach."

In a future entry of The Hub, we'll explore what that "correct approach" might entail.

Yes, the audio industry is different from what it used to be. In many ways, it's better. While old-timers (present company included) obsess over the differences, newbies are discovering the joys of walking around with a thousand songs in their pockets, openly exploring streaming music and servers, even discovering vinyl.

Let's look at the incredible opportunities in the audio world --and it is truly a world, not merely a national, industry -- and learn, adapt, and grow. We went over the top with the doom and gloom; we admit it. Our bad.

So, we go forward with new rules, and a strong, new aphorism.

Here are the rules: no more whining, backbiting, dissing or dismissing. You've got something to say? Great: focus on the good stuff, the possibilities, the POTENTIAL. No mourning, no moaning. Seriously.

And here's the new aphorism:
SCREW the economy, we're gonna have fun!
audiogon_bill
This ia a great update. Living in Germany I have been exposed to the European culture of hi-fi. Compared to the economic news in the states, Germany does not seem so affected by the downturn as it was in the USA. I know companies like Opel, a subsidary of GM was scared for a while due to the decline in automobile sales and the GM bailouts. Today, Opel is getting a cash infusion from GM to stay alive. What does this have to do with hi-fi? Well, for one, the perception of a bad economy is not as bad here in Germany, therefore, people are cautious, but not because they do not have money, because they do, but because they want to be sure that whatver they invest money into, it will be value added for years to come.

Many hi-fi vendors I have visited I spoke freely about the downturn in the global economy and the answer was always the same. Business was a little down, enough to survive, but that was it. The same vendors I spoke with were telling me that many European manufacturers were looking at new business models, to include regional home based sellers, ala, USA style to gain markets, albeit, smaller in many regions, versus one or two large stores with their products. The overall impact would be more availability of products, plus each home seller must buy products, adding more to the coffers of the manufacture, despite at costs deals. Times like these are making manufacturers rethink business models and thus the price range of products is becoming more variable to a lower price range versus one mainstream upscale product. I know I have heard of many manufacturers wanting to go global. Octave, the manufacture of tube amps and pre's was well known here in Europe but not in the USA. I spoke with the owner several years ago about the US market and he said he was going to try. Today, Dynaudio is a distributor of Octave. There are many more companies going global and not just to the US, but to India, China, afterall, it is a global market. We as consumers are benefitting. Some vendors are selling products at reduced rates, the option to try at home before you buy is again becoming a store business model, heck, I tried Silent Wire AC32 and Reference power cables along with a Velodyne DD15 a few weeks ago because the vendor allowed me to try it at home. I have personally taken advantage of the more price aware vendors and have haggled somewhat to get a lower price than advertised. I bouhgt my second SME V and Benz LPS was bought this way.

I guess, like any other business model, change must come to adapt to the current consumer demographics. Unless there is a drastic evolutionary change in how we listen to music and watch movies using; speakers, Ipods, record players, reel to reel, cables, racks, CD players, receivers, amps and preamps and and anything to do with source sound and the playback of that sound, there will be a market, regardless of age of the consumer. The demand for certain products will be higher based on the utility of such device for the consumer. If a teenager today feels like records and Ipods are part of their way of life and how they should hear music, then we should welcome that.

Older source components, ala, analog, should not be disgarded as an outdated business model either. Why shut out a potential market to concentrate on a modern technology that is moving so fast that sometimes it outdated in a matter of months versus the virility of the older technology. A vendor should have a good blend of new and old technology, to portray the merits and benefits of each, not to lambast one or the other. Each one of us have our own preconceptions or experiences dealing with audio dealers. My own experiences over the years have led me to believe that there are many dealers who do care about customers, but the business model is outdated.

It is going to take time to make changes for the better and the perceived better business efforts will be realized by the consumer someday, but along with that, the economic news should also indicate the perception to the consumer that all is getting better, where the consumer feels better about spending money for musical enjoyment. That is a part that all stakeholders have to deal with; dealers, vendors, and manufacturers and consumers alike.

Thanks for the update.

Ciao,
Audioquest4life
A big misconception of old timer audiophiles is that kids these days don't know what good sound really is. I work in a college, and can assure you they have a pretty good idea of what good sound is. They know mp3 compression doesn't sound great. They know iPod ear buds sound like crap. Music may well be even more popular now than its ever been. Or at least more accessable. I'd bet that more people listen to more music now than ever before.

The old timers begrudge the iPod. They think it brings down the audiophile scene by having the masses think it sounds good. If anything, I think the iPod is what'll save good sound. And it has little to do with incorporating iPods into hifi systems. Younger people constantly listening to music may mean that they'll graduate to proper stereo systems once they have a job and a home, maybe sooner. The students I talk to all know a full system sounds far better than a boombox with iPod dock and/or computer speakers.

They're not as stupid as the old timers will lead you to believe. Trust me. I deal with them every day.

What needs to happen IMO is advertising. Placing an ad in Stereophile or whatever other magazine is preaching to the choir. People know there's better sound out there, but they don't know what to buy. Why do most name Bose when asked what's the best stereo stuff out there? Because they're the only ones advertising. If they claim to be the best and no one challenges it, they must be the best. When was the last time you saw a stereo company advertise on TV? On the radio? In mainstream mags? Anywhere?

I see a great opportunity of the entry level companies like NAD, Rotel, Marantz, and so on. I also see a great opportunity for local shops that carry those brands. What needs to happen IMO is the manufacturers and dealers getting together to advertise. I see Rolex ads on TV. They always end with 'Available at these fine retailers.' Why can't NAD make commercials and have a scene or two in it at a local dealer's shop, and give a name and address of the shop at the end?

Another thing these companies need to do is get a celebrity endorsement. No one would have the Beats by Dr. Dre headphones if they weren't 'by Dr. Dre.' Beats headphones for $300 would sit on the shelf. They're decent sounding headphones, but they're no Grado/Sennheiser/AKG. If Grado had ads where Jay-Z was wearing them, I'm sure they'd fly off the shelf.

Another misconception is that younger people don't have money. I see more than my far share of Tag Heuers, Breitlings, and Tissots. Again, advertising. Tiger Woods and John Travolta helped sell enough of those. Ever since Brad Pitt rocked a Tissot in Mr. & Mrs. Smith, I've seen a lot more of them.

The future will be as bright as the industry wants it to be. I'm not saying McIntosh will sell a million units by having Metallica endorse them, but Rotel could. How about Katy Perry endorsing NAD in Men's Health magazine? What about Lady Gaga endorsing Cambridge in Maxim? Don't you think people will start looking for those brands? After they get bit by the bug, they'll move up the ladder like we all did.

Just my opinions. Take 'em or leave 'em.
Kbarkamian,

Great write up from your perspective. Ads and endorsements of products can go a long way to help this business.

Ciao,
Audioquest4life
Why are there no high end stereos shown in the photos in Architectural Digest? Certainly the people who build those showplace homes can afford to listen to music through a quality system.

Whenever an audio system is seen on a TV show like "MTV Cribs" it is a mass market stereo that was purchased from a chain store. Surely the people who have built these custom houses could afford to listen to some high quality music playback, especially considering the fact that many of them work in the music industry. They seem to think nothing about spending huge amounts of money on luxury cars, clothes and jewelry, so why not on hi-fi?

Fifteen years ago, when Jeopardy awarded merchandise instead of cash to their second and third place finishers, one of the regular prizes would be a Counterpoint and Klipsch stereo system. When those shows were airing, several of my friends and acquaintances asked me about Counterpoint equipment. They knew about Klipsch speakers through the ads they had seen in Rolling Stone but they were completely unaware that companies like Counterpoint existed.

How about some product placement in magazines, the movies and on TV?

P.S. Has anybody noticed that Sota Turntables are mentioned in the end credits for the TV show "House"?
There has been placement, but it's been weak IMO. Dr House uses his SOTA turntable often in episodes. But TTs will be a novelty thing to 99% of people IMO.

Joey and Chandler had some Martin Logans in Friends. Never played them or talked about them, as far as I know.

There were some McIntosh seperates in The Departed. The remake of The Italian Job had an NAD receiver "so loud it blows girls' clothes off."

There's definitely a market in the younger crowd. If they can afford iPods, iPads, iPhones, Xboxes, Air Jordans and so on, they can afford an NAD 325BEE.

I student that I converse with regularly about music has a few expensive guitars - Fender Stratocaster, Gibson Les Paul, and a couple others. He'd buy a good system if he knew who made what and where to find them. He though Bose was as good as it gets, but knows it doesn't sound as good as they say it does. I turned him on to an inexpensive NAD and PSB system. He'll move up to a Rega system when he graduates.

Another thing that needs to change is the dealer snobbery. In the NYC area it's horrendous. I've heard it's not much better elsewhere. They need to stop looking down at people who aren't made of money and don't listen to 'audiophile' recordings IMO.