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January 18, 2009 - 5:30pm
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Gold, Silver, Gold Conectors and Reality
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What you say is probably true JIMV with the exception of any labor intensive construction processes adding to the cost of esoteric cables and interconnects.
Just try soldering thin, solid core gold wire yourself and you'll get some idea . The strangest discovery I've made about interconnects and speaker cables is that the LESS metal mass used at the terminal points, such as RCA plugs etc, the better they sound. I have yet to see any measurements to prove this but I sure as hell would gladly sit an ABX test to prove I can consistently hear less is better. What's peculiar about this is that the designers of most expensive interconnects and cables have learnt from market surveys that buyers won't cough up big money unless they see large heavy chunks of audio jewelry attached on the end of whatever wires they're investing in. Audiophools all of em !
You are stuck on the issue of parts cost should equal cost of final product. Nothing else matters in this sort of argument. If everyone of us could go out and buy the bulk materials which allowed us to then turn raw "stuff" into SOTA products, cost of parts only might be a workable argument. We can't do that and so the argument isn't valid either. What matters in consumer audio is whether the product advances your enjoyment of music. If someone worked on a design for five years in order to turn out a better product, they deserve compensation beyond the cost of parts.
If you would please, provide a link to any product that bases its pricing relative to the cost of the precious metals used in production. I believe you are reading into this what you care to see.
Regarding cables I would strongly agree the less material used, especially in a connector, the better the sound. I would even tend to place this as a higher priority than the specific materials being used.
I am making assumptions based on review and posting comment on more than a few audio forums. When confronted over the absurd price of some product, often the first counter argument runs a bit like this "tank solid construction, point to point silver wiring, gold connectors, premium parts,..."etc. As though that parts, metals, and construction mass caused the vast price.
Actually, the price is marked up many, many times to reflect marketing, research, the skill levels of folk building the thing, and, perhaps most importantly, the gullibility of folk reading such stuff.
Let me be clear. No piece of audio is 'worth' $100K though it may be priced there. Unlike fine art or even fine watches, very expensive audio gear will very seldom go up in price over time and the next generation of very expensive gear might well sound better.
You are making assumptions, assumptions that are incorrect.
You don't know your classic audio gear, JIMV. An original McIntosh MC275 in good to excellent condition sells for about ten to fifteen times its original cost. The same for a C22 pre amplifier. The current version of that amplifier is still a Stereophile Class A recommended listing for tube amplifiers.
Go price a Marantz 7c or 10B.
What something is "worth" is what someone is willing to pay. You don't get to determine that for anyone other than yourself.
That McIntosh did not cost the equivalent of $100K. To you spending juniors college fund for a single toy might be good value but to me it is excessive. I do not say do not buy it, just to not tell me it is worth the money. Especially do not tell it costs so much because it has a few ounces of silver and gold in it. I know better.
What portion of my post do you need me to repeat?
That part that addresses my concern, that $100K product is not and can not be 'worth the money', especially when the vast price is justified by the reference to exotic parts or precious metals.
Jan, why are you always so confrontational? You act like some sort of post police/dictator. Relax, quit being so cranky all the time.
OK.
Show me a quote from a manufacturer where the cost of the item is said to be directly proportional to the material cost of the precious metals used in manufactruing, then we can talk.
ncdrawl, you find Winer to be a "contibutor" and me to be always confrontational. That is all that needs to be said on this matter.
You - and JIMV - don't get to take up your own biased opinions and call them facts. There's nothing dictatorial about it, that's reality.
JIMV - I think your point is a good one to the extent that people rely on the raw cost of goods to justify a selling price.
But Jan's right - the value (or worth) of something is determined by the market - what a willing buyer will pay a willing seller. This does depend on the buyer having sufficient knowledge of what they're getting, but as long as the seller isn't outright cheating them, then it is "worth" what the buyer is willing to pay. You could argue that the seller is being dishonest by saying something is an improvement when the cable doesn't make any difference. But if the buyer buys something, listens to it, and decides to keep it, then the item is worth at least as much as the buyer paid. The item may not be worth as much to you (or me), but that doesn't matter. If there is someone willing to pay X, then X is what it is worth. You may not be willing to pay anything at all for a pink fur coat, but that doesn't make it worth 0.
Jan, it is probably the acerbic tone you take in some of your posts, rather than what you say. Ethan can definitely be this way too, but you're just opening the door for criticism, as is he (which will more likely come from people with whom you disagree). At this point, I don't know if you're aware of the tone at all; this being a message board, no one can hear the tone of your voice, so you might be inadvertently harsh without fully intending it (or perhaps just to a greater degree). You might come back and say that people should be thicker-skinned, and perhaps you're right...
"directly proportional"....why not one where the manufacturer uses the word 'gold' more than once in his advertising....talk about spin. I never said 'directly proportional'.
I do not disagree with that, I just disagree that folk who refer to build quality, precious metals, and tank like construction in a piece of audio gear to justify $100K prices are blowing smoke.
I agree the value of something is determined by the market...what makes the market, product and marketing which includes manufacturer hype and reviewer/owner comment. Building and selling a dozen of something at $100K a wack is not a market but affectation.
Can a system made up of $100K items and $20K interconnects sound better than a system whose total cost is $20 or $30K...maybe, but does it sound 20 times better or only 5%?
Are the folk who buy the megabuck system getting full value for their purchase or simply bragging rights. More importantly, how many folk own mega systems an have them set up to play in a manner that sounds worse than your $20K system? Just as there is no real relationship between teacher pay and education there is no real relationship between wealth and musical taste or skill in audio setup.
That speaks to the intellect of the buyer, not the intrinsic value of the item.
From page one of this thread;
Which is it, JIMV, "directly proportional" or due to the quarter ounce of gold?
I don't see it as either. The manufacturer is playing up the materials used in their product in their marketing of that product.
"Builds strong bodies twelve ways."
We never found out what those twelve ways were, did we? Did it really do what it promised?
Pick your battles wisely or else you won't have any ammunition when the real enemy shows up.
I would expect an amplifier manufacturer to also mention a solid aluminum billet and machining of that billet. The price is not "directly proportional" to the cost of aluminum or due to the direct cost of machining.
You are reading what you care to read into a product you find to be unaffordable. Most high end audio components are out of my price range also. That doesn't make them not of value to someone.
If the open market decides something - an amplifier, a car, a bottle of wine, a piece of clothing, etc. - to not be of value, the market takes care of itself.
I thought you were a Reagan Republican. The free market decides. In this portion of that theory I do have faith.
Then you have adopted a partisan viewpoint. And like all good partisans you will not listen to another viewpoint. So why continue this?
Quite honestly, JIMV, if that is your question, there is no point in discussing this. I don't believe you have ever seen anyone claim a system made up of $100k components sounds 20 times better than a less expensive system
When you resort to making things up, I stop discussing.
I seriously, seriously, doubt a $2,000 system sounds "2X as good" as a $1,000 system (or $3,000 twice as good as a $1,500). You hit diminishing returns really quickly in this hobby (see thread on this topic). In other words, the last dollar you spent on your system didn't go as far as your first. That doesn't mean someone is foolish for paying $10,000 to make a theoretical %3 improvement on a $30,000 system (or $300,000 system). Sure, if they could get a %10 improvement by spending less, it may be imprudent, but that's a different story.
All this is to say that anyone with a decent shelf system can say the same thing about you for spending more than $1,000 on a complete system.
We have wandered far from my argument, which I will repeat...folk who refer to precious metals, expensive parts and tank like construction to justify megabuck gear are blowing smoke.
I object to the idea that writers figure their readers are dumb enough to buy that argument, just as I am offended by references to luxury car priced items using words like 'value', 'moderate' or 'budget'.
All such arguments are affectations not unlike the extended pinky at tea time.
JIMV, this is not simply a matter of checking the WSJ for yesterday's close at the Merc and the Comex. Industrial users of gold and silver buy specialized versions of these precious metals. And they probably don't know how to hedge.
I wrote a letter to the head honcho at Audio Quest, in 2002, suggesting that he lay in a good supply of 1000-ounce bars of triple-nine-fine, delivery grade Comex silver. At the time, silver was trading at around $4 an ounce. As a trader in these markets for more than 30 years, I knew that silver had nowhere to go, from those levels, but up. I received no reply. Here is why. Manufacturers who buy gold and silver to use in their finished products typically know nothing about how these metals go through the process of price discovery. They are used to picking up the telephone (or hammering the fax keys) and placing orders according to next week's, or next month's, delivery needs. Since silver is "price inelastic," these manufacturers don't care how high the delivery-grade bullion goes. As another poster mentioned, labor, R&D, and "what the market will bear" have FAR more significance, in the mind of an industrial user, than the spot prices you mention. I will wager that Audio Quest was paying AT LEAST ten bucks an ounce, for their specialized fabrications, when silver was trading at four bucks. Now, they probably pay $20+, and don't really care, as long as they get grades and quantities that match their own unique specs.
As P.T. Barnum noted, famously, suckers abound out there. And the biggest suckers are the users, in this case, who are so wrapped up in the intricacies of their own production processes, that picking up the 'phone and ordering on need is the only thing they know how to do.
And, yes, in my opinion, Audio Quest makes the best cables around, and their silver cables are the best that they make.
Happy tunes.
If you read the excellent interview by Robert Harley with the guys at Spectral in the current issue of TAS, they say that they do not charge their customers at all for the cost of the the R&D that has gone into their products. The cost of the product is due to the cost of the parts used....and Spectral says that they sell the product for 3X the cost of the bill of materials. I don't disagree with what you've said, Jan, about recouping the cost of the R&D, but the interview with the Spectral guys says that to charge for that would make the cost to the customer too expensive, and they want to have products that customers can (reasonably) afford. So, they say that when you are buying their products, you are getting the R&D for free.
Pardon my skepticism but who DOES pay for the R&D. In the end it has to be the customer unless they are a not for profit organization that received donations for the research. Yes I'm being sarcastic there.
In the case of Spectral both of the main partners have other sources of income and Spectral is a very low volume line - or at least I assume they have remained a low volume line. I would still have a difficult time believing the price of the product is the price of parts plus "X". Not that I believe the gentlemen who made that statement are not honest, upstanding members of society but there are more than simple parts costs to consider when running a business. Nelson Pass gives away many of his designs and is extremely giving with his time. He still has to eat.
It's not the cost of parts plus X, it's the cost of the parts times X (3X).
And they are a very low volume line. All products are built by hand, also.
And yes, Spectral does have other sources of income. Also, as they do no advertising or marketing and do not seek out reviews, they have lower costs associated with that as well.
Spectral pays for the R&D, the customer does not. That was point of my post.
Possibly they do but if their accountant finds out there'll be hell to pay.
Nope, as Jan correctly points out, they have other sources of income that lets them work this way. I recommend you read the interview; it's excellent and very informative.
I had some brief dealings with Spectral back in the '90's, however, I had not yet read the interview when SS brought it up but took a look at it last night. As per the article, Spectral was not begun as a business venture that was there "for profit" or to provide a life supporting income for anyone involved with its start up. It's reason for being was as much to assemble a talent pool of innovative thinkers and doers as it was to assemble the best audio products - in the mind of the the main partners - as possible. It was a project both parties felt strongly about doing and needed to succeed according to the unusual terms that were their own and not that of an accountant. It was a model that was a grand idea at the time Spectral was instigated, this one just happened to have sufficient capital to keep it afloat.
The audio industry is not a greedy as some would care to think. That doesn't mean Spectral is a company that should be held up as the example all other audio companies must follow so as not to be called greedy by those unable to see beyond their nose.
with one of the products that one of my companies produce, I have to refine my own metals, right from the get-go. There is no-one I am aware of that refines this particular metal to the level I need it to be at..so I had to design my own method of doing so. Put a value on that.
As for $100k items, yes, they can easily end up at that retail price,and this, via norms in cost vs retail multipliers in use throughout the entire retail industry. No particular premium beyond that.
For example, here's some capacitors that are considered to be 'the best in the world'. Look at the individual price per item. Imagine the limited quantities they are made in. Imagine (and correctly) that the manufacturer's price on that item isn't much better at all, as it is so darned expensive in the first place..that there is little to no room to accommodate any sort of 'quantity pricing'.
http://www.partsconnexion.com/catalog/CapacitorsFilm.html
Look at the DUELUND Cast - PIO (Paper In Oil) capacitors. Not the price getting as high as $1.5k+ per capacitor. The best in the world simply costs money! End of story!
There are customers who can buy such (finished gear, not the noted caps-which are an internal part) items that end up having such astronomical pricing.
Why fault the manufacturer or the buyer?
What's your problem? No money? You angry? I don't blame you. I ain't rich either. But I don't fault those who do have money - If I see some ethics in their character.
But don't blame these producers and don't blame their customers over your seeming insistence to remain ignorant that there are markets that you are not in and clearly don't understand. You might decide I'm beings some sort of high-falutin' ass of some sort, but this is not true.
Limited production of complex devices with expensive parts COSTS MONEY.
For the manufacturer's to survive, standard manufacturing-to-retail pricing structure multipliers are applied and the price ends up being the price. No big deal. Get over it.
The other thing is that the customers tend to really not know the complexities of the issues at the manufacturing level, and all they know is the 'shiny bauble' part and so the item has to look pretty and be built like a tank-for them to see and understand it as a 'great value'
Dennis Morecroft of DNM has remained steadfast in creating works of audio art, with respects to their operational parameters and specifically what is good for the audio signal and not stepping out of that area. Note the few # of dealers he has. Also note that his simple looking preamp is in the $13k US range, simply due to the economics of 'the price is the price'.
A competing neighbor (in the business) has gone the route of making big ass shiny milled aluminum chassis, etc for their products, and has compromised the electronics for the sake of the shiny box. They have about 50x the number of dealers and sales compared to Dennis.
Who is right?
The CUSTOMER is always right. For Dennis has not compromised himself and has created products that are 'true' to his vision.
The other company is selling exactly what the bulk of well heeled customers expect and desire in a piece of audio gear. Great looks (as they interpret things), tank like build.
It is the CUSTOMERS who demand that over-baked shiny bauble characteristic, not the manufacturers.
I fight with this every day. Distributors and dealers fight to have product made shiny as they can't sell it to customers if it is not big and shiny and LOOKS the expensive part, even if the item is expensive already, but looks a bit 'homely' compared to the more expensive milled and machined chrome/plated look.
It ain't me dude.
The customers demand it.
Otherwise I wouldn't be able to sell a damn thing.
Seriously.
I'd rather sell the stripped down version. At half the price, it is better sounding.
But -- you can't convince the customer of that. And if I try, all I end up doing is going broke from lack of sales.
Most manufacturers try to strike a balance, with varying degrees of success.
Then the ultra expansive parts thing steps back in. In the ultra expensive item you put your best circuits and best chassis and best parts. So the item ends up being 3X the retail of the stripped down version. And it sells!
Where's the crime, except in your confused mind which really does not know the intricacies of human psychology and the marketplace as well as it should, before making such a comment? I feel your complaint is legitimate to some degree, yes, but there is nothing anyone can do about it, it's a simple human psychology reality issue.
Get over it.
After all, the customers at the $100k and shiny bauble level are just like you!! They refuse to see anything but what they believe is true.
Think about how hard it would be to get you to change your mind on this subject.
Imagine the customers who demand shiny baubles being argued with at the dealer and sales floor level.
Imagine how broke, closed, and bankrupt the dealers, distributors, and manufacturers of high end audio would be if we all tried our damnedest to break the psychological barriers in the minds of the customers, to 'fix' them.
Not gonna happen. Not in this life, it's not.
Most of you guys cannot even convince your wives that a stereo should be 'properly placed' (set up) in the house.
You would actually be DIVORCED and on the streets--if you tried.
Think about it, just for a few seconds.