Why is There Not More Consolidation in Audio?


I’m new here and know I have a lot to learn about various equipment, but it strikes me that there is an almost unlimited amount of options in audiophile-level products.  This is not just in models offered by a given manufacturer but also in the number of manufacturers.

When I look at most product lines, there were once many companies that produced the items, but over time some became financially insolvent and closed, or they were bought up by better-positioned competitors.  This was true with beer.  This was true for soft drinks.  This was true with automobiles.  This was true with gems and jewelry.  This has been true with all sorts of food manufacturers.  We had many more options before and now we have few options.  

I know that some audiophile brands have gone by the wayside. There are references here to, “If you can find one of the old __________, they were pretty good.” And a bit of research shows me that the manufacturer went out of business and/or was absorbed by a competitor.  Still, choices abound.

My questions are:  Why hasn’t consolidation happened more with high-end audio?  Do you think the choices will remain plentiful or will a few manufacturers come to dominate the market and squeeze out weaker competitors?  Is there something about the audiophile customer, or the audiophile market, that makes it likely that more options are sought rather than fewer options (e.g., each person seeking a unique collection of equipment rather than to own the same equipment as others)?
bob540
There are always a lot of high-end audio companies disappearing or being bought by other companies. What I find amazing is how many new companies spring up to take their place.

It can’t be easy or inexpensive to bring a new high-end product to market, but there are always people willing to try. I think it has to do with the love these people have for music and their desire to see their ideas about its reproduction come to fruition.

For instance, in this month’s Absolute Sound they review Gayle Sanders’ (founding partner of Martin Logan, his middle name is Martin) new all-in-one speaker-amp-DAC-DSP system. I guess there are people who just love building audiophile gear as much as we love listening to it..

Perhaps a couple of factors that contribute are that there is no way to objectively measure the quality or utility of audio gear and the difficulty of making direct comparisons. Seems to me it’s similar to the wine market in that case. 

If you’re in the market for a new car and live in any medium sized city you can test drive every car you can afford, compare specs measured by independent agencies and read reviews of the ones that appeal to you in dozens of online sites and magazines. Almost no one can replicate that when comparing audio gear.

With wine, as in audio, there are both huge corporations with huge advertising budgets and boutique wineries that depend on an appealing label and word of mouth, or word of online forum. As in audio, the big companies keep chugging along, mostly, as do some of the small ones that develop a great reputation and/or cult following, but many of the little companies don’t.


I'll go out on a limb and say there is just the right amount of consolidation that occurs all the time.
When I look at most product lines, there were once many companies that produced the items, but over time some became financially insolvent and closed, or they were bought up by better-positioned competitors.  This was true with beer.  This was true for soft drinks.  This was true with automobiles.  This was true with gems and jewelry.  This has been true with all sorts of food manufacturers.  We had many more options before and now we have few options.
 
That's a lot of examples. But the premise, that this happened because,  "some became financially insolvent and closed, or they were bought up by better-positioned competitors" is undermined by the examples.

In beer, from the beginning, the brewers were so small every town had one, big cities had several, and if a brewer shipped out of the town that was big. Beer was a craft product with many distinctive styles. Pilseners for example are a style characteristic of the water sourced in the town of Pilsen. IPA stands for India Pale Ale, a style originally deliberately brewed with a lot of hops because hops are a natural preservative and this beer being destined for troops in India needed to endure long ship times.

Prohibition came along and outlawed all brewing in the USA. After prohibition, the many small brewers having had their working capital destroyed, the market was open for mass dominance by whoever had capital. It was no longer about craft.

This is simply the history. But notice carefully, the human desire for quality and variety never left the market. The years since prohibition have seen tremendous growth in craft breweries, to the point where today once again we have a situation where every city has its own brewery, with the smaller ones being local while the larger ones ship within a region.

So it was government action, and not competition, that created the situation described- a situation which isn't even accurate since it actually is the reverse, there are more choices, not fewer.

A similar analysis could be done on the other examples. Beer was picked because we know it best. Slightly better than cars even.

In contrast, there never was any governmental regulation in audio. The closest we get was RMS/THD/THX. Before RMS & THD manufacturers were free to claim just about any number. THX is a variation on that theme, creating a defacto industry standard. Any time anything artificial like this comes along it disrupts the market, and so we had the power wars, the low distortion wars, the amps that measure good but sound bad. That was long enough ago a lot of audionoobs won't remember. But it happened. The market has since returned to the norm of naturally seeking greater value and quality as determined by the buyers own senses right there on the spot at the time of purchase.

So this did happen in audio, but only to a very small degree as mentioned. All the rest can be laid at the door of basic economics: the bigger you are the lower your unit cost thanks to economies of scale. Yet thanks to the inherent desire for quality this will never be enough for total dominance. Those for whom quality matters most will always seek out the smaller manufacturers of high quality components.

Which do by the way represent very high value. Once again, it is simple economics. Everything no matter what it is has to be packaged and shipped. The lower the price the greater the share of cost is wasted on the box it comes in. Even when price goes very high, still a large share of the cost is in basic items like the chassis, face plate, connections, and power supply. Only when price goes really sky high do we reach the point where it becomes economic to start using the very highest quality caps, transformers, etc.

So until and unless regulatory meddling comes along we can expect the trend to greater and greater diversity in quality high end audio to continue.

Incidentally, can't resist, the details are different but the results in cars exactly the same. The huge secular trend is to greater diversity in quality and performance. Porsche, once a micro niche marque has sailed on this tide to become the worlds most profitable carmaker precisely because, offering more high quality choices, it exemplifies this trend. To pick just one model, the 911, it is offered in something like 23 different versions! Not colors- versions! Add in options, the variety goes positively astronomical! Yet at the same time there is room for Singer, and Koenigsegg, and McLaren, and others.

So even where governments try everything they can to stamp out individuality, the innate human desire to just plain have fun is stronger. This in the end is the answer to your question.

We're telling you, they're not paying us enough for this.