Growing the High-End Audio Market

KANAGAT: A big problem is that the industry is either ignored or snickered at by mainstream America. The mainstream media often laughs at us because of what they consider to be the exorbitant prices of these products that they’ve never experienced themselves. All they see is the price.

MENACKER: The Wall Street Journal is one of the biggest contributors to this problem.

KANAGAT: Every time the New York Times or Wall Street Journal or the Today Show says something negative about us and laughs at us, we don’t have the wherewithal to fight back because we’re so fragmented. There’s a deafening silence in response to the misperceptions promulgated by the mainstream media. In addition to that, you have the less-than-stellar support from some new entrants who do not have the resources to support their projects over time. The customer gets burned and goes away. And word of mouth expands the negative impact on the industry’s reputation. They add to the relative indifference of mainstream America to our little segment.

MENACKER: Everyone knows Switzerland is famous for watches, Germany for cars, France for wine, and Italy for cars and wine. But what most people don’t know is that America gave birth to the high-end industry and creates most of the best products. It’s a shame that we have this great American industry, yet few Americans know about it.

GIOLAS: You have to educate people on the experience that we provide, and then create a reason to aspire to it. Take wine. If it’s about fermented grape juice, then I don’t get it. But once you educate someone on the subtlety of the experience—and there’s no other way to do that than by exposing them to it, having them taste it—they will aspire to have that experience again and again. The same is true of our world. We can do a better job of creating a market by creating the desire to aspire to the experience our products deliver.

HARLEY: Why is audio not in that category, while many other products are? Why is it just high-end audio that doesn’t have that recognition?

GIOLAS: I think it’s because these other products are easier for people to understand and there are many, many more outlets for them to go to and experience it. I don’t know how many really good high-end audio stores there are in America, but I believe the number is significantly smaller than exists in other industries.

KANAGAT: When I arrived in this country and joined the audiophile ranks, you could get decent demos and some fairly enthusiastic hobbyist-level selling in many stores.

GIOLAS: Ferraris are not more broadly distributed than highend audio, if you look at how many Ferrari dealerships are in a given market.

MENACKER: Well, Ferrari is a unique product. You can go to the tip of South America and say “Ferrari” and everybody knows what you’re talking about. You can stand on the corner of 57th and Madison all day and say “Dave Wilson” and nobody has heard of him. And Dave Wilson is probably the most famous loudspeaker designer in the world.

KANAGAT: To address Robert’s point of what’s different about high-end audio compared to other specialty industries, in other categories the supplier industry is far more concentrated than in ours. How many high-end auto-manufacturers are there? How many high-end watchmakers? There are more watchmakers than automakers, but there aren’t hundreds and hundreds of them, which you’ll see in directories of high-end audio manufacturers. That’s the distinction.

MENACKER: But those industries sell a complete product. What would happen if BMW and all the other luxury cars advertised their motors separately and their gas tanks separately and their chassis separately and on and on? The automobile business would be totally different.

GIOLAS: One factor we’re ignoring is the age of those other industries. It used to be true in the early days of the auto industry that you had a coach builder and an engine builder, with the car assembled from different suppliers. Carmakers were far more prolific than they are now. As time has passed, their numbers have dwindled to the detriment, and in some ways to the benefit, of the industry. But we must remember that our industry is relatively young compared to the wine, car, watch, and other specialty industries. The industry needs to move beyond its founders. Dave Wilson is the founder of Wilson Audio, and Terry is founder of Overture, and they are still the principals at those companies. In the auto industry, we’re talking about multiple generations beyond Henry Ford, Enzo Ferrari, and Ferry Porsche. We’re still in that original pioneering effort, like it or not. It feels lengthy to us because it’s been an endeavor that we’ve engaged in for the better part of our lives. It seems old to us for that reason, but the industry is still in its infancy.