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The state of audio retailing today

Opinions — 25 May 2011

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The state of audio retailing today

“I told you so.” Nasty words, but inescapable of late. I just can’t stop saying them. As hi-fi retailers – real ones, stocking decent equipment and blessed with an awareness of the high end – are disappearing as quickly as typewriter manufacturers and cathode-ray tube TV sets, some might ask how it all happened so quickly, or how it can be stopped. But I, for one, don’t consider a 25-year-long descent to irrelevance to qualify as “quickly.” Those guilty of allowing purist audio systems, capable of making divine music, to become unloved and obsolete were warned.

Retailers, manufacturers and audiophiles with any longevity in this industry know that specialty hi-fi stores first appeared in the mid-1950s, as an off-shoot of electrical goods stores, maturing to the point where they were free of “white goods” by the end of that decade. Suddenly, hi-fi justified its own dedicated retail outlets. Gone were the days when audio separates were sold side-by-side with refrigerators and washing machines. The trajectory was quick, the plateau reached by the late 1960s.

For a good 30-35 years, a decent “stereo” figured in the top 10 of most consumers’ “wants lists.” Everyone got lazy. Hi-fi sold itself. Cool bachelor pads in Playboy featured killer systems. A specialty audio product could sell 50,000, 100,000 or more units. If you don’t believe me, do some Googling and terrify yourselves with the unit sales of Dynaco amps, AR speakers, Shure cartridges and the like.

As of 2011, hi-fi doesn’t figure in any consumer research Top 20s for the targets of disposable income or “must haves.” Audio systems have been nudged downward by smartphones, iPads, gaming consoles, state-of-the-art cooking ranges from Viking or Aga and aluminum-clad coolers from Sub-Zero, fine wines, luxury vacations, better attire, fountain pens, digital cameras. Hell, most 15-year-olds draw a blank if you even say “hi-fi” or “stereo.” They probably can’t hear you through their vile ear-buds. They certainly don’t covet dad’s sound system

More indicative of this trend is a figure quoted to me a few weeks ago, apparently from an industry body, maybe even the CEA. I was told that in 1997, global sales for “high end” separates totaled $500,000,000. Projections for 2011 were $270,000,000. Keep that near-halving in mind, because we live at a time when, despite a financial crisis, other luxury sector vendors are enjoying phenomenal growth. Why aren’t we?

Despite all the warning signs, the audio industry* carried on behaving like audio geeks when they should have grown up. The lost opportunities are numerous, the self-inflicted obstacles shameful.

We created unnecessary wars – digital vs analogue, stereo vs multi-channel – and we refused to stop playing the customer-repelling formats game. How much damage was inflicted by failed formats? From the 1980s onward, during an era where every single luxury item has enjoyed increased sales thanks to increased levels of sophistication, only high-end hi-fi plummeted.

Cigars (despite anti-smoking legislation), fine wines, artisan fountain pens, custom-made luggage, tailored suits, five-star dining – the list of luxury goods with upward sales is endless. What they all share, that hi-fi doesn’t, is the manner of presentation, and the perception of what ownership imparts. Shout all you like about how high-end manufacturers share the same production and performance values as Mercedes-Benz or Montegrappa in their quests for excellence, but don’t you dare tell me that anyone in audio knows how to sell to the self-same clients.

Where does the “I told you so” come in? As far back as the late 1980s, I was bellowing, kvetching and whining about pending doom, not least in magazines like the UK’s much missed, scurrilous trade organ Private Eye-Fi. My decibel screech increased logarithmically as I saw how it should be done, how it should have been done, the whine increasing as I moved deeper into the worlds of wristwatches, exotic cars and other boys’ toys. The satori was painful, the analogy with our failure inescapable.

Many of you would like to deny any culpability for the diminishing of the appeal of high-quality sound systems, blaming it all on such “villains” and “cancers” as digital, the iPod, the economy, the Wife Acceptance Factor, the lowering standards of contemporary music, or other real or imagined causes. All are responsible.

But what you might learn from is a similar catastrophe that happened to another once-vast industry, with a devastating effect which crippled a 300-year-old tradition in under a decade: in the 1970s, quartz arrived and killed off the mechanical watch, seemingly overnight.

You think that the flat-screen TV replaced the CRT in record time? The digital camera wasted film in a trice? The word-processor slew the typewriter in a blink of an eye? They were nothing compared to the devastation that battery-powered watches wrought, in terms of speed, on the mechanical watch industry. But consumer electronics had an advantage over the watch business because the transitions, e.g. the move from CRT-to-flat screen, were evolutionary developments that the same makers could handle: JVC-to-JVC, Sony-to-Sony. None of them had to shut down. Quartz watches, on the other hand, killed off brands by the hundreds, American lost all of its homegrown makers, the Swiss laid off a few hundred thousand workers.

By the time the Swiss realized that the mass market belonged to quartz, the Asian makers owned that market. But the Swiss did something no-one has yet figured out how to do in audio, to counter the iPod/ear-bud/crap-speakerization of music playback: they went upmarket.

Nicolas Hayek thumb 450x355 2315 The state of audio retailing today

First, a genius named Nicolas Hayek single-handedly saved the Swiss watch industry, by creating the Swatch, which brought mass-market sales back to Switzerland. He beat the Asian giants at their own game, with inventiveness and panache. But then he and a handful of other visionaries did something else which is PERFECTLY analogous to what the revival of the turntable is doing on a microscopic level in our industry: they sensed a desire amongst fastidious consumers to return to the mechanical watch, even though it offered absolutely no technical advantages over quartz, save surviving a nuclear holocaust thanks to immunity to EMF.

What happened to the watch industry still defies logic. Seemingly-obsolete mechanical watches acquired prestige and collectability. They became objects of desire, little machines that attested to manufacturing skills which border on the artistic and the magical. And yet the finest watch in the world tells the time no better than the clock in your mobile phone.

Lest you think I’m praising a scam, note that “high end” watches appeal to individuals for exactly the same reasons that we choose one component over another, even if we’ve reached a point where the two are so sonically similar that measurements don’t reveal differences. We choose one over the other because the company has been around for 50 years, or its output is Class A instead of AB. Watches, though, have other virtues that high-end audio doesn’t: the likelihood that the value will appreciate, the sense that you’re getting you’re money’s worth. Even the most seemingly-overpriced watch has been costed to reflect man-hours. Now tell me how a $5000 meter of cable is as work-intensive as a $5000 chronograph.

But that’s neither here nor there, and I like to think we buy the things we love to enjoy them, not to re-sell them, nor to worry about value-for-money. That only applies with budget purchases, because funds are more of an issue for the consumer, while the Law of Diminishing Returns affects every upgrade – as anyone who knows wine can demonstrate with ease. Where the analogy stops, and where we failed, is our inability to make audio appeal to anyone outside of the audiophile mindset.

I will leave you with one illustration. Imagine you have $2000 or $20,000 or $50,000 in your pocket. Even the least amount is a decent piece of change. You would like to think that whatever salesperson is relieving you of that, in exchange for his wares, will treat with relative respect. You do not, for example, expect a guy selling you a Coke for a buck to fawn over you the way a waiter would who just uncorked a $600 Ornellaia. But you would expect a refined level of comportment from someone about to swipe your Amex through the card reader for $50,000, whether it’s for a mid-level BMW, a Patek Philippe chronograph … or a $50k amplifier.

And that’s where we fall down. Step into any branch of Cellini or Wempe for a wristwatch. Go to ANY Mercedes-Benz dealer on earth, any Hermes boutique, any salon selling Prada. You will not see dirty coffee cups, empty boxes, snotty sales staff. You will not be harangued about your choices, nor fed sales pitches consisting of eye-watering mumbo-jumbo. You will be treated with respect, and you will witness salesmanship worthy of the product that you are about to buy.

In my 40 years in audio, I have met no more than a couple of dozen individuals employed in this industry who would be hired, in any capacity, by Patek Philippe, Harry Winston, Aston-Martin, Montegrappa. Having met the CEOs of those companies, visited their factories, seen their retail outlets, I weep for us.

Talk not to me of their margins – they are the same, or worse than audio. Talk not of such companies being larger concerns with deeper pockets: you would be surprised how small are some of the great names, compared to hi-fi’s few giants. Instead, ask yourselves why they can sell luxury products for the same prices as yours, in great quantities, and they never have to apologize for them.

Or beg for customers.

In May 2011, the Richemont Group – owner of Cartier, Montblanc, Van Cleef & Arpels and other luxury houses – posted an increase in sales of 33%. [http://www.businesslive.co.za/incoming/2011/05/19/richemont-sales-up-33] Is there a single manufacturer in audio that can claim as much? Besides someone selling capacitors and resistors? Richemont did it selling luxury goods, which are by definition things that nobody really needs: wristwatches and jewellery. We can’t even do it with something as life-affirming as music machines.

[*To avoid confusion, I’m talking only about makers and vendors of “quality separates,” “real hi-fi” – call it what you will – not mass market dreck]

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About Author

Ken Kessler

Ken is one of the most widely published audio journalists at work today, having contributed to over 200 magazines around the world. He has been writing for Hi-Fi News & Record Review since 1983, where he is currently Senior Contributing Editor. He has also written about wristwatches, pens, hotels, cars he can't afford and wines he wishes he could for newspapers and lifestyle magazines including The Wall Street Journal, Esquire, GQ, Men's Health, The Financial Times, the Telegraph, the Times, and many others. Ken is the author of Quad: The Closest Approach and McIntosh - For The Love of Music, and co-author of Sound Bites. His next book, co-authored with Dr Andrew Watson, is the history of KEF, due in autumn 2011. Ken was born in Maine, which he misses daily, but has lived in the UK for nearly 40 years, sharing his home in Canterbury with his wife, son, three cats, 12,000 LPs and the world's only SME 3012 tonearm with factory conversion to RCA connectors

(21) Readers Comments

  1. Jay Valancy

    May 31, 2011 at 8:00 pm

    Hits the nail on the head – I was treated with total respect at a local Rolex store and couldn’t even find a high end store. And, although I didn’t buy a Rolex, I got another self-windign watch.

  2. Leslie Ujj

    May 31, 2011 at 8:56 pm

    Yes AND No! The wristwatch collection industry has a long history! In my family some 100 years our own watch maker masters were true enthusiasts and remained so even unto the Q revolution. Go to Greenwich England to feel the wonder of this incomparable art. I say this as a devoted music and Hi-Fi fan of 40 years: our hobby can NOT be compared to theirs!

  3. Neil

    May 31, 2011 at 9:53 pm

    Excellent article Ken, and you do hit the nail on the head. I am an audio retailer myself, and strive everyday to try and remind people that its supposed to be fun. We are listening to music FFS! Not performing heart surgery. The ridiculous levels of snobbery I was subjected to as a customer taught me to NEVER treat someone who wants to spend $1000′s with me like that. We sell beautiful gear, but just because you may not be able to afford it, doesn’t mean you are any less of a person… People do business with people, and if nobody wants to deal with you, you must be doing something wrong!!

  4. May 31, 2011 at 10:32 pm

    You can bemoan the state of the industry, but don’t blame it on the service quality of audio “salons” or the quality of the equipment. Neither is a contributing factor in the demise of the audio industry. Rather, the industry has been decimated by the commoditizing of the near-high-end that produces more than acceptable sound for most consumers.

    The average consumer has never cared about the fetishistic worship of high-end components. In the 50s and 60s people wanted a good record player and a decent radio. They wanted to be able to play media in style. Today, those same people expect their media streamed, downloaded, video and audio capable, and they find they get a pretty good product for their money. There is no doubt that the empirical quality of audio media used by most consumers has declined but it is still much better than consumer-level products from 30 years ago. And people are fine with it.

    When Macs changed the game in the publishing world, first wiping out typesetters and then decimating color separators, the two industries clung to a false notion that their clients would hang onto conventional production methods to get that extra 5% of quality, even if it cost ten times as much. Boy were they wrong. In the space of five years they were all gone. Why? Because there are only so many people who care about that last 5% in anything—even professionals—unless you can make the product have an aesthetic cachet that goes beyond its function in the general culture. When most people see a typical high-end set-up with giant amplifiers sitting next to room-hogging speakers, they don’t think its cool—they think the person is crazy.

  5. Jeff K

    May 31, 2011 at 10:41 pm

    Nice article Ken. As a thirty-one year veteran of audio retailing, I too mourn the death of quality audio retailing. I’ve been thinking about this a lot recently as I hit a milestone birthday. As much as I’ve enjoyed and respected your reports over the years, I think some of your points here may be a little off base.
    First, there are many contributing factors to the loss of popularity of the audio hobby. Some include:
    Reduction in leisure time- as Americans work increasingly longer hours, both spouses working more often than not these days, with the few remaining hours away from work increasingly devoted to driving to and attending children’s organized athletic and cultural activities.
    A shift in “geek” focus from audio to computer technology. For those interested in technology, hardware, and “tweaking”, how many more opportunities with the rapidly evolving technology of computers.
    The evolution of multi-tasking- if you don’t sit down and let yourself become involved in the music, can you really appreciate a fine music system?
    The increasing parity of audio component quality. I remember having discussions about this with my friends at Bang & Olufsen in the early eighties. They realized thirty years ago that as technology developed and matured, there would be smaller differences in the audio quality between components. Solid state was getting better and more affordable. Digital ushered in more parity- how many manufacturers of DAC chips were there in the eighties- or now? We talked about how a manufacturer would have to differentiate themselves in other ways. They have found ways to differentiate themselves with technology, design, and presentation. One could argue they have come closer to the luxury good models you cite than any other audio manufacturer.
    Speaking of your references to the success of luxury goods manufacturers, I submit that there are substantial differences between their business and ours. Let’s look at small goods, such as watches and writing Instruments, vs. High end audio
    Sales per square foot- much less investment is needed for retail space- for watches and writing instruments you really don’t need any more than the area a single high-end listening room occupies.
    Sales process/time- Minimal for these- review the construction and design, try on the watch, jot a few notes with the pen, vs. hour upon hour of listening and comparison for any single component in a system, followed by visiting the client’s home to evaluate the space and system matching, loaning, installing, and tweaking the component for evaluation in the client’s system, returning to pick up the loaner, returning again to install and tweak the client’s factory fresh component, returning again to tweak if a break-in period is required. All that time usually expected by the client to be no-charge. Then, if you’re lucky, the client actually buys it from you, rather than used, or from some sleazebag on the internet, who doesn’t give a damm about any of the process listed above, selling on price alone.
    Status Symbols: There are those who buy watches and writing instruments because they appreciate the engineering, craftsmanship, and sometimes superior functionality, but many are purchased exclusively as status symbols (How else to explain the popularity of outrageously expensive watches/eyeglasses/ handbags, etc. featuring hideous designs composed primarily of the logo or initials of the maker). They are small, portable, and may thus be shown off to friends, relatives, and associates. A HiFi may only be shown off to those who come to the house, and then only those interested in visiting the listening room.
    Unreasonable influence of the “high-End” audio press. Yes, there are magazines for high end watches and writing instruments, but they are mainly pretty pictures and ads, with little criticism. In audio, a small number of magazines dominate the market, and routinely publish lists of what they proclaim to be the “best” gear, although they can review only a small percentage of the products on the market. A good review makes a product, an OK or worse review can destroy a company. I remember a time, working as a manufacturer’s rep, bringing a new brand of DAC from a respected designer to my dealers for evaluation. Everything was going well, until the review in one of those magazines mentioned they “thought” that they “may” have noticed “a little grain”. Interest immediately ceased, and the company disappeared.
    So where have the good audio dealers gone? The ones who couldn’t see that the business was changing, or who were unwilling to adapt, are gone. There are many of us though, who saw that we needed to evolve. We are now Custom Electronics Professionals, Systems Integrators, Custom Installers, Technology Consultants and the like (we still haven’t evolved enough to settle on a definitive and universal name for our profession). You say “In my 40 years in audio, I have met no more than a couple of dozen individuals employed in this industry who would be hired, in any capacity, by Patek Philippe, Harry Winston, Aston-Martin, Montegrappa.” I know many that could fill that bill. We have evolved to work hand-in hand with millionaire and billionaire clients, custom homebuilders, architects, interior designers, fine cabinetmakers and others. We provide a level of service that most of the quality audio dealers in 1980 could not imagine. We do serious acoustic analysis, room treatment, and sound isolation to maximize the performance of the listening room, which was very rare in 1980. We have the knowledge and products to improve the quality of electrical service to the system- again, almost unheard of in 1980. Our systems expanded beyond audio to include video, lighting control, security, phone systems, networking, control integration and other disciplines. We love to sell high-end audio when the client is open to it. We evangelize it. But we can’t depend on it to pay the bills. And many of the “high-end” manufacturers have not evolved in a similar fashion, and continue to pin their hopes on the traditional audio dealer. That’s changing finally, but many don’t even bother to talk to us because, although we have listening facilities, we are not out on a traditional retail strip, and only show by appointment. (The day is gone when you can have salespeople sitting in a showroom waiting for walk-ins. We are out in the field with clients.)
    Finally, one of my pet peeves- manufacturers who have lavished far too much effort and money on expensive cosmetics that do not affect sound quality, pushing the price beyond the reach of many of those who would be interested. While I appreciate fine design, and craftsmanship, many components are now sporting “bling” to appeal the status conscious consumer mentioned previously. If you are truly making a superior sounding component, why not engineer it into a package mortals can afford? If, on the other hand, it is NOT superior, better bling it up and put a humongous price on it so the guys with more money than experience will buy it because it MUST be better if it’s more expensive, right?
    Well, that’s enough ranting, but you hit a topic near to my heart. As a kid getting started in this business, I was accused of wanting to “save the world from bad HiFI”. Now, thirty years later, I still get accused of that, but also get accused of wanting to “save the world from bad installations”. I hope I’ve done a little of that.

    Thanks Ken, and Thank You Paul, for the new forum.

    • Paul McGowan

      June 3, 2011 at 10:18 pm

      Jeff. Great reply and you are welcome for this forum. It’s replies like this, well thought out and responsive that keep it strong. Thanks.

  6. Ian Blacker

    June 1, 2011 at 10:33 am

    As a former salesman of Bo and O, Telefunken and other good products in Britain, I too have found that the attitude of too many high end retailers is klitch. They have no clue how to sell a product from the moment a person walks into a store to ending the sale. I remember a salesman who knew too much about the product who, having sold the person the product, then started to tell everything wrong with it. I stood stunned by the idiots attitude, as his customer walked out shaking his head.

    High end businesses, you have the worlds best audio products-especially British!! Sell it like a Bentley, with focus on the customer first. Sell the experience, sell the product and sell the service that welcomes them back by name and pops them a glass of wine, tea, coffee etc, when they come in, with a great show room that matches your desired customer base. Cost a lot? Yes, but the returns are inestimable. Remember, Image is everything in retail. I waited four months for my watch without complaint because of what it was.

    Though not an “expert” If there is any high end retailer needing to know how to sell to an upscale market, I would make myself available for a consultation. The same applies to manufacturers who seem to have forgotten how to advertise, let alone sell to their supposed market. Why make a great car sound system for a Bentley and not double sell by advertising your home audio products to the customer who spent $250,000 on your car? Duh!

    Ian Blacker.

  7. billy

    June 1, 2011 at 10:58 am

    If it were only that simple…What Ken fails to point out is that “luxury” as he understands it is completely divorced from functionality. Take his watch example. People do not buy mechanical watches for their functionality. You can talk all day about art and beauty, but the majority of people who own these types of “luxury” goods are simply advertising their wealth and success. It is certainly not about telling the time. They are nothing more than symbols of status. On the other hand it’s hard to impress people by wearing a pair of Wilson Alexandria’s on your wrist to show people that you are successful. The rise of luxury as Ken understands it probably correlates to the moral decline of society. People who enjoy audio are enthusiasts and passionate about music, a real art form. Everyone knows you’re not supposed to talk about money. The luxury manufacturers have simply found a way to skirt around societal strictures and norms of good taste and propriety and made it fashionable to flaunt one’s wealth! LOL. Ken calls it “luxury”. I call it nouveau riche.

  8. Erik Miner

    June 1, 2011 at 11:14 am

    Ken: I have to disagree with the above post. I’ve spend 30 plus years in audio. First off the comparisons to high end watches doesn’t work. The reason that high end watches sell is because of prestige. A successful man who wants to show off his success or that enjoys the finer things really only has a watch to wear as a token of his success. Apart from a bespoke suit or other personal items a watch is the one item that can be worn without ridicule. I suspect big gold chains and diamond earrings don’t really fly in the board room, court room, or operating room. A watch is really the only piece of jewelry that a man can show off with.

    High performance home audio has been dying a slow death since the 80′s, and it’s death isn’t due to only one criteria. The first change that started the down slide was home theater. I was selling audio in the 80′s and as soon as BIG TV’s started making their way into audio stores the entire dynamic of the sale changed. First was the application of a customers budget. If a customer was going to spend say $10K on a new system before it was all on audio. Now it was $5K on the TV and the rest on audio. Well as we all know video has at best 25% margin and audio 40-50%. Also with the BIG TV, small speaker systems and subwoofers became popular. Over night Magnepan and Apogee and ML sales went in the crapper. The wife was OK with a Big TV but no way were big speakers also going to be allowed. This trend has continued as specialty audio stores had to get more and more involved with video. Video really hurt margins, and began the commodification of HiFI, which is where we are now, audio equipment for the most part is a commodity.

    The rest of the downward spiral of HIFI can be directly laid at the feet of changing technology. Back in the beginning of home audio there simply weren’t very many home entertainment options; In the 50′s and 60′s and 70′s the choices were a nice HIFI, 5 TV channels, and board games..There simply wasn’t anything to compete with HiFi. There wasn’t 700 cable channels, no on demand porn, satellite radio , and of course no internet. Life styles have changed, times have changed, people (men and women, mothers and fathers) are so much busier, the most valuable commodity is time, and people just don’t want to spend what free time they have sitting and listening to recorded music. There simply isn’t any status in having an expensive HiFi, it simply doesn’t matter any more and that’s really the crux of the matter; a fancy HIFI simply doesn’t impress, it’s become irrelevant to most people. Music is still important, but the days of the pipe smoking bachelor with the big reel to reel and impressive HIFi are gone.

    There will always be die hard hobbyists, us.. but the high end needs to wake up. Because of manufacture of scale because of limited volume prices have gotten stupid, and frankly the value has gone way down. There simply is no correlation anymore between cost of manufacture and retail. For the price of a five figure audio component I can buy a basically hand made Ducati or BMW motorcycle, or do some nice home remodeling, etc etc.. The high end needs to retool themselves and make their products affordable to a wider audience, increasing volume instead of increasing profit per unit is the only way out. Selling fewer and fewer units at higher and higher prices to the same rapidly dwindling audience is a recipe for death.

  9. Norm

    June 1, 2011 at 1:44 pm

    I agree wholeheartedly with Erik.

    I want great sound, and I want to pay as little as possible for that performance – although I’m certainly guilty of moving way up the diminishing returns slope. Of course, I’m not trying to make a livelihood in the industry.

    I’m dealt with some really great dealers (the best one selling Thiel’s on weekends from an industrial space), but most of them have not had helpful attitudes, and certainly gave me little service for the top dollar they demanded. Lately, the cost of high end equipment is just ridiculously out of reach for almost anyone tempted to get into the hobby. Most “normal” people that hear my system find it a revelation, but we need good moderately priced options to get them hooked; and the hobby also needs more unbiased sources to help the newbie spend his limited funds effectively and get the most out of it.

    Does the industry need more consolidation, to get unit sales up and prices down? Is there hope reasonable demonstration space can be found for the larger market – maybe partnering with Home Theater is not the end of the world?

    The last thing I want to be a part of is Tiffany Audio.

  10. June 2, 2011 at 9:16 am

    Great article Ken and even better responses – all good reading! Perhaps an answer to why the ‘hi end audio retailer’ is almost gone is in Norm’s 1st paragraph -

    ‘I want great sound, and I want to pay as little as possible for that performance”

    And isn’t that what 98% of the population all want now?

    One would have to define ‘great sound’ – it may be an individual thing; my definition would be the music system needed would have to reproduce the album as close as possible to how the sound engineers expected it to be listened to after their final mix. No additional colour throughout the playback BUT just as it was laid down. And that comes with a price that does not include the word ‘little’ anywhere. In this case you have to be particular in choosing your components and your retailer / consultant.

    My system consists of Genelec (S30D) and two DAC’s (I wanted to compare two brands) and mostly FLAC / HD FLAC files on both Mac + PC.

    My Genelec’s were tweaked after a month of use (some 6 years ago now) and the difference was remarkable.

    Let’s hope we get a few more responses!

    Keep up the good work Paul! Is that picture of JB Hi Fi here in Victoria, Australia?? must be??

    • Paul McGowan

      June 3, 2011 at 10:26 pm

      Yup. Australia it is. I am not too familiar with the dealership but there were plenty of pictures of them available as the kind of store you don’t want to be.

      This is great dialog from everyone. Thanks. It’s refreshing to read.

  11. Priaptor

    June 2, 2011 at 10:27 am

    It is easy to blame the lowest guy on the totem pole, namely the dealer for being rude, crude and oblivious. First, I have purchased some of these “high end” watches Kessler is making his analogy to, and must say he is clueless if he believes this serves as a benchmark of comparison. The only benchmark it serves is to illustrate how the advent of the internet and discount houses have taken business away from legitimate dealers.

    While there is plenty of blame to go around, I mainly blame the manufacturers. In many cases, and this is by choice, manufacturers are directly competing against dealers by selling direct to customers. The “dealer” has overhead the manufacturer doesn’t AND for to become a dealer, the dealer must purchase product from the manufacturer, which helps cover the manufacturers overhead, not the dealer. The manufacturer is investing NOTHING in the dealer.

    Of course, how many products do we see being sold outside of the dealership distribution, such as on Audiogon, etc. as NEW. Where are those products coming from. The manufacturers are violating their agreements with their dealers who have overhead by allowing these practices.

    If the manufacturers desire is to change their model of distribution they need to step up to the plate as it is not fair to allow these violations of agreements they have with their dealers.

    For those who have not noticed, MBL is now selling directly to the public.

    There are also too many products being released. There are too many choices, too much overlap and each one, gets THE BEST recommendations from TAS or STEREOPHILE as long as the manufacturer keeps advertising. The reality is there is little difference between one BEST versus another BEST. Few revolutionary products are out there despite being touted as such, even those amps being sold for 150K.

    It is easy to point to lesser products and younger people setting a trend, but I see it differently. In fact, with computer audio growing and gadget mania growing, the perfect match would be high end audio with computer audio as the younger ages. It would offer a natural progression to higher priced gadgets not unlike those of us who broke their cherries on portable transistor radios. As much as we would like to think this generation is different they share more similarities than differences.

    It is the industry who is failing, making a storefront dealer a dinosaur, with worthless reviews hastening the process and manufacturers, by virtue of ever decreasing return per dollar; ever increasing duplication of products and change in distribution methods ensuring their own demise which will lead to only a few left standing.

  12. CEDUP

    June 5, 2011 at 2:53 am

    The industry did it to themselves. Over priced over hyped nonsense. $10,000 phono pre amps, $40,000 amplifiers that don’t meet specs, yet get rave reviews by Stereophile and other usueless magazines that are only there to push useless products. How about $10,000 pieces of magic wires? Yeah, that’s not high end, that’s criminals at work. They did themselves in. Dynaco, Ar, shure, many other legit mfgs offered products that actually gave value to the consumer. Now the audio marketeers are all hucksters, fleecing the buyers. And the consumer woke up. They priced them selves out of business. Good riddance.

  13. B

    June 5, 2011 at 1:13 pm

    I think this is a good stab at explaining why the hifi market is dying, which it surely is, however as most have pointed out, it’s probably only about 10% of the reason. I’ll point out a few other angles:

    1. Incomes among young people are in serious decline. They can’t afford to buy as much or as expensive of anything. Hi-fi falls pretty low on the priorities.
    2. The boomers who have the most wealth are now in “preservation mode”. They’re not buying as many splurge items. Many are moving from big houses to small ones. That means the hi-fi loses prominence in the home.
    3. The trend in cities is towards condo living after 20 years of suburban growth. This means smaller rooms and smaller (or no) hi-fi.
    4. Manufacturers are screwing retailers by offering no support or advertising and selling direct. Most have gone to a build-to-order model so there isn’t even reliable stock. Even if a retailer gets behind a product he often can’t get it when he has a sale!
    5. There is absolutely no marketing to regular people. Retailers are the least equipped to do this. In today’s society, marketing has to come from the very top of the chain to be successful in building brands or awareness on a macro level
    6. People don’t care about good sound as much as before. Everyone is used to iPod headphones and car audio. This doesn’t mean they can’t be persuaded there’s better, but it’s like the prevalence of H&M clothing. 90% of the world is used to it, it’s DIRT cheap and it does the job. What percentage of people compared to 50 or 100 years ago gets custom made clothing. Hi-fi, like everything else is going to commodity status.

    Long story short, society has become such a debased consumer system that you can get what you need for nothing on just about any corner. This juggernaut of selection diverts all the capital to a particular stream based on volume and away from quality. It also reduces most people’s incomes because production of everything is automated and volumes reduce the need for handmade skill.

    There is still a percentage of people who have the means and knowledge to buy quality, but as a percentage of the total population it is minute. Of that category, most people still buy on prestige and not outright performance or craftsmanship. People still believe that $500 Klipsch and Tannoy are top quality because of brand names built 50 years ago! They were smart at the time and marketed to a receptive audience. Today’s companies are lazy and facing huge inertia against getting known.

    The happy thing is that our natural resources are not infinite and this mindless race to mass-consumerization will inevitably come to an end (probably shortly). When that happens (if any of the specialty retailers are left), peoples’ opinions of true quality are going to snap back to the fore like cold water to the face.

    Already we are seeing a backlash against things that break within the first week or months. It won’t take long before the $49 DVD player is a thing of the past as it becomes impossible to actually make products that cheap anymore. Even $500-$1000 machines have terrible reliability nowadays. It’s going to be the first foot in the door for certain component manufacturers that make reliable stuff.

    And just vocal posts like on this forum will go a long way to slowly changing awareness.

  14. June 9, 2011 at 8:13 pm

    Almost every major factor in declining HiFi sales has been listed.
    The sad fact is people are sheep and don’t think independently, Look at the failure of the big screen Zune.
    The name Ipod sells it’s self,Dose Bose or Monster ring a bell? They still do pretty well but Marketing and name recognition has sustained them.

    What young person just sits and listens to music anymore?It is just another layer of stimulation while playing a 3d graffix video game while sexting his girlfriend about the latest skinny geans at Abercrombie and Fitch.

    The car audio industry has done a great job of adapting The sound quality of a well installed mosfet head unit and speakers will include bluetooth ,HD radio ,ipod interface,24 bit CDP and a wireless remote and 22 watts RMS x4 50 W peak for $200.00.
    In the early eighty’s a new Blaupunkt AM/FM cassette remote on a wire was $1,400.00 for a head unit at half the rated power.

    ipods with apple loss less or an Apple TV through a stand alone DAC sounded so good it made me give up my first rate turntable and tube phono stage and thousands of records and even packed up my CD’s.
    Because the small margin of quality did not out way the massive storage and weight not to mention care,record cleaning brushes,zero-stat gun,cleaning machines and constantly thumbing through looking for that one record you want to hear with a good buzz and it’s not in it’s alphabetical spot.

    I can veiw my albums with artwork on the 65 inch DLP scroll albums by artist,album or gaunra of music in seconds and I can make playlists of songs like a 3,000 lp juke box that sounds better than my Music Hall 25.2 CDP. and if thats not enough I can load it on a ipod classic and listen on my car stereo through it’s DAC or slip it in my pocket and go for a walk with my high end headphones.

    The fact is new technology is not all bad it can be liberating but I will never give up my Manley Labs tube amp that makes any sorce sound the best it has to offer.

    I grew up spending more time listening to very good audio than anyone and sometimes we forget it’s the music not just the gear we are there for.

  15. Donald

    June 10, 2011 at 9:53 am

    Great article and great replies / discussion! I am so glad that you have Ken on staff – he is one of my favorite writers!

  16. Louis Belanger

    June 11, 2011 at 10:14 am

    Very good article from Ken Kessler about the state of Audio retailing.

    Many good replies too. The point about the ridiculously high priced audio equipments is a major one to my point of view. Even if interesting technologies are involved in those expensive audio equipments, their sales price have contributed to make “good audio” something out of reach in consumer’s mind. I would summarize it as a shoot in the foot exercise by many audio manufacturers.

    One more point have played a major role in the decline of sales is the profound mutation of our industrialized society for the last 30 years. Young generations are very different in their way of living. After the divorce explosion our societies have pass through, the younger generation have a more nomadic behaviour after we have impose them to share their time between the two separated houses. They have no stable point of attachment. They also share more of their time between school,friends, parents and other activities.Cell phones and portable MP3 have been the answer to their needs of having an easy and constant access to communication and music. We should not be surprised about the skyrocketting
    sales of IPods. They have just been an intelligent answer to new consumer’s ” on the fly” needs.

    • June 12, 2011 at 1:09 pm

      Great look into the modern culture of a lost generation adapting to constant shifting.
      Most people have so little time to truly listen to music these days that having to thumb through a couple thousand records taking up so much space and trying to balance it all with work and family obligations is next to imposable. I my self just made the switch to digital music storage and now I listen to music more often due to how easy it is.
      If High end is going to survive it is going to have to meet the needs and budgets of a changing world.
      Goraman

  17. StylinLP

    November 26, 2011 at 10:55 pm

    Very interesting thread. I stopped posting on AudioAsylum, SH and Circles years ago because I had nothing else to say. But this thread woke me up. I would like to praise Rega for their latest turntables. This is something I bashed all turntable manufacturers for 10 yrs ago. Looks like they took my advice! Great job coming out with better quality for the same money. Now for more companies to do the same.

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