High End Audio Business Model
lenwfl -- Mon, 11/16/2009 - 12:20
As audiophile I’m acutely aware that audio retailers are the crucial link for high end audio to succeed. Unfortunately it’s becoming increasingly difficult to audition high end audio equipment in all but the largest metropolitan areas. So I’m profoundly confused why audio retailers are not aggressively trying to convert perspective clients to the audiophile ranks. The audio industry appears to be transfixed on a small group of older males with financial assets, trying to get them to continually upgrade their audio equipment. While this approach does sell some very expensive audio equipment, an increasing and alarming number of high end manufacturers and retailers are going out of business. I’m confounded why a different business model is not being used.
The current business model has long been contributing to a serious contraction of the high end audio business rather than growing it. A new business model is sorely needed to attract new customers. Its unlikely students pre-occupied with portable and cheap low resolution music or people trying to establish careers and families can be converted. But there’s a significant potential audiophile customer base (35 to 50 years old) who have the financial means and have begun focusing more on themselves by that age.
Many in this age group have never truly been exposed to high end audio having been seduced by low resolution consumer electronics, price and portability. Audio retailers should begin targeting this age group via advertising and direct mail, inviting them to experience high end audio - at an acceptable price point! Many will become converts once they hear for themselves how awesome well recorded music can sound. But an affordable audio system would have to be assembled with a wow factor that would seriously impress perspective customers responding to this offer. Sound is paramount and price is critical in this business model, a complete audio system (speakers, amplification, digital or analog source, rack incorporating energy control, synergistic cabling, power conditioning, and room acoustics), costing roughly $10,000 or less that provides the listener with credible coherence, articulation, imaging, and dynamic range.
Not a “consumer electronics retailer” type of business model, but rather experienced and knowledgeable audio retailers that emphasize component synergy, system setup & tuning, and provide a good listening environment and experience. Audio retailers that can straightforwardly demonstrate to people what defines a good audio system, and are willing to provide follow-up service to ensure customer systems are setup properly. Audio retailers prepared to provide service beyond the sale and mentor prospective clients at all price points. A good percentage of people receiving this kind of treatment will become repeat customers.
This business model would change the focus from targeting a small group of audiophiles at high price points, to building a much larger customer base highlighting good audio starting at a price competitive with a consumer electronics video system. It would also reestablish two channel stereo as the primary system objective to contain cost, and emphasize music. This business model has the capability to grow high end audio.
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Nicely put lenwhite! I think to attract new/young customers you don't even need a $10K system. A $2K to a $5K system can induce great interest if set up properly, if client is welcomed in the store properly, if the snobbish attitude is let go. As people who are very old with lots of money die, so will high end audio progress to slow death. The new generation still loves music and loves convenient ways to play it rather than collecting 5000 CD cases and going to a disk player to change it every 3 minutes, they want something fun and easy to use. I think High end audio has hit the right spot with music servers. As younger people are attracted to this, starting from low affordable price points they may be much more inclined to invest and later as their interest develops will upgrade to better stuff. But going to an audio retailer to get ignored based on the car that you drove in, your age, the price of a product, and the crap treatment by retailers if not buying what they would like will definitely end hi-end. Just look at Apple, they have a product that attracts millions; you walk in the store they treat you great, they help you find and show you products. And people upgrade all the time. In the last 5 years I have upgraded an apple product at least that many times and I am an old man. As the young go away from hi-end shops, internet shopping gets more and more common and the old die, we are not looking at a bright Hi-end future. The funny thing is that some of the people who own Hi-End stuff worth a lot of dough invested in it, their own kids think the stuff is junk, giving it away for peanuts after their departure. That’s sad! Those of us who own Hi-end systems should get younger people involved, show your kids what you look for in the sound, show your friends how great it sounds and how the images snap into place. A locked up museum and snobbish attitude will certainly keep hurting this wonderful hobby. Marketing this stuff in stores is a difficult uphill climb. Not too many people interested in Hi-end but advertising and marketing is important. May be some can team up with some other companies. A good example is Mark Levinson with Lexus, Burmester with Porsche, Martin Logan with Best Buy.... it gets the word out....and go from there.
As far as the US goes, it is worth looking at the death or absorption of Tweeter and The Good Guys to get some insight into how hard this is. Tweeter wasn't high-priced from a typical audiophile perspective (I have less experience with The Good Guys, but I don't think they were either). Tweeter in my experience wasn't snobby or locked up or any of the stereotypes we tend to apply to some high-end retail. Tweeter actively marketed their stuff (important, as Sam notes). OEMs who used Tweeter may know more about business practices (I don't know if they were well run). But I suspect the problem of attracting a younger audience may be bigger than we think. Issues would include:
-- teenage media culture focused on videogames, phones, web (competition for time, $)
-- transition away from foreground music to background music
-- fragmentation of players making it difficult to deal with lifecycle from mobile audio to car audio to office audio, to home theater, to home audio
-- reduction of music education programs in schools
-- distraction of music industry around MP3 piracy
-- small size of audio companies, limiting ability to invest in large scale marketing
-- dominant cost structure of non-experiential big box retail and internet retail
-- reference pricing of computer technology (makes $500 seem like an ultra-expensive purchase)
-- low growth businesses tend not to attract capital (no consolidation of retail to drive efficiencies)
-- global expansion of niche offerings more capital efficient than moving toward mass market
I can tell you stories about how we've tried to push this rock -- it is tough to get even a small part of the industry moving in this direction.
CEO and Editorial Director, Nextscreen LLC
Pretty good analysis so far. I think it’s a bit incomplete, however. The purpose of any business, according to the great business guru, Peter Drucker, is to create a customer. This has only partially been addressed in the thread so far. Answering Drucker’s question begs another question: how does a customer experience the product? The reality is that while audio equipment is sold as products, in reality, they are experiences. The problem is that experiences are abstract - most people don’t concretely understand them until they are a part of it or do it. Few products are like audio. I disagree with the expensive watch analogy. I think expensive cars a more analogous to the experience framework. However, one can impress others with cars. Even if one does not have a passion for cars, at least one can signal to society he has arrived. When one shares with friends or acquaintances that instead of the Mercedes he bought an audio system, most people (except the crazies on this site) think he is an IDIOT. Most good experiences come not from products but from services. A reviewer can write or talk all he wants about a great restaurant. However, you have to be there to taste the foie gras and it’s sauce, how it pairs with the other courses, the wine etc. Also, unless one is really an expert, it’s really hard to communicate it the experience. Even the greatest expert needs to experience something to get a full understanding. Mr. Valin can write all he wants – and write really well - about the Mini or the CLX. However, his review makes more and more sense only after one has extensively auditioned the product. No wonder why there are so few people coming into our hobby – they just don’t understand what the fuss is all about.
So how can one get that initial experience to get hooked? That’s where the breakdown happens. Many great dealers in Chicago, but as explained well above, they attract very few new customers. New potential customers need to be exposed to good sound. There is a store called Abt around Chicago. They remodeled their store to make it an “experience” – freshly baked cookies and other food, entertainment for the kids, comfortable sofas to select TVs, etc. The idea is that the longer a customer stays in the store, the more he will buy. However, there is no room where one can experience good 2 channel or surround sound! Abt really dropped the ball on this one. So did Best Buy. What if these stores had inviting rooms for customers to peek and walk into that had amazing sound and video? Imagine people walking into a room that shows an impactful scene with full surround sound that engages all of the emotions, or a song playing from their favorite band that sounds more real than they have ever heard. People would be moved. Even if 4 or 5 of these people purchased, it would be better than nothing; 1 of those 4 or 5 could become an audiophile…
Not all is negative, however. Positive trends include the fact that data storage costs are decreasing and data transmission rates are increasing. More people will have easier access to high quality digital. If they can be exposed to a great audio experience, more will get hooked.
As for existing audiophiles, the industry needs to innovate better, rather than having just incremental releases. Maybe it’s just me, but I hear mostly different flavors listening to different brands of electronics. It would be great to see more breakthrough products like Magico Mini or the apodizing filter cd players. Then customers will actually buy them. Is ARC Ref 5 really that much better than the Ref3? Is the CJ GAT that much better than the Act 2.2? (Speakers are different, thank God.) In Chicago, very few speakers over $10K are sold in this city of 7+million, and it’s embarrassing. Also, very few dealer stores have fully treated and decked out high end rooms; most could use a remodel.
People don’t seem to understand that the world has changed. Customers want to be entertained. Ultimately it’s about creating great experiences.
"Is ARC Ref 5 really that much better than the Ref3?"
Actually, and surprisingly, yes. However, your point is valid for most cases. Improvements are generally incremental, and only every now and then comes a product or technology that provides a radical change.
Len,
I agree wholeheartedly with your assessment of the audio industry, in that it's basically preaching to the choir'. The problem is - as Tom Martin so correctly highlights - that reaching those outside the audiophile world is very difficult, for all of the reasons described above. Worse still, there are companies that fight shy of attempting to reach such a market in case they end up disenfranchising existing companies in the process. This applies as much to manufacturers as to retailers... and even to magazines.
Audiophile equipment is predominantly made up of low volume, higher price equipment. Most modern mainstream consumer electronic products are high volume, lower price. This has posed problems for brands in the low volume, high price market; Leica still makes some of the best cameras and especially lenses on the planet, but the price of that quality is met by sheer incredulity by a market more used to very high volume products at a fraction of the price. This paradigm shift also affects perceptions of reliability; audiophiles anticipate products to have a life expectancy measured in decades, where those who grew up with a computer-based model consider a five year old product to be an antique.
Alan Sircom
Editor, Hi-Fi Plus Magazine
London, England
editor [at] hifiplus [dot] com
Alan,
I can understand your reasoning, but don't you think most audio retailer's could put together a complete stereo system for under $10,000 that would mightily impress potentially new audiophile customers? I can't believe many people in the age group 35 - 50 would really continue to choose low resolution music - if - and this is a big 'if', they were properly exposed to a really good stereo system costing about the same as many people are willing to spend on an AV system today. I'm referring to a complete stereo system with all necessary parts capable of producing an impressive listening experience.
And while I wouldn't want to exclude any age group that loves good music, my contention is many 30 - 50 year olds would choose very well reproduced music over an AV systems sound at a comparable price point. Especially when they realize most video doesn't need all that surround sound, center channel, sub-woofer equipment to sound really good.
The advertising may be more problematic as you point out. But using the Internet to attract the 30 - 50 year age group may be the most productive in the shorter term for reasons I stated in my original post. I believe web pages can be targeted based on similar interests.
This business model is targeted at music lovers in the 35 - 50 age group. I rent and like good movies, and have integrated HDTV into my primary sound system. But I love music and appreciate how good audio equipment (properly setup and tuned) can convey the essence of music. I want to continue experiencing music like that in my home by having access to audio improvements, and good audio retailers are key.
I do agree the entire audio industry and audiophiles should do everything possible to promote good music and high fidelity audio to young people. But honestly I don't think low resolution music is very appealing and certainly doesn't have any wow factor. And as someone else suggested, I don't believe it would be economically feasible for high end audio retailers to attempt being all inclusive.
I would have never considered high end audio appealing if I couldn't hear a clear and significant difference over radio and at least some similarity to a live acoustic performance. I understand a stereo system cannot truly recreate a live acoustic event, but it does have the potential to produce a wonderfully imaginative experience.
High end audio manufacturers and retailers had better start thinking outside the box before its too late.
Len
Len
Unfortunately, "if you build it, they will come" doesn't work in this context. Neither does "if you build it and shout about it a lot, they will come". The UK audio industry has a commanding reputation for building relatively low-cost systems that help entice younger generations - our difficulty is largely at the other end of the scale; with a few exceptions (dCS and SME for example) the UK high-end has a distinct price ceiling - if you want the cost-no-object best, it's rarely got a Union Flag on the box. Recently though, a significant part of that market has just gone away.
Audio components centered around the $5,000 per unit are still proving popular here, but the demographic profile of the buyer grows about 18 months older every year.
In part the problem is that people aged between 30-50 are at their musical nadir; under 30, they are most actively engaged with the music 'scene' (whatever 'scene' they choose to be involved in) and over 50, people have the time and maturity to explore genre they wouldn't have the attention span for in their twenties. The time between those two poles is spent remembering what the music of 10, 20 or 30 years ago sounded like, tempered by raising kids and paying too much for putting down roots. Given that the average first-time home buyer is now in their mid-30s, their minds and budgets will be elsewhere for some time.
Most 50+ audiophiles caught the bug from their fathers, either learning how to 'tinker' with tubes or sneaking their records onto their father's system when Dad wasn't looking. That generational link got lost somewhere in the 1980s; I suspect it was when the Walkman came about and Dad didn't have a tape deck in his audiophile rig. The same thing happened at the end of the 1980s; I would often sell equipment to audiophile parents who refused to have a CD player in the main system as late as 1990 and their kids were happily playing music in the bedroom on a cheap micro system. That generation (now in their mid 30s to mid 40s) seldom got to know how good an audio system can sound, and they are now parents to the iPod generation, who think Dad's mini system in the living room sounds awful (because it does).
You are absolutely right that the audio industry needs to reach this market and to do so involves thinking outside the box. You are not the only person to think this way, and many of us have tried increasingly inventive ways of enticing new people. Here's one I came up with recently (and any audiophile dealer who does this and pulls in new business from this owes me 'a drink' for the free consultancy) - the shopping mall audiophile Guitar Hero challenge; give away a PS3 and Guitar Hero to the person who gets the best score in the mall, all they have to do is fill in the entrance form (and if under 18 get permission from a parent or guardian - who is your next customer) they play Guitar Hero through the TV speakers for the first half of their challenge, but hear it through a good stereo system for the second half. The kids get to play Guitar Hero in public, get impressed by the improved sound and go home and pester their parents to get better sound than they already have. The dealer gets to play PT Barnum in the shopping mall, handing out endless promo material and the rest. And, if they have something like a Wadia 170i and a DAC in the same system, they can show just what an iPod or an iPhone is capable of.
You see, in some respects the only way of getting the lost generation of the 30-50 year olds on board is through their kids, who have more music on tap than any of us could ever dream of. Low-res, appealing or otherwise, their music (in all its forms) is how we get the audio business back on its feet.
Alan Sircom
Editor, Hi-Fi Plus Magazine
London, England
editor [at] hifiplus [dot] com
Alan,
If your data is accurate, that's a depressing scenario! I do like your promo idea although every time I've played low resolution audio through my stereo system, it highlights the warts compared to well recorded music in a higher resolution.
I'm not sure the following is typical of the demograhics here in the US, but the following was posted on the Sterophile forum as a response to a thread I started similar to this one:
"This is an interesting thread.
As a non audiophile who recently upgraded my HT speakers I found the entire process to be the most convoluted, time consuming search I have done in quite some time. The end result was worth it but I can easily see most people giving up before they even start.
I decided to upgrade my old HT speakers at the start of this year and set out doing some research. I wanted quality music playback in stereo mode and the current micro speakers the wife approved of didn’t do it. I set off to find some new speakers and quickly discovered a few things
1) There are more speaker companies then I imagined.
2) I found most speaker reviews to be of surprisingly little help in my search. I know that what sounds good to one person doesn’t necessarily sound good to another but I don’t think I saw a speaker get a bad review.
3) There are surprisingly few places to hear speakers that is not Best Buy or Fry’s
Since I did not plan on buying something I couldn’t hear I changed my search criteria. Using the yellow pages I found all the hi-fi shops listed in Atlanta that did not have car in the name. Second I checked for a web site. No web site and they were off the list. If the website didnt say anything about a show room they were off the list. This left me with a surprisingly small number of places to shop.
I took my CDs and just went to listen. I would estimate I spent the better part of every weekend for 6 weeks driving around town to listen to speakers. My wife went with me a few times but her comments were always the same..."Those sound the same as the last ones which sounded like the other ones....these cost how much?" In the end she said I need to make a choice soon or I risked loosing WAF for my endeavor.
In the end I found what I wanted and greatly enjoy them. Even my skeptical wife remarks how much better movies and music sound. My friends often ask me to help them with upgrades and recommend places to go listen to speakers.
My friends and I are probably along the line of your ideal demographic --- early 30’s +, six figure + household incomes and we are willing to spend for quality. I and a few of my friends are interested in taking the next step and getting a dedicated music system for our families to enjoy. However, if getting a 2 channel system is this much work I doubt I have time to invest in searching any time soon. If you want to attract new people you need a few ready made systems at various price points around 1k, 3k, 5k and 7500. Once/if they get into this hobby they have something they can then upgrade individual components."
The post indicates to me a desire in the 30+ year old demographic to experience well reproduced music, and a big concern with the complexities of seting up and tuning a stereo system for optimal sound. This experience would seem to strengthen my argument that audio retailers should emphasize affordable stereo systems that demonstrate the wow factor, and mentor prospective customers as to what defines a really good audio system. I don't know if this scenario is statistically valid, but it is encouraging to me.
As to your theory "Most 50+ audiophiles caught the bug from their fathers", perhaps I'm not typical, but I don't remember my father ever really being into music at any level when I was young. I remember enjoying records on my Aunt and Uncles mono console when I was very young, and relishing the old big band sound (e.g., Benny Goodman, Duke Ellington, Tommy Dorsey) with my school mates. When I was in the Navy in the 1960's I thought a portable 1/4 inch open real tape deck system sounded amazing. So I think I "learned" to appreciate good music pretty much on my own, and possibly through reading the hip magazines of the era like Playboy.
But I think you may be correct about the 1980's because despite my love of reproduced music, my son doesn't enjoy reproduced audio at anywhere near the same level. Perhaps that's because many in his generation were caught up in living well beyond their means, and running as fast as they could to keep up. And his son (my grandson) has been totally caught up in video games, to the exclusion of almost anything else. So it's difficult for me to see how "getting the lost generation of the 30-50 year olds on board is through their kids" will be possible.
I suppose there is much to fear regarding the maintainability of high end audio, although posts like the one I'm including with this do provide hope.
Len
Len
Doesn't this discussion miss the point . . . entirely? Do we really believe that the objective of the majority of high end buyers over these past decades was to become audiophiles? or even that they viewed themselves as such? (I sold consumer A/V technology and high end between the 70's and 90s. I'm now retired from a very different field.). Remember, I'm not referring to a small group of hobbyists, but the folks that actually kept Tweeter and the many other small HiFi shops in business. These high end purchasers often capitulated to the only outcome available to them if they wanted to recreate either music or film entertainment in their homes. They bought equipment that overwhelmed their rooms, at prices that were unavoidable, and antagonized their families with their apparent blinking light fetishes. Even wealthy audio connoisseurs had to apologize to friends and wives for the complexity or aesthetic nightmares that dominated their homes.
With alternatives now more readily available, the impetus to make what you might perceive has better choices no longer can be justified by an increasingly larger population of buyers. They will spend money on bigger, but less intrusive, more exacting, but less complex media tools. The growth industry, and better business model, is technology integration into the home. What equipment ends up in those homes will be determined by the integrators, and rarely the home owner. Rarified high end equipment is very difficult to sell to disinterested, distracted, or even distant 3rd parties in the transaction.
We used to urge our customers in those audio showrooms so many years ago that they shouldn''t lose focus on the only outcome that matters -- the music (or video), and not get distracted by the equipment. Haven't they done just that? What's our problem?
My definition of an "audiophile" is some that loves music but is unwilling to accept low resolution or badly reproduced emotionally good music. I never shopped at Tweeter, but I did buy audio equipment from a subsidiary - Sound Advice. At one time Sound Advice carried some very good high end audio (e.g., B&W, Krell), but Sound Advice eventually followed other consumer electronics outlets emphasizing AV systems. Each Sound Advice store had a few reasonably knowledgeable sales people, but first and foremost they concentrated on selling product. There's no valid reason for over whelming a listening room - obviously that's not the way great audio is created.
The business model I described relies on a very knowledgeable sales staff and a high end retailer that appreciates and knows what makes up good high end audio systems. As I stated in my original post, high resolution audio requires a lot of well integrated component parts, not necessairly super expensive. And while I do believe a very good high end audio system can be assembled for less than $10,000 (equivalent to what many people are willing to pay for an AV system), that doesn't mean some much higher priced audio equipment doesn't provide higher quality audio reproduction. But I've never heard an AV system or "home integrated" audio that possessed realistic imaging, resolution, cohesion, and dynamics - period. Perhaps that will be possible in the future, but not presently.
Audio equipment is only a means to an end - good music reproduced in a manner that allows the listener to truly enjoy the experience as their primary focus. Similar to how one would enjoy a live acoustic performance.
Len
Len, I have been an audiophile for years. Since college almost 30 years ago when I listened to my first high end system I was hooked. But I agree with you 100%. The audiophile manufactures make great products but have terrible marketing. A while ago I looked at the market and decided to do something about that. I introduced a new amplifier on the market. This is not a self promo, but an example of what we as audiophiles can do. I asked my son for his help and partnership. The young crowd 20-40 is who we need to attract. He basically said, everyone has all their music on their PC or Mac. So we developed the T-2 vacuum tube integrated amp. The amp has a built in USB/Toslink for PC or Mac connection. Now I will admit this is not the super high end audiophile amp, but at $795 its not meant to be. It is meant to attract the new younger crowd that wants to listen to their digital music but in an audiophile format. Hopefully once they get in they become audiophile fans for life. Since we started selling the amp in July 2009 over 50% of our customers are under 40. Again please do not take this as a promo for us because its not meant to be, but I think the audiophile companies need to wake up and target this market. If we can do this the market for everyone will be huge.
George,
I agree the audio community should encourage young people to appreciate good music and exciting high resolution music. But I believe for the reasons I stated in my original post, targeting the 35 - 50 age group will initially be more productive. I have read many impressive reviews on relatively inexpensive audio equipment that audio retailers should be able to market and sell as part of a complete package for under $10,000 to newly converted audiophiles. But I emphasize once again, these systems have to be complete audio systems, well setup and tuned to provide a wow factor!
The high end audio industry needs help immediately to stop the bleeding
Len
Len
I've been thinking about the business model problem with high end for a few years. I truly want to open a store but I'm puzzled at what might work. I have a few bias' I'd like to share.
To re-ignite excitement in audio you must offer something that is visually and sonically different. This really means that "monkey coffins" and most solid state electronics are completely out. High efficiency and tubes are appropriately in. The monkey coffin/solid state business is way to much like Best Buy...Differentiation is critical and fairly easy when you are selling high efficiency.
Relative to cost. Low cost systems are truly a gateway drug so start at $1,000 and go to $250,000.
Exposure is critical so your store needs to be large enough to accomodate a different activity such as music performance/art and/or lectures.
Manufacturers should be charged rent to display their wares. (yes you read that right)
I believe all but your first and last sentence would be better served in a new thread because the main point appears to be tube vs. solid state. And we all know there are emotional differences of opinion on this subject. So personally I'd like to keep this thread to ideas specifically addressing unique business plans.
But I do appreciate the idea of having an audio retail facility to accomodate possibly live acoustic performances and lectures. And while I'm certainly no expert on retail sales, charging audio manufacturers to rent space may only serve to increase prices.
Len
Altman, I like your model.
len white the discussion has nothing at all to do with tube or solid state merely marketing. Honest...
The high efficiency route is amazingly provocative and the designs give one an impressive talking point. I guarantee if you have a showroom with large Advantgarde speakers visible from the street you will have foot traffic...
In addition, in my day job we pay attention to macro trends and there is a nostalgia trend which has been sweeping the nation ---- This is why
Mercedes is re-introducing the Gullwing. The tube amp high efficiency turntable push is completely consistent with this trend.
There is a misconception that people dont like high end because of hideously ugly equipment. I suggest one should look at high priced kitchen gear. This is a triumph of marketing since 25 years ago no one would consider an ugly industrial stove like a Viking.
It's pretty depressing if form is trumping function. I'm far more interested in how the audio system sounds rather than how it looks.
Len
It seems to me that there has always been a very limited market for high-end audio. Audiophiles have always been the rarity. But now, as Tom Martin pointed out above, there are more offerings that compete for attention and money. To show the history of this limited market, go back to your beginnings and think of how many people "off the street" had ever heard of Bozak, Audio Research, Eico , Spendor, Mark Levinson, or whoever was happening at your beginnings. I recall a "Dennis the Menace" episode where a man was demonstrating his mono system as he played sound effects records. The view of his listeners was "this is very interesting, now, can we play cards or something?" The golden age was not all that golden as far as numbers go. With all the techno competition, I wonder if we should expect any growth in the future.
But that's actually my point! High end audio has always been marketed to essentially the same people over and over - preaching to the choir! The audio industry needs to rethink their priorities and target a different demographic with an affordable stereo system with a serious wow factor.
Len
Actually the future growth of the industry is somewhat limitless. The moment flat against the wall speakers sound good and you can literally paint a high definition screen on your wall without a projector --- the possibilities for an immersive music or gameplay experience really open up...
another subject --- len white I'm not sure why having the manufacturer pay the dealer is not part of the business model??? This will be critical in the future as the cost of floorplanning, electricity and real estate grow to monumental levels. Sorry if I didnt understand the thread...
I believe the manufacturer thinks he/she already pays the dealer via margin. Can you describe how your proposal is different from "more margin"?
CEO and Editorial Director, Nextscreen LLC
I agree with your fundamental points of the marketing emphasis needs to change,but I am not sure that an audiophile system cannot be done justice with in a Home Theater system and by Home Theater I do not mean a dedicated room, chairs, etc. My system is in the family room (yes I know not the best of locations) but I purchased higher end; components, separate amps, processors, cd and dvd players, game systems, plasma, etc. the point being that I use the same system for both Home Theater and strictly music (stereo and otherwise). I think the main point that higher end vs. HIGH end ($15,000 for a turntable and $5,000 for cables) must get across is the barrier of will it work with my I-Pod I am in my 50's and started my music appreciation prior to I-Pod but still love the convenience of digital music, just not the compression of a MP3 player. I think the true market is not the strict, stand alone, stereo system but rather an integrated system that will offer the bells and whistles desired of a home theater but with the quality necessary for a musical appreciation of the latest c.d. or DVD Audio or its counterparts. I think High End scares too many people off with esoteric items and totally subjective claims between one $1,000 speaker cable vs. another $3,000 speaker cable claiming the $1,000 speaker cable represents a significant value. Not counting the Plasma, I have a little over 10k invested but space and financial constraints would preclude me from having two distinct systems each costing about 10k. Many higher end speaker companies now sell matching Home Theater satellites, subwoofers, etc. even when listening to strictly stereo I like to have my subs engaged, nothing like the 1812 overture with a couple of nice subs firing off. I think the problem higher end stores have is knowledgeable sales people selling more expensive equipment that is available on the internet at huge discounts over that sold in the store. I will support the audio store but not for a 30% or 40% premium. That is not a argument of if the price difference is necessary or even warranted just economic reality. However I would certainly and have knowingly purchased equipment for a 5% to 10% premium and up to about 20% but not more, at least that I am aware of.
I also have integrated video with my primary stereo system. But I have found it unnecessary to use a center channel speaker which is oriented in the wrong position and would block the view of the HDTV, or sub-woofers that have very limited utility with most video I want to watch. And since my stereo speakers reproduce 30 Hz. effectively, I've found I don't need more low end for audio or video. If you've been able to integrate sub-woofers with your audio system without them sounding like an appendage, then perhaps your audio system sounds very good.
My primary interest is cohesive and articulate stereo and I've configured my system to provide really good resolution, imaging, and dynamics. That formula also works very well for most of the video without a center channel or sub-woofers. I do have surround speakers in the ceiling behind the listening position for video sound effects, and while it does occasionally make a movie more immerse, I could live without that as well.
Len
Tom --- you guys are already sick of me but trust me the models are radically different. In my model I would like the dealer to have more of the monthly fixed costs covered. This will be neccessary as the dealerships should really become showcases for the manufacturers. The sales for the most part should be fulfilled by the manufacturers to lower the costs for the dealer even further though the dealer should be sent a fixed per/unit payment for sales within the protected territory. The dealer also would not buy stock or demo units --- this becomes a manufacturer cost.
In this model dealer vs direct/internet conflicts are resolved. In my model the store would not literally sell anything and in most cases there would be no sales tax. One thing that works really well is that you can withold the commision from the dealer on big ticket items until a customer survey form is received which certifies that the gear has been quality assured at the customers house.
Your idea shows promise as long as the retailer provides customers with the expertise and service needed to implement a really good stereo system from the various manufacturers products represented. The retailer is still the key element in the customer interface because only the retailer has the potential of possessing the necessary objectivity to assemble a synergistic sudio system.
Len
"One thing that works really well is that you can withold the commision from the dealer on big ticket items until a customer survey form is received which certifies that the gear has been quality assured at the customers house."
When I bought my LP12, in 1981, Linn had a warning paper in the LP12 box that said that if the turntable was not properly and comprehensively demonstrated, setup and installed at home by the dealer, that dealer should be reported immediately to Linn Products :)
Altman, I think its great you are looking at new ways to market audiophile gear. We need new ways of thinking to expand our target market. Let me know if your concept develops into something real.
George
www.neuhauslabs.com
The problem with the sub-30's is that everything they touch, from a technology perspective, has "planned obsolescence" built into it and this is what they have become used to.
Even expensive gadgets such as ipods, upmarket cellphones, laptops, digital cameras etc change specifications very quickly (basically so manufactures can get return business every year).
The under 30's will essentially repurchase newer models of the above every year. This means electronics are not coveted in the same way that that say an over 50 person did when they were under 30.
We (over 50's) coveted them because the technology was relatively rare....as opposed to now where the marketing pressure to have the latest gadget creates the desire. ..despite the potentially minimal performance gain. Is a 12 megapixal camera really that much better than a 8 megapixal camera?.Who cares...sell the old one on ebay and get the newer model.
Technology was never as ubiquitous in the "old days"....but today, because of upgrade cycle the under 30's are continuously in, technology has no value in their eyes...its just a commodity.
So it becomes very hard to sell a high value product to a generation that view technology as a commodity.
Peter
And before someone says the "sell the old one on ebay and get the newer model" sounds just like audiogon... it is.. but audiogon services people who have already got the audio bug(ie 0.1% of the population).
The view of technology as a commodity in the under 30's is general and widespread.
The economics of the High End audio industry run counter to the technology industry which delivers more capability for less on a year over year basis. $10,000 spent on an A-V system will get you a high quality 1080P large screen (52 inch) display along with an excellent AV receiver and speaker system. To compare that with a two channel stereo system which hasn't changed in concept in 50 years is difficult on a value for money basis.
High end audio has remained a craft based industry, with a small number of producers manufacturing for a select number of customers. Technological developments which have enabled 7 channels of amplification to be shoved into a box smaller, lighter and cheaper than a stereo receiver of 35 years ago have not brought the same relative improvements in value to the high end. Products are expensive and will stay that way, because rather than taking advantage of technological advances to bring higher quality at a lower price, they are designed for a small market based on high levels of craftsmanship.
This doesn't even address the difficulty in appealing to people who have grown up in a world far diffierent in technolgy and sociology than the present 50 year old customers of the high ever did.
In many respects the key phrase in your post is that high-end audio is a 'craft-based industry'. This poses fundamental problems in communicating the benefits of high-end audio to a 21st Century audience.
Goods - even craftsman-based goods like high-end furniture - are principally sold on design and exclusivity. The assumption is that if you buy high-end furniture, it's made by artisans, but it's an assumption not a mandatory requirement any more.
High-end audio has the exclusivity thing perfectly covered. The design is more of a problem. A lot of electronics especially rely on design cues that are decades behind the curve. Show (don't play) an audiophile an Audio Research Reference and a Pathos Endorphin player and they will likely select the ARC product as being the best, because it looks solidly built in the manner of big classic Marantz Model 7s; do the same to a non-audiophile and they will pick out the Pathos because it looks cool and high-tech. Loudspeakers have more of a form-follows-function appeal, but it often seems loudspeaker brands assume the listener will accommodate to the looks of the speaker than the other way round.
Such issues may make audio sound better, but they limit appeal to civilians.
Alan Sircom
Editor, Hi-Fi Plus Magazine
London, England
editor [at] hifiplus [dot] com
"$10,000 spent on an A-V system will get you a high quality 1080P large screen (52 inch) display along with an excellent AV receiver and speaker system. To compare that with a two channel stereo system which hasn't changed in concept in 50 years is difficult on a value for money basis."
Your implication a %10K AV system performs as well as a $10K dedicated stereo system is not invalid. If your primary objective is video and you only listen to music in the background, a $10,000 AV system meets that objective. But if you listen to music as your primary source of entertainment with great resolution, imaging, coherence, articulation, and dynamics; a $10K AV system isn't going to do it. Besides the money used on the video components, an AV receiver won't match a good integrated amplifier. It's also unlikely a sub-woofer and center speaker can be integrated well so they don't negatively affect the sound.
I also disagree with your contention making it sound like audio hasn't gone anywhere in 50 years: for example CD players and DAC's have gotten a lot better, and integration of coherent cabling, power conditioning, and resonance control has improved audio systems.
Len
I've read a few comments on technology --- I submit we are moving into an anti technology phase. Younger people are actually beginning to buy singlespeed low tech bikes. Younger people are buying LP's at rates higher than the older population. If you go to George's website and merely take it all in you get a better picture of what is happening in the marketplace. This is happening because all of our traditional institutions are failing us.
George relative to my business, for the last three years I have created and updated a business model and unfortunately the hifi store never makes the grade in terms of return on capital. I dont think it ever will. Hifi is a business where you are only as smart as your dumbest competitor and there is always someone out there who is primarily a hobbiest who will drag you into a death spiral.