The glory days, or golden age, of the high end are gone, and will never be seen again. The time frame is debatable. Some will point to the heyday of McIntosh, Marantz, Eico, Fisher, Dynaco, et.al.. Others, myself included, will point to the ‘70s and the first wave of high end audio from Japan, like the direct drive turntables, the magnificent tonearms and cartridges, the VFets, ES, Natural Sound, etc.. And still others will point to the ‘80s and the rise of small manufacturers that took over from the audio pioneers of the ‘50s, ‘60s and ‘70s.
Here’s the thing: When audio was really big, back when Dynaco was selling tens of thousands of units, there was very little competition. If you were at home, let’s say in the dead of winter, there were a finite number of activities. You could watch one of three or four TV stations (unless you had several UHF off-brand stations), play a board game, eat, play cards, listen to sports or news, or listen to music. The high end scene that spanned from the iconic radios of E.H. Scott, up to August 23, 1977, grew out of the early radio era, and did so in a very gradual way. From radio, to 78s, to FM, to LPs and 45s, to FM Stereo.
What happened on Aug 23rd 1977? It was the roll-out of the VHS tape, and the end of the hegemony of sound. It was the beginning of the end for the dominance of music in everyday life. Today, not only does sound compete with video, but it must compete against computers, smart phones, iPads, iPods, etc… For kids born in the early ‘70s, Video Killed the Radio Star (the first music video on MTV). For those born in the ‘80s, the center of attention has been game consoles. With the MTV generation, audio was considered an equal partner to video. For more recent generations, the lines are so blurred that people only pay attention to the sound if it is missing, or out of sync with the video. Music has been reduced to a commodity, like homogenized, processed, vitamin-D milk. The music promoted by the “majors” is pro-tool recorded and processed to hard disk drive, auto-tuned, compressed and completely devoid of the natural. Then the music is squeezed down to something barely acceptable as sound or music so it doesn’t consume “too much” bandwidth. The artists are chosen not for their music, but their marketability. The entire music and audio scene is in terrible shape for many reasons, but it’s a fact. Things are tough all over.
While the baby boomers were still in their prime, audio was able to tread water, but things have taken a nosedive since the late ‘90s. With the “great recession” and the evaporation of trillions of dollars of net worth, the upper middle class, bastion of high-end audio, has been decimated. Even if they have money, they are so afraid to spend it that they keep it hidden under the mattress.
So, how can a high-end company survive? How can new companies start up and established companies continue to exist. First, we should realize how high end audio devours its own children.
The business model of the high end is based on a structure that existed before the advent of the internet. Advertising was done through a few select rags, and a dealer network was established. Foreign-made products were imported by a distributor, who added a mark-up, then sent those goods to his network of dealers, who added their markup. If the equipment was manufactured here in the US, and the company wasn’t too big, the makers would distribute directly to dealers, cutting out the distributors and wholesalers, increasing their margin. Some large corporations would only go through a distribution network because of the hassle of maintaining accounts and dealing with the daily commotion of shipping and receiving small numbers of units to many dealers.
Back when the Dynaco ST70 kit cost around $80, a high end amp from McIntosh would have been three to four times that price (maybe more). In that pricing structure, the McIntosh dealer would have made a very nice profit of around 40%. The rest went to McIntosh. The McIntosh dealer network was very exclusive though: You couldn’t be just any shop to sell McIntosh. You usually were a well established company with a lengthy track-record and the ability to do minor service work for the customers (like testing tubes and triaging defective gear). The lower end brands like Fisher and HH Scott were available at lower prices and had many more dealers, though with a smaller profit margin for the dealers. There were very few audio manufacturers compared to today, so most of the gear was mass produced in volume, making it somewhat cheaper to build, even when taking inflation into account.
When video came on the scene, along with the rise of big-box retailers, high end audio retailers began to suffer. The priorities of their customers shifted to video and home cinema. To make up for the smaller customer base, prices started to rise. Higher prices were a fact of life. There is efficiency in numbers, and the more you sell, the cheaper it can be manufactured. When prices started rising, even more customers disappeared. It was a self-perpetuating cycle that drove up the cost of manufacturing and put dealers out of business. Honestly, I detest ultra expensive audio, which is why I look for value. If I had the money for a Ferrari, I’d buy a Ferrari, not over-priced audio. I’d pocket the rest and go see live music. Even adjusted for inflation, the Marantz 9 or McIntosh MI200 mono blocks look like a bargain compared to today’s priciest offerings (and most of them can’t touch the MI200).
With the rise of the internet, the deterioration of the dealer network was greatly hastened. People could score used equipment and buy direct from manufacturers at a big discount, and the dealer network shrunk further. Today, we are at the point where there aren’t enough dealers to use the old business models. I’m not saying there isn’t a place for a good dealer. On the contrary, I think companies that sell direct should make exceptions for qualified dealers, cutting their own profit margin to help subsidize the high end shops still in business. Still, direct sales are now the order of the day. And what’s more, with the rise of eBay and the establishment of a truly international marketing engine, companies started direct-selling from outside the country. So, the internet put a fork in the dealer networks, and threatens to upend international distributors. Not that I care either way. The equipment will get sold, one way or another.
Further exacerbating the situation is the relative ease of going from idea to finished product; it’s conceivable to do so in under a month. Available for free, LT Spice will simulate most anything electronic you can dream up. There is relatively affordable PCB design software. There are a multitude of operations that will produce and stuff PC boards, if you provide the gerber files and parts list. Some will even do the PCB design for you, for a fee. There are companies that will cut, bend, weld, insert, powder coat and silk screen your metal. There are so many parts suppliers that it seems virtually impossible that you would dream up something unbuildable, unless you decided to use an obsolete part, like a germanium transistor (don’t laugh, germanium transistors have a following in the recording community for their “crunch” or whatever it is). Actually, with enough money, you could have a new run of parts made. There is an abundance of supply right now and manufacturers are more willing than ever to cater to niche customers. With the downturn in the global economy and the over abundance of capacity, it’s easier than ever to contract an OEM (original equipment manufacturer) to produce small runs of specialty audio.
But, the biggest reason for the decline of high end audio is the death of the buyers. When one high end listener dies, he/she isn’t replaced by a new one. The market is shrinking, and there aren’t enough new buyers coming along. The overabundance of entertainment has decimated the specialty audio market. The US has been particularly hard hit, but it’s felt everywhere. How many discussions have there been about “what to do with all this audio shit” when a loved one dies? In a lot of cases, the entire collection of equipment and records were dumped at Good Will or The Salvation Army (to the great delight of bargain hunting audiophiles and eBay sellers).
What is left is a growing number of manufacturers trying to poach each other’s customers in a shrinking market. The high end devours its own children. So, what can specialty audio do to increase market share? Is there a solution, or is audio going to be an increasingly small niche of a much larger niche (home entertainment)?
The Way Forward is Sideways
I’ve always been shocked by the lack of imagination shown by manufacturers (not just audio). It’s as if they think the customers should come to them. That’s not how it works. As an ex-insurance agent, I can tell manufacturers and would-be manufacturers that they have to chase customers and close the sale. It’s never been easy, and it’s only getting more difficult. The problem for many companies is that they aren’t looking for new customers.
Moving sideways might seem contrary to the idea of moving forward, but you need to think of people with similar interests who could be developed into future customers. This includes those who are not high-end users, but who enjoy electronics (kit builders); those who collect records (and should enjoy a better turntable); those who enjoy wood working and cabinet building (and might enjoy building a speaker kit); those who enjoy modifying their cars with mega-buck audio systems, as well as musicians and interior designers. All are potential customers who have an interest in music or some aspect related to the designing, building or integration of audio. You don’t need to create high end buyers out of thin air. The future buyers are there, but haven’t been cultivated.
Let’s look at kit building and what it means. If someone sees an amp kit or speaker parts/plan kit in a non-audio publication, like “Popular Whittling” or “Electronic Nerds Monthly,” they might build the kits purely because they like to build things. Once they have their new fangled speakers, they might hear the shortcomings of their crappy $100 receiver from Target or Wally-World. Eventually, they get sucked into the whole high-end scene, wind up reading articles in Dagogo, and wonder why other people aren’t into high end audio. Start by finding common ground, then slowly pull them into the hobby. It’s what I call the “high-end audio, slippery-slope syndrome” or HE-ASSS ™. It’s the same as alcohol being the gateway drug to cocaine, or fast food being the gateway to morbid obesity. You have to hook new converts in a very gradual way, much like pushers “giving” away a joint, or casinos “giving” a “free” drink. Yeah, sure, those drinks they give you while working the slot machines are, ahem, AHEM, “free”. Seriously, hobbies are addictions, but not as destructive.
If you market to cabinet builders or electronics whizzes, there is the risk they will become new competition in the future, but unless they are extremely foolish, I mean ambitious, they probably won’t offer a complete line of sources, electronics and speakers. Only someone extremely stupid, I mean ambitious, would try to build everything themselves and start from scratch on everything. So, yes, they might wind up being the next great speaker manufacturer, but chances are they will stick with speakers and buy their amps and sources from another manufacturer. The place to market to these types would be trade publications, hobby magazines and banners on user groups, just like it’s already being done in audio publications and user groups. Cabinet builders probably don’t have a subscription to Audio Express, so you’ll have to figure out what they read for pleasure.
You know who needs to be exposed to audio, before it’s too late? Kids and college students! If you make a line of headphones or electronics, why not go to local schools, junior colleges, universities and trade schools? Introduce yourself. Offer to leave a couple samples of the product for use in the “listening lab” or band/orchestra/choir hall, then offer a standing discount for students and teachers. The younger you get to them, the easier it will to make them life-long audiophiles. It might take a meeting with the administration, but as long as you are offering a quality product, at a discount, that benefits school activities, then you stand a good chance of getting access to a young and impressionable group of customers. Hey, most kids are going to listen to music, regardless. Why not give them better sounding audio?
In the music and drama programs (Playbills), why not place a small ad offering a discount to students and teachers?
Similarly, approach the vocational departments of learning institutions. Offer them plans and parts to build a speaker system. When it is finished, bring in a powerful amp and good source so the kids can hear what the speakers can do. Offer a discount to any student who wants to build a system of his or her own.
Likewise, if there is a local electrical engineering program, talk to the instructors. See if they would be interested in your dropping off defective equipment to troubleshoot or tear apart. See if they would be interested in a component, but entirely broken down to its constituent parts, with the goal of assembling the parts into a functioning product. If the instructor is worth her salt, she knows that tactile interaction with the subject reinforces learning. If you are big enough, why not use local schools to develop new talent, whether it is sales, marketing, manufacturing or designing? Offer a scholarship to a local college. Find young innovators and bring them onboard before the competition does. Sponsor internships or work co-ops. Be willing to learn as much from the students, as they learn from you. Some of these kids will create the next big thing. Develop healthy relationships that are mutually beneficial with students, teachers and the schools.
What seems like the most organic approach to growing the high end audio scene is this: Figure out how to attract record dealers and ham radio guys to regional audio shows. Let’s say you have an existing high end show in a hotel. Obviously, audio demonstrations must be in individual rooms, which leaves the ballrooms and common areas free for something else. Why not put an ad in Goldmine offering table space, dirt cheap? Why not reach out to ham radio operators, through their publications and user groups, inviting hams with “old junk” to sell their “crap” in air conditioned comfort, instead of the hot parking lot at a ham convention. Can you imagine the cross pollination?
I know some manufacturers might be afraid of the records and old electronics parts competing with the audio rooms, but that misses the point. High end users come in all flavors, including musicians, skilled trades, millionaires, doctors, and the ordinary John Doe, among many. The goal should be to expose record collectors to good audio. The equipment guys would get to scour the Ham stuff for tubes, resistors, chokes, distortion analyzers, oscilloscopes, meters, power supplies, solder, soldering irons, transformers, cabinets, sockets, fuses, etc., etc.. Perhaps an electrical engineer stops by to look for parts and strikes up a long lasting relationship with an equipment manufacturer. What if a budding DIYer starts a friendship with an older, wiser, retired ham radio operator? What if the retired ham radio guy finds a new lease on life, while the young DIYer finds a mentor?
I even thought of inviting car stereo guys to show in the parking lot, but the level of douche-baggery is too great to justify the risk. If the show was big enough, then it can develop a unique character. Live music after show hours? Why not? Inviting component manufactures, like Vishay or local transformer winders? Local sheet metal, powder coating and plating shops? Invite electrical engineering students, the “board ops” at radio and TV stations, music librarians from schools with a music library, music teachers and music students, members of local orchestras and opera companies? Call every used record store, home theater installer, and invite them to either show, or drop by to visit. It can take any direction you want. To paraphrase Darth Vader: I find your lack of imagination disturbing.
Had I the time and resources, I’d love to do it, but I’m just a blue collar working stiff. Also, the guys who put together ham conventions and record shows wouldn’t take kindly to you “giving away” exhibition space, but I really don’t give a damn. If they get in your face about it, get a restraining order. Don’t let greed and stupidity get in the way of progress here! Why don’t manufacturers get together and more actively collaborate with show organizers? Help the organizer get warm bodies through the doors with unconventional marketing (see above). Only backwards-thinking manufacturers would see this as competition, when they should see a good marketing opportunity and a chance for the common good. Instead of destroying the commons with turf wars, improve the commons.
The easiest way to spread the gospel of audio is the local high end club, which exists in many cities. The problem is getting non audiophiles to attend. Just like religious people invite friends and coworkers to their place of worship, perhaps audiophiles should invite one friend or coworker per six months to an audio function. Just a thought, but local audio clubs help share the expertise of skilled repairmen and help move used equipment locally (as opposed to consignment) while exposing club members to exciting new equipment.
Perhaps the most useful development would be a 501c (non-profit) organization to further the ends of high quality audio (in general). Perhaps the International Quality Audio Federation, or something like that. It could be open to anyone with a stake in high quality audio, foreign or domestic, educators, including manufacturers, dealers, designers, parts manufacturers, marketers, distributors, vinyl and digital disk mastering and pressing facilities, OEMs, pro audio, patent attorneys (because new ideas need to be protected), schools with audio related degrees, audiologists (because it helps to hear), musicians and most importantly…the end users. If the company or individual pledges to further the advancement of good sound, whether as an end user or manufacturer, membership should be granted.
The membership dues to become a member would be relatively small, and would help subsidize activities. A monthly journal would be published with an emphasis on design, history, manufacturing, standards and new developments. There are vast untapped resources that could be translated into English. How I would love to see articles by Japanese DIY contributors translated to English. English is the international business language, but a chapter in another nation could translate important patents and papers into the local language. Advertising would be sold for the publication to help subsidize activities. There should be a massive database on a web site with important patents, scientific papers, biographical information on important audio people, dead or alive, a list of members by category, and a list of those who decide to make a larger monetary donation, much like what you see at the back of the Playbill when you go to the theater. Membership would be replete with card and secret handshake. Members would be encouraged to foster quality audio wherever poor audio is present, the equivalent of red-carding offenders. There would be local chapters to organize informal and formal gatherings. The audio police? Why not. “Yo dog, your speakers are out of phase. That’s whack. Need to handle up on that bro. Here’s your red card.”
More importantly, the organization would take proceeds from memberships and advertisements to help promote local audio shows, work with vocational programs, advance audio at schools with electrical engineering programs, pressure the establishment to make quality audio a priority (when big business decides to compromise audio in the name of corporate profits), try to develop the next generation of audiophiles, and help write grant applications for study in audiology and audio related engineering. Proceeds would be broken down by region and used regionally. It’s inherently wrong to take the proceeds and spend them all in one country when the organization is international.
If a board of directors needed to be formed, it would not be dominated by manufacturers. That’s why the CEA sucks. Every segment of membership could have a representative to vote on what to do with proceeds and where to concentrate research. Letting manufacturers take control of any organization is a recipe for disaster. It’s the inmates running the asylum. It should be a partnership of all those interested.
The AES, or Audio Engineering Society, counts a staggering 15,000 members worldwide, out of a possible 7,000,000,000 inhabitants. Failure? Maybe not. It is an exclusive membership just for audio engineers. Try to buy a copy of their journal. You’d think they’d like to disseminate information, not hoard it like a bunch of trolls. The problem with the AES is that they don’t have an outreach program, or one that I know of. I’ve never seen an advertisement for the AES in one of the DIY audio publications.
The Consumer Electronics Association, or CEA, with some 2,000 members, is a joke. It started off as a trade show for radios, and has devolved into blue tooth equipped vibrators and wi-fi equipped blenders. Specialty audio is marginalized, and rates for showing at CES are onerous. Its name implies “consumers” and “electronics,” but you don’t see consumers in attendance, and you see gadgets that might use electricity, but are hardly “electronics.” It’s an organization for huge mega corporations to push the latest line of crap for the sheep who buy what they are told to buy.
If 17,000 worldwide members, all interested in good sound, pooled their collective knowledge and resources, anything could be accomplished, including a new audio golden age.
Make It Happen!
This is the hard part. With money tight, it requires people to pool resources and collaborate. And as I’ve seen all too often in audio, manufacturers tend to jealously protect their turf. Manufacturers are afraid of giving away their “secret” suppliers. Secrets don’t do any good when you are in bankruptcy reorganization. The sooner the high end stops eating its young, the better. Manufacturers, dealers, reviewers and users must put aside petty differences to work for the common good. If not, there will be nothing but manufacturers and reviewers left, and that’s not a good business model. If you think I’m wrong, or missing something, let me know. Intellectual growth means being open to opposing views. We must be intellectually honest enough to accept that we might be wrong.
There might be future generations who never hear the sound of uncompressed audio. That’s a hateful thought. Let’s get going before it’s too late. Perhaps there is a new golden age of audio to come. I have faith that it is possible, but I also know it’s not likely under current circumstances. I’ll finish by quoting Jesus: “Go into all the world and proclaim the good news to the whole creation.”
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