Stereophile As We See It; High-End Audio & the Invisible Hand

[Alan Sircom]

Then manufacturers need to be voting with their feet. A public trade show is not a gathering of the faithful to commiserate, it is a marketing vehicle. If the people running the shows are not marketing them, they're pretty useless. Are there any American shows that get good numbers?

Tim

That depends on what you mean by 'good numbers'? RMAF is usually relatively well-attended (especially with the Head-Fi CanJam in attendance) and is possibly the ideal balance - not so few attendees that you feel like you're in a ghost town, not so many that you can't spend time with the people who mean business. T.H.E. Show in Las Vegas was pretty sparsely populated, TBH. CES itself is (or at least should be) B2B so it doesn't really count. Others... I really have no experience of, so I can't comment.

Here in the UK, we have four main shows: Bristol and Manchester Sound & Vision, AudioWorld in March and the National Audio Show at the end of this month. The Bristol and Manchester shows are popular, in part because they are well-promoted locally and nationally and in part because companies sell equipment at discount, but even here the average age seems to be going up by 12 months every year. NAS 09 was well attended (because it was new), but numbers seemed to drop off significantly last year. We'll see what happens this year later this month. AudioWorld is not strongly attended.

The difficulty with manufacturers voting with their feet is where do they take those feet? Many manufacturers big and small have costed up other types of event that appeal to a wider public, and sums only work if you are selling tens of thousands of dollars worth of equipment per day. Even Munich is punishingly expensive for smaller or start-up brands, and it's peanuts next to something like The Ideal Home Show here in the UK. If you are a company turning over say $10m, you can't afford to blow $500k speculating on a single show, because unless it ultimately adds 10% to your client-base, it was probably $500k you could have spent elsewhere. You can spend $50k on a series of shows, however, even if those shows ultimately end up merely reiterating the company exists to those who already know you exist.

The other problem is you can market your pockets dry and still not substantially increase numbers. RMAF/CanJam is a telling environment for me. It's like two completely separate shows under the same roof. Periodically, someone under 40 rocks up into RMAF or someone over 60 wanders into CanJam, but mostly they soon turn back to their respective comfort zones, shuddering at 'what lies beyond'. If you were to try to promote RMAF to the wider CanJam audience, they wouldn't turn up, because even when it's there and free as a part of the CanJam experience, they don't turn up. And they are music loving gear enthusiasts with money to spend and an ability to spend large on good stuff. Worse, it's all too easy for your marketing to backfire - audiophile PR will always push the big names and big numbers, but to real people 'come and hear what a million dollar audio system sounds like' can end up being 'go visit the audio lunatic asylum. Remember - don't feed them and never put your hands through the bars.'

 

[fas42]

someone under 40 rocks up into RMAF or someone over 60 wanders into CanJam, but mostly they soon turn back to their respective comfort zones, shuddering at 'what lies beyond'

But why? What traumatises under 40's about speaker sound? Is it not good enough, or does the thought of possibly sharing your own music space with others deeply disturb them? Are the sounds of real instruments in open spaces frightening perhaps?

Curious phenomenon ...

Frank

 

[Gregadd]

When I started in audio the yearly hf -fi show fairy common place. I can still remember Mongo Santamaria and Sergio Mendes and Brazil 66 playing in all the rooms.

 

[Alan Sircom]

But why? What traumatises under 40's about speaker sound? Is it not good enough, or does the thought of possibly sharing your own music space with others deeply disturb them? Are the sounds of real instruments in open spaces frightening perhaps?

Curious phenomenon ...

Frank

To be honest, I think it's down to the concept of sharing a room with an amplifier that looks like it came out of a Russian submarine from the 1950s and doubles up as a radiator.

However, there is a change in perception about music. Music is either a personal experience or a shared one. So it's either very in-head or in a club, gig, concert or festival. The sound of a loudspeaker in the far-field is essentially an alien experience for many today. Let's face it, neither loudspeakers nor headphones entirely replicate the sound of real instruments in open spaces... they present a likeness of that experience. I maintain that if you have learned to experience one form of likeness, it can sway you against others. If you talk to SET/Horn lovers, they have exactly the same inability to understand the enjoyment of the likeness of the OTL/panel enthusiasts as headphone users have toward loudspeaker listening.

 

[Orb]

I think people are looking at one big point and missing the other two important ones in JA's fine editorial - the lack of dealers and the rise of the shows to replace them. The three are intrinsically linked - fewer stores means less visibility means manufacturers spending more money on shows means less money to pay for in-house manufacturing means outsourcing manufacturing means (cue scary chord) China. If we fixate on 'who makes it?' and ignore 'who sells it?' there may come a time when the answer to both is 'no-one'...SNIP.

Well I would like to think my first post picked up on this, and was the main reason for linking the article as to me it is very informative of what is really happening, something that I have seen picked up by yourself Alan and also Ken Kessler in articles, although I do feel JA's nailed it perfectly with the various factors and variables at play in one article.
But I agree it rapidly evolved beyond that point

Cheers
Orb

 

[Alan Sircom]

Alan I wrote this letter the Sterophile years ago that was published. (Sorry I had not discovered Hi-Fi+ yetTimes have changed

Editor: The March issue's "As We See It" presented me with an irresistible opportunity to get on my soapbox. Over the years, Stereophile has been on both sides of this issue. When business is slow, consumers are chastised to not waste dealers' time or expect discounts. When business is booming, dealers are warned to not abuse their customers in search of short-term profits, for it is the long-term customers who will sustain their business over time.

Only two weeks ago, I was politely denied my request to audition the latest version of a popular speaker. My initial response was to simply stop going to the store. After being an audiophile for 20 years, I can get anything want from just about any source. But I decided to give the store the benefit of the doubt. I went back midweek in the daytime, so that any claim that they were too busy would not fly. A new salesman allowed me to listen to the speakers. I was not wowed by my initial listening session, but I decided the speaker had promise.

The owner was there—a guy I had known for almost 20 years. I purchased equipment from him out of his house. I watched him rise to be the larger dealer in my area. Anyway, on seeing me discussing the speaker with the salesman, he made some crack (and not for the first time) about how long it had been since I had made a purchase. I left the store unsure what I was going to do.

The fact of the matter is that times have changed. As much I would like them to be the same, they are never coming back. Audiophiles who were once the backbone of the audio business are frowned on, because we want to listen to all different kinds of components and borrow them for in-home evaluation. The store owner wants to make a quick sale with the minimum fuss and bother. Looking to maximize his profit margin, he much prefers the audiophile virgin who will accept his advice as gospel. It is no wonder, then, that consumers feel no loyalty and seek the lowest possible price.

I have the solution. Let the store owners charge a nominal fee for audiophiles to audition the equipment. This fee would be refundable on purchase of the item. No loyalty need be involved by either party. The consumer could then negotiate the best price and the owner could seek to maximize his profit.

Better yet, let's do away with dealers altogether. When I attended the Home Entertainment 2001 show in New York, I evaluated every hot product on the market, with no disapproving stares or impatient foot-tapping from rude salespeople. We could just have a series of hi-fi shows across the country, and if you wanted to buy something, you could get it off the Internet.—Reginald G. Addison, Forestville, MD, gregadd@msn.com

As someone who has campaigned - and continues to campaign - for significant attitudinal change in dealers (in the UK at least), I can only agree. Sort of.

Dealers cannot be client-hostile under any circumstances. I understand the frustration of having to wrangle someone you are convinced is simply wasting your time, but it comes with the retail territory. If someone buys equipment 20 years ago and doesn't come back again, you should hope that you did such a good job they are recommending you to their friends. If they are happy with their system, let them be a happy proselyte. If they keep coming in for a talk, as long as they don't smell strange or start biting the other customers, so be it.

However, clients have to realise a dealer is a business, not a personal lending library. The logistics of loaning products to individuals make it difficult to perform without it incurring a hefty fee rather than a nominal sum - how much would you realistically pay to borrow a pair of Wilson MAXXes for a week for example, given they incur at least a two-person installation team and the better part of a day's matching to your room and half a day's disassembly at the end of the session? If you decided you want the Wilsons, but not the demo pair, will your fee include two sets of installation, or do you just pay for the cheaper second one that already has done all the ideal room location evaluation process? What if, three days into your home demonstration, the water pipe in the room above cracks and the product is water-damaged? The store's insurance will not cover such eventualities and neither will yours.

I've known businesses that tried this form of practice. It invariably is the path to bankruptcy, because you end up earning nominal fees for products that are bought cheaper online because you cannot afford to make online prices because of the costs involved in the product loan service. You also end up with one-per-month "It was like that when I got it" arguments over preamplifiers with knobs torn off, power amps with bent heatsinks from being dropped, tweeters poked in and ports containing a dead mouse and a sicked-up hairball.

Both dealers and clients need to think of the audio store as something closer to a Mercedes dealership than a bait shop. A Mercedes dealer is unlikely to loan you six different cars for a week each for a nominal fee while you make up your mind. And a Mercedes dealer doesn't leave the demonstrator stock caked in half an inch of dust.

 

[Gregadd]

How boring would life be if there were no problems to solve?

It's like they say in professional sports, it's not a game anymore its' a business. Of course only in audio is the consumer deemed to owe some kind of allegiance to the industry.

 

[Alan Sircom]

How boring would life be if there were no problems to solve?

It's like they say in professional sports, it's not a game anymore its' a business. Of course only in audio is the consumer deemed to owe some kind of allegiance to the industry.

That's nonsense. Every industry demands your allegiance. You buy a beer. The name on the label is there to help you buy the same beer next time. Even fungible goods like rice and gasoline are given brands, and loyalty cards. Manufacturers spend a great deal of time and money trying to make people loyal to the brand. It's why Rolex sponsors tennis events, because it reckons that people rich enough be interested in tennis are rich enough to aspire to a Rolex. It's why Porsche spend so much money ensuring Porsche stores are the right temperature, right shade of grey, right level of lighting and so on. It's why when I recently bought a Nikon D7000, I got a welcome pack with special offers only available at the store I purchased the Nikon from.

You notice it in audio because you are interested in audio and we are so ham-fisted at finding good ways to keep people loyal.

Part of the mess this industry is in comes down to people treating it like a hobby rather than a business. Because when someone did start treating it like a business, suddenly the world of audio is iPod shaped.

 

[Gregadd]

I choose the beer because I like it and the price is fair. Staying in business and making a profit is there problem.

 

[Alan Sircom]

I choose the beer because I like it and the price is fair. Staying in business and making a profit is there problem.

This gets pretty ridiculous pretty fast. OK, so you choose the beer because you like it and the price is fair. Next time you choose a beer, that choice may influence you toward buying that beer again, over others that may well prove more value-driven or more suitable for your tastes. Unless every time you go out to buy a beer you reset your criteria as to what constitutes 'good' and 'good value', you are pretty much being sold to, in order to keep your brand loyalty.

You are right that staying in business and making a profit is the brewer's problem. The fact you choose a specific brand based on a series of values that you deem relevant and that those apply to a specific brand or brands suggest those breweries you support (by buying their product) got it right in your case.

Audio isn't a special case here. It often isn't a special case at all.

 

[garylkoh]

Except that in audio, the consumer walks into a bar, asks for a beer and will only pay 60 cents on the dollar, or will take a sip, decides that he likes it and pick up a beer at the 7-11 on the way home. Some will bring the beer to another bar and ask for a glass to drink it out of. The bartender spits in the glass before handing it over.

The manufacturer has no respect for the dealer, and the dealer has no respect for the buyer and the buyer has no respect for the dealer. The question is, how to change that for the betterment of the industry?

 

[Gregadd]

Gary Thank God for Happy hour.

 

[Stereoeditor]

Are there any American shows that get good numbers?

THE Show Newport Beach was the best attended US show this year, with around 5000 paid attendees. The Rocky Mountain Audio Fest, which has become the de facto press and trade show for high-end audio in the US, only attracts around 3000 attendees, partly because there are not that many potential attendees within driving distance of Denver.

For context, when Stereophile promoted its own show, we got three times as many as Newport Beach at our most successful shows - New York in 1996, San Francisco in 1997, and New York in 2001 and 2002 - and around 4500 at our least successful Show, Miami in 1994. Show attendance dropped throughout the last decade, with our final show, in New York in 2007, attracting just over 5000 paid attendees. It was a fun show but only just covered its costs. Our management decided at that point that we should get out of the Show business. It is possible that the current generation of Show promoters - Michel Plante in Canada, Richard Beers in the US, Roy Bird in the UK - will do better than we did because Shows are all that they do.

John Atkinson
Editor, Stereophile

 

[jazdoc]

I agree with Alan's observations that dealers can't be a lending library and they can't be expected to carry everything. OTOH, the audio press informs consumers that you really can't truly judge a piece of equipment unless you get an extended audition in your system. So this leaves the consumer with two alternatives to the dealer model: a) use Audiogon as a way to swap equipment in and out of your system until you find a satisfying combination in your personal listening environment b) attend audio shows with a large variety of equipment and audition in unfamiliar systems in a suboptimal environment.

IME, I find the investment in audio shows useful. In a short time frame, I can get a reasonable, if incomplete, handle on the general sound of a piece of equipment, especially if heard in more than one system or over a couple of shows. More importantly, I can exclude those pieces of equipment that absolutely don't appeal to me. This narrows my range of choices to a reasonable number for subsquent home demos for which I will gladly. At the level of my likely equipment investment, the costs of attending shows and subsequent home demos is worthwhile and I have been satisfied with the results. (I also enjoy hanging out with fellow audio crazies at the shows.) Indeed, except for one cartridge and my CD player, every other piece of equipment I own has resulted directly or indirectly from a show experience.

I have a terrific local dealer who I support by buying product and for this support, he is generous with time and allows home demos. But in general, between the disintermediating effects of the internet and audio shows, I believe the dealer model for high end audio is dead. I don't mourn it because it wasn't as great as some would have us believe by looking through retrospective rose colored glasses and I believe it has been superceded by a better model. Audio dealers should adapt to the new reality and concentrate on entry level and mid-fi as an adjunct to home theatre and entertainment systems. Perhaps there is a place for a specialized high end dealership in a select few large metropolitin areas but for the most part, the high end dealership is no longer a viable business model.

 

[Phelonious Ponk]

I choose the beer because I like it and the price is fair. Staying in business and making a profit is there problem.

FWIW Greg, I've spent my life in marketing, and you may be the exception, but when you run consumer research, the majority of respondents always say that: They make pragmatic purchasing decisions based on quality, utility, price, they are not influenced by advertising. The only advertising they even pay attention to is pragmatic, full of product details, etc.The men? Overwhelming is an understatement.

Then we run the advertising campaigns, making the emotional/brand/prestige pitch, and the sales numbers go up. Every time. And products for whom men are the primary target market are no exception. Somebody's fooling themselves more than a roomful of audiophiles hearing greater depth of sound stage in a comparison between B and B hiding behind the X.

Tim

 

[Phelonious Ponk]

Except that in audio, the consumer walks into a bar...

"Three audiophiles walk into a bar..."

Stay tuned. I'll be working on this over the weekend.

Tim

 

[Alan Sircom]

Audio dealers should adapt to the new reality and concentrate on entry level and mid-fi as an adjunct to home theatre and entertainment systems. Perhaps there is a place for a specialized high end dealership in a select few large metropolitin areas but for the most part, the high end dealership is no longer a viable business model.

Yes, but the entry-level and mid-fi sectors are far smaller than they ever used to be, and - unless you have your own lines (as Richer Sounds has here with Cambridge Audio and Mordaunt-Short) - you simply will not be able to compete with online traders. There's no easy way out of this... companies that try to limit the scope of online discounters find themselves in court over price-fixing and anti-competitive business practice. As is the case with photo and record dealers in the UK and elsewhere, the low-cost Bricks & Mortar audio dealer ends up having to buy products at trade for the same price the discounter sells to the end user, because of volume discounts.

This doesn't happen at the higher end. A $10,000 Qwiznitz Incontenent V will cost $10,000 from everywhere. The local dealer might give face-to-face discount, which actually gives them the edge over the online retailers.

 

[Gregadd]

FWIW Greg, I've spent my life in marketing, and you may be the exception, but when you run consumer research, the majority of respondents always say that: They make pragmatic purchasing decisions based on quality, utility, price, they are not influenced by advertising. The only advertising they even pay attention to is pragmatic, full of product details, etc.The men? Overwhelming is an understatement.

Then we run the advertising campaigns, making the emotional/brand/prestige pitch, and the sales numbers go up. Every time. And products for whom men are the primary target market are no exception. Somebody's fooling themselves more than a roomful of audiophiles hearing greater depth of sound stage in a comparison between B and B hiding behind the X.

Tim

No doubt advertising has its place. I was taught name recognition is the primary purpose of advertising. When you make that choice you recognize the name you have seen in the ads. We want what we see. I am more likely to go to the hi-fi store after the magazines come out.

Funny though I never need a tv ad to wet my appetite for beer. You might recall that beer is one of the few products where the marginal utility increases as you drink more.

When I was trying to sell my car before buying a new car ,the salesman told me "nothing sales like price."

 

[Stereoeditor]

FWIW Greg, I've spent my life in marketing, and you may be the exception, but when you run consumer research, the majority of respondents always say that: They make pragmatic purchasing decisions based on quality, utility, price, they are not influenced by advertising. The only advertising they even pay attention to is pragmatic, full of product details, etc.The men? Overwhelming is an understatement.

Then we run the advertising campaigns, making the emotional/brand/prestige pitch, and the sales numbers go up. Every time. And products for whom men are the primary target market are no exception.

I think drawing analogies with beer can be misleading. Mass-market beer brands, like cigarettes and gasoline, are differentiated primarily by advertising. The only equivalent in high-end audio, where the advertising provides the primary brand differentiation, is cables. Everything else in high-end is differentiated primarily by performance and technology.

John Atkinson
Editor, Stereophile

 

[Gregadd]

...and magazine reviews.