High-End Audio: Regaining the High Ground?

Although I was only able to stay long enough to snap a few photos and hear moderator Ken Kessler’s (Hi-Fi News) downer of an introduction, Friday evening’s post-show panel included, from left to right, HiFi Plus editor Alan Sircom, recording engineer Peter McGrath of Wilson Audio Specialties, Kathy Gornick of Thiel Audio, Michael Fremer of Stereophile and AnalogPlanet.com, Roy Hall of Music Hall and "why don’t you join me for a shot," and Kessler himself. Dan D’Agostino of D’Agostino, Inc., founder of and former designer at Krell, turned up after I had shot my photo.

John Atkinson adds: Kessler’s thesis was that the high-end audio industry is dying by its own hand; that if it is to continue to exist, let alone thrive, high-end audio has to emulate the example of the luxury watch, pen, and car industries by becoming aspirational and moving upmarket, abandoning the middle-class customers who no longer have the necessary disposable income to spend on audio.

Some companies are already trying this strategy—see my March 2011 essay. But personally, I think it crazy for a company, unless it is very small, to makes this concept the entirety of their marketing strategy.

Adam Smith, the philosophical father of free-market capitalism wrote in The Wealth of Nations, "No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable." The fact that poor and miserable people don't buy high-end audio equipment was Kessler's point but it was the expanding purchasing power of the middle class throughout the 1970s, '80s, and '90s that fueled the growth of the high-end audio industry. I believe, like Art Dudley in September 2012, that product prices aimed at the middle class remains the industry's best hope for both survival and growth.

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ppgr's picture
...unless it is very small...

I'm not aware of any "large" company active in high-end audio... Even the biggest names in high-end audio are tiny operations by corporate standards.

John Atkinson's picture
Small

ppgr wrote:
Even the biggest names in high-end audio are tiny operations by corporate standards.

I don't disagree. But I thought it it obvious that the context for my comment  was "within the high-end audio industry." A company like D'Agostino is small, thus its limited production capcity is matched by the market for its very expensive amplifiers. But while a company like Bowers & Wilkins, that has an annual revenue of many 10s of millions of dollars, makes some very expensive speakers, it would be financial madness for them to restrict their output to just those aspirational designs.

John Atkinson

Editor, Stereophile

ppgr's picture
Obvious, but not for everyone

The point is, most people think of "high end" as big corporations, with a lot of staff, lot of money and lavish offices. Fact is, most, if not all "high end" operations are really "mom n pop" businesses, don't even have the annual turnaround of - say - a gas station or convenience store.

B&W don't qualify as they do not earn a significant income out of "high end" items. How many snails were shipped last year? 5? 2? How many Zeppelins? 50000?

Companies like UE Logitech with annual turnover of 2 billions, make 25% of their business in the audio sector - they have absolute state-of-the art facilities (Camas, WA), yet, they're not in the high-end business.

JohnnyR's picture
A Firm Grasp of the Obvious

So it takes years after everyone else can see the writing on the wall, for the companies themselves to take off their blinders and admit that the High End is in big trouble? Please also note that most of the people at that meeting aren't too young anymore. The youth don't have disposable income and neither do most of the middle class regardless of age. Hey if they want to abandon the middle class and rely upon the rich to bail them out then I'll just sit back and enjoy the crash and burn.

 Good luck boys and girls, it couldn't happen to a more deserving group.

dalethorn's picture
High end sound

First I have to define for myself what is high end audio. I think most often about what I never could attain on a budget - excellent large loudspeakers in a room large enough with appropriately dense walls to sustain a ~20 hz organ pedal note without loss, and with no resonances at or above that frequency on the longest dimension of the room. The rest seems easy - the best hirez downloads, best possible DAC/preamp/power amp/interconnects.

Some EQ might be needed for standing waves on the other room dimensions, and how that might pollute the purity of my sound is still a concern. Back when I was buying audiophile loudspeakers, the room was the missing element for me. Getting there wasn't possible on a budget, unless I purchased an abandoned mine or some such facility way outside of town. And I don't want to live outside of town.

Now ignoring the hysteria about everything-$20000 component pricing, if a middle-aged audiophile with a reasonable career making $100000 or so were very thrifty and invested wisely, they could pick carefully and purchase a system that would get 99 percent of the way to perfection, needing only the ideal room to put the gear into. There might be some argument about that 99 percent, but I'm betting this middle or upper-middle-class audiophile would be far closer to the rich man's audiophile nirvana than they would ever get to the rich man's anything else, whether cars, castles, boats, or trophy companions.

Metalhead's picture
Highend audio is definitely

Highend audio is definitely leaving the middle class behind. I used to upgrade when I would move up the line with both Marantz receivers and JBL speakers. The finest example in the JBL line was the 4350 which I almost put on layaway.  Still regret not snagging them and it would be impossible for me to buy the flagship JBL today (60 plus K).

The pricing reminds me of the Scrooge McDuck comics of my youth. For only a gigafillion dollars you will love it. 7 thousand dollar tonearms, 10 thousand dollar cartridges. There must be a lot of high rollers buying some of this stuff.

I spent a lot of coin (based on income level) on audio over the decades and thankfully am very satisfied.  I look at most of the new gear and prices and just bascially shake my head. 

The growing Chinese economy MUST be buying most of this stuff????????? 

WJ ARMSTRONG's picture
Some further thoughts sparked by Ken...

I understand Ken Kessler’s argument. As someone who has worked in retail as well as a reviewer for 6moons it has long frustrated me how ineptly & amateurishly the hi-fi industry markets itself. It’s not unusual for a $20k pre-amp say, to turn up in a plain brown cardboard box, wrapped inside a plastic bag, with the most basic of shipping protection (and possibly with the serial number scrawled on the back of the unit - in classy felt-tip marker - just for good measure).

The really odd thing is that, in terms of production at least, many of the industry’s offerings have obviously been painstakingly designed to utilise cutting-edge technologies and built to the very highest standards… and it’s exactly at this point that the lights seem to go out and everyone heads for home. Companies like Bang&Olufsen succeed long-term for the very reason that they see the job through to the end, including well-targeted marketing, centrally located showrooms, and yes, seductive packaging too. This leaves the buyer with a feeling that his or her money has been well spent and their custom appreciated. And it's that kind of consistency of execution that builds brands.

Also, looking at the pictures from RMAF, some of these set-ups appear painfully out of fashion; indeed even Ayre’s much-praised praised ‘cool’ listening space looked a bit desperate to my eyes. Simple measures like giving up the (usually black) hosepipe cabling is just one step to a far more appealing aesthetic. And why not just use Crystal Cable for heaven’s sake? It sounds great and it’s practically invisible.

I don’t see why the ‘middle-class’ enthusiast should be completely frozen out. But there are far too many companies out there chasing a slice of a pretty small pie. The industry has to rationalise and be prepared to spend a far greater proportion of its collective budget on ad agencies in tune with the zeitgeist and brand managers who can not only envision a future but help to shape one. If this happens there’s no reason why already professional companies - like Ayre, Boulder, Esoteric, Martin Logan, Meridian & Focal, to name just a few - shouldn’t go from strength to strength, offering a wide spectrum of potential customers better value products with even greater appeal.

Erkit's picture
No no no. Embrace the /bottom/ of the market.

Comparing a big fancy stereo to a watch or pen or car is silly. A business man buys a Piaget because it appreciates, and commands a bit of respect at work in the meantime. A Bentley gets the passenger where he needs to go faster and more comfortably. And pens? Does Mont Blanc still have offices outside of Beijing? I don't think so. No one here needs 'em. And that's key. In the West, rich guys like to have an excuse for their conspicuous consumption, and the sad but true fact is that a man cave filled with tens of thousands of dollars' worth of ugly electronics sounds only marginally better than a discrete B&W Zeppelin. So he's not likely to go for it. What's worse, a dedicated listening room conjures images of a sad man listening to Pink Floyd in the dark. Better to have friends stumble on your $400 bottle of tequila. Ultimately, high-end audio's saving grace lies with the 99%. It first must hook them on quality sound, by offering excellent affordable DACs and speakers, and then it must design new expensive components that are Bang & Olufsen beautiful while sounding worth the price.

DetroitVinylRob's picture
><((((º>`·.¸¸.·´¯ `· .¸.·´¯`·...¸><((((º>‏

Funny, (not High-Ends current plight) but I thought the High Fidelity reproduction of music was what kept me from being poor and miserable. 

In the bigger scheme of things, it is not a good healthy omen when people are growing up in a home not filled with music. Like many here, I did have the gift, and I can't shake the benefits.

Disclaimer: I am not in the audio industry nor do I supply to it, unless spending all my discretionary income counts as being part of it? No, I didn't think so.

Happy Listener! ;^)>

mrplankton2u's picture
There is some truth to the point

I agree that there is some truth to the point that the "high end" is in line for a pretty big shake up. The market is flooded with loudspeakers for example in the $50,000 to $100,000 range. At some point, there has to be a reckoning as to whether or not there are real differences in performance, quality, durability, and resale value that would justify the enormous cost. When a company like Revel produces a world class speaker universally heralded as a performance leader for $20,000 per pair - what does that say for those manufacturers that seem to think they need $150,000 or $200,000 to build something that competes? Yes there are parallels in the auto industry. But the auto industry press actually spends time evaluating $20,000 daily drivers and recognizes that possibly only a dozen Bugatti Veyrons will be sold next year. The "high end" audio market seems obsessed with the Bugatti models and if it continues along the current path, it will find itself to be an industry without customers - if that already hasn't happened. 

arnoldpm's picture
I agree with Mr. Keslers

I agree with Mr. Keslers thesis 100%. This is the reason why we had diversified the type of music we offer to listen to at our studio. Whenever I go to a timepiece party or a time piece launching they play a different type of music to set the buyers to an enthusiastic mood that results into buying. Enjoy.

GeorgeHolland's picture
I find the high end to be

I find the high end to be full of themselves to be honest. Prices out of reach of the people who really are interested in owning fine audio components like the low and middle class. The rich mainly want a show piece or bragging rights instead of wanting better sound. Paste a few fake McIntosh or Nordost labels on some cheap components and that would make them just as happy in my opinion. It's time they woke up before they find themselves filling for bankruptcy

Paul55's picture
Where do new audiophiles come from?

 

Where do new audiophiles come from?

In the 70’s when I was young, it was cool to go to a store that sold audio equipment and see / hear the new gear. You would feel welcomed and they seemed excited to show the new stuff.  It was also still cool to go to record stores (before chain retail took over and killed it and eventually the record industry).  Anyway,   both activities feed each other. Better systems made me want to hear more music and listening to more music made me want better systems. I’ve been upgrading ever since.  That is how I got into audio. 

Today, young people starting to pursue hi end audio are generally not welcome at most hi-end audio dealers. In fact, no one is unless they can demonstrate they are a serious buyer ready to spend many thousands of dollars. Even then they are tolerated at best unless they are spending mega bucks.

A few years ago I was at a place ready to spend $6,000 on a pre-amp. I had a few questions and the guy said he didn’t really have time because he was involved in a home theater installation issue.  The days of looking at new gear at audio dealers are mostly gone which is too bad because it was seeing and hearing the new gear that made me want to save the money to buy it.

It is no wonder that much of today’s generation (tomorrows consumers of audio) have little if any interest in the high end and that most of them think ipod‘s and mp3’s sound good enough.

Now, as if things weren't bad enough some of the audio industry wants to further alienate the very consumers they need to survive by repeating the same mistake.

emulate the example of the luxury watch, pen, and car industries by becoming aspirational and moving upmarket”

Don’t you think they have already moved too far upmarket?  Do you really think they can go that much further and survive?  Seems to me like they are upmarket without a paddle.

Listen, I can buy a good enough pen for $15, a really nice for $50, maybe a great one for $100. Maybe even a really fancy for $1000.  But at some point it is no longer just a pen, it does nothing better than the $100 pen. It just takes on the secondary value of its symbolism. Sure the gold, diamonds and platinum and all the craftsmanship are all very nice. But I just need a good pen.

My standards for audio are higher than my standards for pens but still I just want something that gets the job done in a realistically convincing way. If one needs to spend $500,000.+  and still ends up with flawed sound why bother. BTW for that kind of money, I can hire some of these artists to play live at my house.

There are other issues with the ultra-expensive equipment from boutique manufacturers: What happens when the owners of these small companies die?  Will their companies die with them?  Is there any guarantee that if I were to spend mega bucks for my upmarket system that service and parts will be available when the company’s founder is gone?

Additionally, I’ve played on enough stages and have been in enough recording studios to know without doubt that no recording / playback system sounds and feels as live as real live music. Some are of course much better than others but none ever get it all right. Especially with very dense, complex, dynamic music. So why should anyone spend hundreds of thousands just to have something that is a bit less flawed then the systems that only cost tens of thousands.  Get it all right and maybe we can talk. In the meantime mega buck boutique audio manufactures should start displaying their products at the watch and pen shows and hope for the best.

I believe that the Audio companies that survive and thrive in this new economy will be the ones that can provide the best sound reproduction at realistic prices. It’s difficult to say exactly what a realistic price is, but it is obviously way less then the so called reference systems featured at the audio shows.  And by the way, the last two shows  I attended, one  at the Waldorf and the other, The Axpona Show NYC  had some of the worse sound I’ve ever heard (even by show standards).  I had a skeptical friend that I dragged to the show so that he could experience what the HI End was all about.  Boy , that was a mistake.  I’m still apologizing, he is still laughing at me. The sound was so bad in fact that I doubt I’ll ever attend another show.  I just need a good pen, I just need a good pen, I just need a good pen…………

QSYSOPR's picture
New Generation

I admit I'm old, but working in IT business I work with a lot of young people today.

Just to tell an exemplary story - one of my younger collegues has thousand of flacs on his computer at home and most of them come from to record collection of his father. He has a tiny Logitech 2.1 speaker setup to his computer and a Beyer Dynamics headphone.

While his father stills hears his collection on a middle class stereo at home and his son has realized, that it sounds much better than his PC based system he never intended to buy a stereo. I asked him to come and visit me and hear his music on my system which is more high end than middle class. He really liked what he heard. Asking again whether he wants to buy a system he denied. When I asked why he would not buy a system he said that he finds the prices more than ridiculous. He said: you know what our new iSeries from IBM costs and what is all in there. The finest processors and memory, best network devices and SSD. But it costs a fraction of what the high end industry wants just for a pair of speakers. I got a frog in my throat at that time. But he was right! In the 60ies and 70ies it was cool to have some Marantz, Scott and Fisher at home firing EV, JBL Infinity or KLH speakers with a Linn or Thorens as frontend and if you had a bit more money you bought your first ARC or McIntosh. The income was lower than today but in terms of fraction of income a lot more people could afford things like that and it was cool.

Today all these things eben have no prestige anymore. It is much more exiting for the young to show each other their new iPhone or tablett PC. And take a look at a lot of the companies. They are in the hands of investment companies today. That may all be OK if they want to sell the xth system to the sheiks and russian gazillionaires or holder of the Wall Sreet but it will be a Sisyphos work to get the young people back. 

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