John DeVore on the Grey Market and OCD Mikey

[Ron Resnick]

There's never an issue with these [accommodation price] sales unless the item shows up on the second hand market before a year.

Can we all focus on this narrow point for a moment, please? I want to focus on this particular point because this is another ethical issue in the industry.

I believe this is not correct. I believe that if an industry participant -- whether a reviewer or another manufacturer or an influencer or a publisher -- contacts directly a manufacturer for the purpose of purchasing from that manufacturer at an accommodation price a component, and such person represents to the manufacturer that such person is purchasing the component for his/her own personal use, then such person's state of mind (mens rea) should be that he/she truly wants to use, and truly intends to use, that component in his/her personal system.

This is different than somebody purchasing a component directly from a manufacturer at an accommodation price, and then seasoning it in inventory for a year without using it, with the intention of selling it to a third-party after one year (or whatever is the agreed accommodation price holding period).

I believe there is a material difference in these two different states of mind and underlying intentions, and concomitant representations to the manufacturer.

In other words I don't think accommodation pricing for personal use envisions nothing more than a delayed sale agreement.

 

[mtemur]

I’m not a distributor, never been in trading, I’m just a consumer and don’t ask me how I know but normally distributor price is 1/3 of retail. Depending on the product and brand it can be a little bit higher or lower. For cables it can be as low as 1/4 of retail. I don’t know if it’s meant distributor price by accommodation but I don’t think anybody like a distributor, manufacturer or reviewer who are working in the audio industry willing to pay a product as high as 1/2 of retail when distributor price is just 1/3 of retail.

IMO this case is about a manufacturer selling a product maybe a little bit higher than distributor price and another manufacturer buying and reselling it with a profit to a consumer. Both are doing wrong cause both are bypassing the local distributor. The only one who has right to complain is the local distributor.

 

[Solypsa]

... normally distributor price is 1/3 of retail ...

Can be, but this scene is changing for the non luxury brands. A lot less is on the table lately.

 

[Ron Resnick]

Furthermore that Media employee may be friends with the local dealer that sells the said brand. Potentially that magazine employee receives a kickback on every client they bring to the store to listen to the illustrious brand.

Is this merely speculation about another theoretically possible type of unethical behavior, or do you know for a fact that this actually happens?

 

[RCanelas]

This is a tiny industry, and a tiny community. Given enough time, everything gets known by everyone. All the shady stuff floats to the surface, where it either gets ignored or spot-lighted.

For people with decades of activity to believe they can do whatever they want, fool whoever they want, and not get caught sooner or later is just weird IMO. For them to believe they can just BS, redirect and gaslight their way out of the spot-light is even weirder. For them to not recognize the irony of complaining about industry bad-faith while acting in bad-faith within the industry is... sublime.

 

[Ron Resnick]

An identified audio magazine employee is offered a single audio SKU at dealer cost, or more commonly on "permanent loan" to use in house to fulfill their own personal desire. This piece is then used to promote that manufacturers product in the magazine in many different ways.

Hello Mike,

This forum has discussed comprehensively the matter of "long-term loans," beginning with my rebuttal to Robert Harley's TAS editorial. Please see https://www.whatsbestforum.com/thre...ne-by-robert-harley-the-absolute-sound.36468/

 

[Kingrex]

You have to admit, its pure entertainment to watch the tornado that seems to spin around Powell. He keeps in the thick of it all.

 

[andromedaaudio]

May be an idea for the audio magazines , a gossip page /section.
Every month the latest juicy stories of the audio industry ,.... Lee ??

 

[Another Johnson]

Powell is condemned by his own words. I would not do business with a person who is comfortable misrepresenting his intentions in the way he describes.

 

[Phoenix Engineering]

When I was still in high school, my father once said to me: "Most people are honest, but if you make it easy enough for them to steal, even the most honest of people will be tempted to do so".

When I started selling synthesized mains PSUs for turntables in 2014, I was a start up in this industry with zero name recognition. I was eager to sign up dealers and as a result, had very few requirements to become one. After about a year, nearly half of my dealers purchased once and never again. I can only assume they purchased the products at dealer discount (40% off) for personal use and not for resale. As my company began to become better known, I implemented minimum quantities to become a dealer. You live and learn. I still made the sales, even if some of them were done under ethically or morally suspect motives.

I also did accommodation pricing for several people in the industry including reviewers. I think there is an implied quid-pro-quo for doing so, namely that your products will get reviewed more quickly than if you just submit them unsolicited. You'd hope the reviewers have enough integrity to do an honest review, but you have no control over that. In a perfect world, a reviewer that gives a good review to an inferior product would damage his own brand by doing so and would thus be motivated not to, but I've seen enough evidence that this doesn't really happen.

Are we really so naive that we don't expect some people to game the system if we make it easy for them to do so? If JD doesn't like someone taking advantage of his largesse, then don't offer accommodation pricing. If you do offer it and someone takes advantage, stop whining about it in public, you only make yourself look bad.

By the time I exited the market in 2016, I had end users asking for special pricing, to which I responded "Why?" (and also "No"). I have no plans to ever mfr or distribute products ever again (at least not in this industry), but if I did, I would never offer accommodation pricing and would probably only sell direct. I think the dealer model in this industry is broken; they offer little value for taking 40 points off the top, especially for non-turntable items which don't require set up or alignment.

A number of the mfrs who complain about "grey markets" also practice vertical price fixing, restraint of trade and other violations of anti-trust laws. For some reason, nobody seems to notice (or care). People who live in glass houses.....

I think all the pearl clutching is hilarious. Grow up people.

 

[Verastarr]

Can we all focus on this narrow point for a moment, please? I want to focus on this particular point because this is another ethical issue in the industry.

I believe this is not correct. I believe that if an industry participant -- whether a reviewer or another manufacturer or an influencer or a publisher -- contacts directly a manufacturer for the purpose of purchasing from that manufacturer at an accommodation price a component, and such person represents to the manufacturer that such person is purchasing the component for his/her own personal use, then such person's state of mind (mens rea) should be that he/she truly wants to use, and truly intends to use, that component in his/her personal system.

This is different than somebody purchasing a component directly from a manufacturer at an accommodation price, and then seasoning it in inventory for a year without using it, with the intention of selling it to a third-party after one year (or whatever is the agreed accommodation price holding period).

I believe there is a material difference in these two different states of mind and underlying intentions, and concomitant representations to the manufacturer.

In other words I don't think accommodation pricing for personal use envisions nothing more than a delayed sale agreement.

Great point Ron. Also, there is accommodation pricing for company use (as in testing, etc.) with no intent for personal use whatsoever. Ive got gear that we use as a company that I would not use personally for instance.
Im looking at this wholistically as in "how is accommodation pricing leveraged and for what purpose".. I agree with you about nothing more than delayed ability to resell...

 

[Verastarr]

Is this merely speculation about another theoretically possible type of unethical behavior, or do you know for a fact that this actually happens?

Ive had dealers offer me kickbacks if thats what youre asking. Id rather make full profit on the items I represent however.

 

[Ron Resnick]

All interesting observations and points, Mike. Thank you.

 

[Verastarr]

Powell is condemned by his own words. I would not do business with a person who is comfortable misrepresenting his intentions in the way he describes.

Condemned to who ?? LOL..This was a single isolated incident 6 years ago when I had no speakers to offer clients. So I stuck my neck out to help a client. If this client was you , you would greatly appreciate my gesture. Now I carry some of the top brands on the globe.. So I can tell a client ive got something other than mediocre DeVore to sell them. Ive had speaker manufacturers offer me below wholesale price so i could sell their non sellers at wholesale online and make money. I can name a well known dealer who has made his reputation on doing that. We all fight to get to our point of success, and Im here..nobody got hurt. nobody lost money. So why are you bitching ? Shall we go into all the things other dealers or magazines have done to become successful ?? Ive got many stories. some dealers used to drink alcohol and do bad things. Are you going to dredge up an old story from many years ago and use it now to say they cant conduct themselves well ?? Seems like it... Its SUPER EASY .. dont buy from me if you dont like what I did 6 years ago to help a client..

 

[Verastarr]

May be an idea for the audio magazines , a gossip page /section.
Every month the latest juicy stories of the audio industry ,.... Lee ??

LOL, there you go. The crowd would go into a feeding frenzy...Just dont give them weapons, there's no telling what may happen..

 

[Verastarr]

You have to admit, its pure entertainment to watch the tornado that seems to spin around Powell. He keeps in the thick of it all.

If I dont keep myself there, someone else surely will... lol.

 

[Another Johnson]

Powell is condemned by his own words. I would not do business with a person who is comfortable misrepresenting his intentions in the way he describes.

Irony at its height

 

[Verastarr]

When I was still in high school, my father once said to me: "Most people are honest, but if you make it easy enough for them to steal, even the most honest of people will be tempted to do so".

When I started selling synthesized mains PSUs for turntables in 2014, I was a start up in this industry with zero name recognition. I was eager to sign up dealers and as a result, had very few requirements to become one. After about a year, nearly half of my dealers purchased once and never again. I can only assume they purchased the products at dealer discount (40% off) for personal use and not for resale. As my company began to become better known, I implemented minimum quantities to become a dealer. You live and learn. I still made the sales, even if some of them were done under ethically or morally suspect motives.

I also did accommodation pricing for several people in the industry including reviewers. I think there is an implied quid-pro-quo for doing so, namely that your products will get reviewed more quickly than if you just submit them unsolicited. You'd hope the reviewers have enough integrity to do an honest review, but you have no control over that. In a perfect world, a reviewer that gives a good review to an inferior product would damage his own brand by doing so and would thus be motivated not to, but I've seen enough evidence that this doesn't really happen.

Are we really so naive that we don't expect some people to game the system if we make it easy for them to do so? If JD doesn't like someone taking advantage of his largesse, then don't offer accommodation pricing. If you do offer it and someone takes advantage, stop whining about it in public, you only make yourself look bad.

By the time I exited the market in 2016, I had end users asking for special pricing, to which I responded "Why?" (and also "No"). I have no plans to ever mfr or distribute products ever again (at least not in this industry), but if I did, I would never offer accommodation pricing and would probably only sell direct. I think the dealer model in this industry is broken; they offer little value for taking 40 points off the top, especially for non-turntable items which don't require set up or alignment.

A number of the mfrs who complain about "grey markets" also practice vertical price fixing, restraint of trade and other violations of anti-trust laws. For some reason, nobody seems to notice (or care). People who live in glass houses.....

I think all the pearl clutching is hilarious. Grow up people.

Thanks, I could not agree more. Not to mention, this is 6 years ago, and I took my beating publicly then through his media pal who wrote a full article and published it.

 

[Verastarr]

Irony at its height

View attachment 115579

What will REALLY be ironic for you "another Johnson" (we all know what youre telling us), is how much I grow in popularity. LOL. That sticker was made after the DeVore story anyways, but yes, your joke is funny.. You are a very resourceful person in mud slinging. If you're so clever, why not come on to my show as a guest tonight and "put me on the spot" ... lets see what youve got ... Heres my personal invite.. Stand up to me real time or hide behind your keyboard, and moniker.

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[Robert Young]

Condemned to who ?? LOL..This was a single isolated incident 6 years ago when I had no speakers to offer clients. So I stuck my neck out to help a client. If this client was you , you would greatly appreciate my gesture. Now I carry some of the top brands on the globe.. So I can tell a client ive got something other than mediocre DeVore to sell them. Ive had speaker manufacturers offer me below wholesale price so i could sell their non sellers at wholesale online and make money. I can name a well known dealer who has made his reputation on doing that. We all fight to get to our point of success, and Im here..nobody got hurt. nobody lost money. So why are you bitching ? Shall we go into all the things other dealers or magazines have done to become successful ?? Ive got many stories. some dealers used to drink alcohol and do bad things. Are you going to dredge up an old story from many years ago and use it now to say they cant conduct themselves well ?? Seems like it... Its SUPER EASY .. dont buy from me if you dont like what I did 6 years ago to help a client..

There you go again, refering to an ethical failure on your part as having “stuck my neck out for a client.” That’s quite the spin. And since when did anyone else’s ethical failure mitigate your own? Whataboutism is tremendously unattractive.

OK, 6 years ago. Maybe it would have worked better to say “6 years ago i did something for a client that pushed a bit past the ethical boundaries we all should strive to maintain, and for that i am sorry. I’ve learned from the experience and moved beyond it. I wish others would as well.”

And the bit about deVore speakers being “mediocre” just makes you look small and petty. Whether they are or aren’t.