Long Live High-End Audio

While we contemplate high-end audio’s long, slow, and stinking death, Magico, manufacturer of high-performance, high-priced loudspeakers, is in the mainstream press: USA Today ran an article earlier this week, which asked, “How much would you pay to bring music to life?

The author, Marco Della Cava, seems convinced of hi-fi’s potential. He writes: “Opening your eyes to see not a band but a cold rack of hi-fi gear is a genuinely jarring experience, like drifting to sleep in a hot tub only to wake up in the factory that makes the hot tub.”

This comes just weeks after two NYC hi-fi salons, DUMBO’s Oswalds Mill Audio and the Flatiron’s Audioarts, were profiled respectively by Jay-Z’s Life + Times and the Wall Street Journal.

While the recent press has been overwhelmingly positive, the fact remains that we focus almost entirely on the most extravagant segment of the high-performance audio world, suggesting that high-end must be high-priced. Remember what John Atkinson said: High-end doesn't necessarily have to be high-priced.

For some reason, for as long as I’ve worked at Stereophile—well over a decade now—older, more experienced audiophiles have asked me two questions: 1. How can we prevent hi-fi from dying? 2. How can we attract a younger audience?

Never have the answers to these questions seemed more obvious.

First of all, don’t be stupid. Hi-fi can’t die because, luckily, it’s inextricably tied to music. (Although it can be argued that audiophiles have tried their best to kill music, too.) Hi-fi will exist for as long as music exists. And music will always exist. So, while hi-fi’s popularity will rise and fall, hi-fi itself, for better or worse, will certainly stick around. Follow the music and you’ll find life. However, if you want to attract a larger audience, offer the products that most people want. (Duh.) When we launched our three sister websites, we focused on the areas of high-performance audio that showed the most growth, not only among audiophiles, but among all music lovers. These areas are, clearly and undeniably, headphones (InnerFidelity.com), computer audio (AudioStream.com), and vinyl (AnalogPlanet.com). Makes sense, right? To launch a site today devoted to, say, cassette decks, probably wouldn’t make a lot of money.

So, to prevent hi-fi’s death, make stuff that people want to buy. And do it faster. Stop wasting time making fun of how other people choose to listen. Instead, improve that listening experience. Remember what Jon Iverson says: Audiophiles perfect what the mass market selects. Get on it. There are plenty of opportunities. (Hint: headphones, computer audio, vinyl.)

And, if you want to attract a younger audience, make stuff that younger people can afford. (Duh.) Try to remember what it was like when you were younger or less privileged—that is before (way before) you thought a $1500 amplifier was "affordable." Realize that, to many people, there is an enormous honking difference between spending $150 and spending $300. Realize that, to many people, the idea of spending $1000 or even $500 on anything is really freaking scary.

Make stuff that people want and make stuff that people can afford.

And if you’re not really interested in attracting a larger and younger audience, stop pretending that you are, and stop asking stupid questions. There are better things to do and more records to explore.

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Comments
ppgr's picture
So what you say is that

it takes 16 hours to solder connectors to make 1 cable? You really think the manufacturer pays $600 for a 10 ft "spool" of "raw material", and on the top of it, the manufacturer will sell the thing for $3000 to you - the poor dealer - who's gonna turn around and sell it for $5000?? So it's OK for a dealer to make 2 grands on a cable sale with no added value? How does that balance with the 15%. No, we're not on the same planet.

Assuming your reasoning is correct (and it's not), the manufacturer makes $1500 profit on the design and manufacture of the cable, while the dealer takes in $2000 to handle the box to the client.

This is precisely why you'll have to close your store when you run out of fools. It's not good business, it's pissing in the drinking water. 

MVBC's picture
BTW

In fact referring to this USA today article and pretend this is what high end is demonstrates how lost in lala land the high end and its merchants are:

BTW, the Magico uber-system priced at $600k uses O surprise, serious pro compression drivers -Ale ?- for low mid, mid and HF and the horn ressembles... a JBL Everest system DD 55000!

I imagine this thing must sound pretty good -although the cylindrical charge for the woofer is a not a preferred choice according to Briggs-, BUT the truth is that one can build a system comparable for 1% of the cost -i.e. spend $6k in pro drivers- and create an active system with multi amplification. Sure it's not entry HiFi, but it is real high end and it will still save you $560k... And that I believe may have a wide appeal! wink

prerich45's picture
Pro-Fi

 The pro market is on the move indeed.  There have been shining reviews of the Crown XLS 2000 power amps, Tekton makes its speakers from pro drivers (a la Pendragon), and even homely Behringer has several items consistantly used in high end systems (the DCX2496, DEQ2496,  and the EP4000 amp ...as a subwoofer amp).

 

  Our recordings are usually mastered on pro gear, so the pro side (to me) is a wise place to go for high performance gear :)!!!! Most Hi-End'rs or 1%r's don't care for the looks of pro gear - me...I don't mind at all wink

Bill Leebens's picture
Ads, trade organizations, and such

If you knew how small most high-end companies are, the idea of advertising in mainstream media would never cross your mind.  An analogy I frequently use is that most successful, well-established, familiar high-end brands do less in a year than your average 7-Eleven store. The REALLY BIG ones-- by high-end standards, not by Bureau of Labor Statistics standards, which would classify them as "small businesses"-- still do less than most Best Buy stores.

I've been involved in three separate attempts to create high-end audio industry organizations. All failed, because it takes three things to create a useful trade organization: money, money, and money. Not to mention that the phrase "herding cats" is pretty apt when it comes to trying to get high-end audio entrepreneurs to agree upon ANYTHING.

I hate to sound cynical, but these are facts.  I've been in manufacturing, I've run an industry website, and I've run a consumer show: those things are doable.  A high-end audio trade organization just doesn't seem to me to be doable.

That doesn't mean I have given up on promoting the business.

ppgr's picture
Totally agreed...

Readers of this magazine seem to think of high-end manufacturers as big companies with secretaries and lavish offices, execs listening to music all day long, while in reality it is more like a 2 or 3 persons operation working in a non-descript industrial location.

Just because readers see a $60000 pair of speakers on the front of a magazine does not mean there is actually a market for it. Most of these speakers end up here:

http://www.higherfi.com/audio_speakers/1

or on Audiogon as "demo", "floor model", "B" stock or whatever term needed to explain that the product price was over-inflated by 100% to factor in the 50 points the dealer got to put the speakers on the floor, waiting for a sucker.

The audio over inflation cannot sustain forever and no, $2000 mark-up on cables is NOT good business as the NJ dealer seems to think.

Keith7mick's picture
High-end Audio , present and future

I'll keep this short, although I usually don't. I have the 46 years of intensive involvement and the references to be taken as credible. I have now been selling high-end for 30 years, 4 shops that were all successful for substantial periods. We have allowed our passion to take on a lunatic-fringe, ivory tower image that spells entropy and bye-bye, when once, getting home from work and turning on the tunes was what most folks did, and it relaxed and refreshed them in a way matched by no other experience.

Three "MUSTS'": One, above all , we must attach our industry to a much bigger wave, and it is called health and wellness. The medical and scientific data is there by the ton to re-market listening to music on a clean stereo as simply a normal part of a modern health and wellness regimen. At the peak of stress in our history, establishing this as the "free lunch" of wellness or the "organic food" of music enjoyment is the biggest opportunity this biz will ever have to get back on Main Street. Two, decent upper mid-fi for the masses is more important than high-end for a few wealthy, jaded boomers, no question. Three,the previously mentioned squirrley nature of specialty audio manufacturers, and the stone-age marketing methods still in use must change; bonding under this logo: PAtH -Pure Audio to Health will allow all specialty audio to be positioned as validly "good for you." Products could and would still be differentiated as normal, but there is no bigger wave to catch than the publics' increasing health and wellness awareness. Every party involved, from musician to studio to manufacturer to vendor to consumer would all benefit. That's it for now. I can be reached at craig@lavishtheaters.com or thru www.lavishifi.com

bonhamcopeland's picture
Why aren't more people into high end audio?

Read all the comments out loud to a normal person.

And we wonder why young people haven't come into the fold?

This is an intimidating world. 

I agree it starts with the sticker shock. But beyond that, there's the hundreds of unknown brands, components, scores of devices, technology, specs. The learning curve is steep. Not to mention the stigmas, snobbery, and snake oil. Retail spaces are rare for people to actually hear this stuff, as are dealers that are willing to educate new customers. Then you've got the universe of opinion on the internet. Legions of arm-chair experts, actual experts and actual assholes, where debates rage about every conceivable aspect of sound quality right down to the right kind of fuse. While I agree computer audio is abosultely the biggest area of future growth, I find the endless tweakability of computer audio and the non-stop Moore's Law versioning of technology on the whole could get to be a real drag. DSD files? Awesome. (You know who's absolutley nailing this moment/entry level market right now? Peachtree Audio.)

Anyhow, I applaud folks like Stephen and Steve Guttenburg who are actually trying to put forth some kind of High-End Audio Welcome Center. A place where somebody can start. "We won't quiz you on Mahler until your third visit.™"

I don't know how, but I think Hi-Fi has to get friendlier.

We have to start having fun.

Ariel Bitran's picture
This

is a very nice comment.

i agree 100% but one thing I think is that the learning curve in hi-fi is not necessarily that steep. All you have to do is enjoy good sound and want to enjoy it to get into it. If you then visit a hi-fi store, and the storeperson is in a "friendlier" state of mind, the basic concepts of how to organize a system can be learned in minutes. 

blaster88's picture
High end would be a sunset industry if it does not evolve....

 

Hi Stephen,

Great article and I could not agree with you more! Perhaps these are the signs of the impending demise of hign end? Perhaps not immediately but slowly and surely...

a). Noticed that the sellers and buyers at shows are mainly aging men. How many Gen Ys and smartphone trotting audience did you see at these events? That's the future segment and the Hifi community has not done enough to target them! The rich would continue to by high end but they are greying and dying...how long can you survive by selling a handful of super expensive cables or speakers every year?

b). Welcome more products that bridge the smartphone, computer or tablet to High end at affordable prices, suave looking, mobile, versatile, connectivity etc. etc. Need more innovative companies like Rega, Cambride Audio and Zu Audio that position their products in a hip and "current" manner. Honestly, I also welcome the Chinese invasion.

c). The new frontiers are in Asia and Eastern Europe. Do the sellers understand these markets?  Are they doing enough R & D to build market appropriate products? For example, space is a major constraint in most part of Asia, speakers that looked like vertical coffins and inspired by Godzilla (some of the new Wilsons and Sonus Fabers come to mind...) need not apply.

d). Unlike the automobile or IT industry, there are very little innovations in High End. The best sounding technology (vinyl) has been around for more than a hundred year? Legions still swear by the good old tube, including myself?  And we continue to build "so called" better mousetraps and charge exorbitant prices for them. I liken this to doctors using penicillin to treat infections in the 21st Century!

How are we going to convince the Gen Ys?

I have been in this hobby for 30 years. Unfortunately, it has shown no significant progress or break throughs. We need someone like Bill Gates, Larry Page or Sergey Brin to shake things up....

Rgds

CH

audiodoctornj's picture
To PPRG Again you don't read

To PPRG

Again you don't read nor comprehend do you. Profit is not evil it is the guiding principles for capitalism and enables companies to survive, thrive, re-invest etc.

So in your model I should sell a pair of $5,000.00 cables for what $50 bucks above what I paid for them? $500? If that was the case how could I afford the shop to display them or even afford to purchase the cables in the first place? Do you expect the manufacturer to just give them to me? 

In your dim view of the world all goods should be as cheap as possible, just because you are cheap, doesn't mean that products are over inflated, yes there are some products in this industry that are, but the market determines value.

In my opinion it is just thinking like yours which has underminded the Western world, when huge companies are forced to make no profits, it stiffles competition, and the reason for companies to spend millions of dollars to  build plants and higher engineers and workers. 

Are we a better society now that the US garment industry doen't exisit? In the 70's almost 80% of all fabric's and garments were produced in the US, giving people good jobs. Now almost all farbrics and garments are produced overseas, giving us cheaper goods, for cheaper prices.

When I was growing up you saved for goods that were higher quality and you took care of them, instead of a closet with 20 cheap shirts you had 5 good ones. 

It is the race for cheaper and cheaper goods with no profit margins leads to the domination of Wallmart and the quality shopping experiencde therein.

You fail to remember that an audio system even an inexpensive one is not needed to live nor a flat panel TV, these are luxury goods.

You miss the point our world economy isn't better with cheaper and cheaper goods it is worse, say hello to the rise of China and the slipping of America and Europe into second class status. 

There is a difference between profit and greed, and many of the products produced in this industry are not over priced, when you look at all the factors in producing and developing them as well as the small production runs associated, but I forgot you believe that companies shouldn't make a profit or that you in your infinite wisdom you  should determine the amount of profit that companies make.

Does a Doctor deserve to make $300k a year? The answer is yes,  How much does medical school cost? Is it free? How much is a year of your life worth? How much is the stress of working in a high stress industry?

Do you think that all of us fat cat audio dealers are rich? I have a wife, three kids and you have no idea how difficult it is to stay in business and be able to provide for my family as well  as being able to make the money to be able to grow my business, bring in new products. You don't know just how difficult it is to run a business and stay in business. It is a struggle I can tell you.

Please stop posting here, your true nature is revealed you are jealous of the people who can afford good equipment and you don't have the money or desire to see an economic system survive.

A race to the bottom doesn't benefit anyone, cheaper goods doesn't create desire, people will aspire to afford the producs and services that turn them on If all Ipads cost $1,000.00 people would save up and purchase one, if they couldn't afford ohe outright, is is called layaway, or paying out over time, or gasp look at a competitive product that they could afford, 

In your dystopian future we will have 0 middle class as no one will be left making any money other than the very rich, and the giant corporations that are monopoistic, you should go and crawl under a rock. 

ppgr's picture
To audiodoctornj

I don't care about doctors making $500K or basketball players making millions. I don't care about expensive cars and watches and expensive speakers.

My point is that when an industry needs to push prices and mark-ups to an insane level to keep the eco-system from collapsing because of inadequate demand, a shift is happening and it is not especially welcoming to what remains of middle-class.

Dealers are closing everywhere and highend manufacturers are dropping like flies. It doesn't take a PhD to see that the "high-end for everyone" is no more. The top 1% will continue to buy luxury while the bottom 99% will continue to buy chinese made stereos, and chances are, these stereos will be bought online, bypassing the last standing dealers.

What I understand from your post is that you need the $2000 mark-up to stay in business. Wouldn't you be happier and more profitable selling 100 times as many components with a smaller mark-up? 

Did you ask yourself that the whole idea of $5000 cables might be out of reach (and out of touch) to most people looking for an alternative to earbuds? Don't you think dealers should at least be open to alternatives? Don't you think the status quo doesn't work?

MVBC's picture
Strawman argument. Nobody

Strawman argument. Nobody contests the need to make money. What is surmised is that no one should be surprised to see manufacturers disappear when their overpriced gear fails to find buyers. Moreover, we also question the spin industry that tries to justify those practices and has to embrace whatever new fad may come out in order to survive. The DeVore example comes to mind...

We all know products that are money makers for their respective companies and are yet affordable and high quality. It is in fact how and where to spend one's budget that will ultimately make the difference between good sound and big hype.

tmsorosk's picture
And not so over priced

I see as many low end manufactures disapear as highend . 

Audiophiles are not stupid , whether there purchasing  $300 speaker or $30,000 speakers they all want the best value per dollar possible and are willing to do whatever it takes to accomplish this goal . 

I know many high end audiphiles and can't think of one of them that makes audio purchases for status . 

low2midhifi's picture
Hi fi's future is good-bad-and good

I'll comment from the perspective of my experience with hi-fi equipment, and I'll hazard a couple of guesses of others' thought processes.

The future of hi-fi is probably good and bad for manufacturers and retailers.  With reasonable compromises, given scare resources and allocation of savings -vs- expenditures, the future provides many options for those of us of middle-to-lower resources who will listen to and love music, via two-channel means, no matter what. 

The future for all seeking information on hi-fi equipment is still not perfect, but the internet has made many, often foreign-language, sites available for augmenting the information available through sites such as this one.

First, I will comment on the high-end to the extent I can credibly since I do no belong to this echelon.  My sense is that very expensive (let's say over $40,000 for a system) equipment will continue to do well.  There has always been a market for this product; I do not see it disappearing.  I will never be part of this segment of the market, but I believe that over time I gain some of its benefits as the technology, in part, finds its way to manufacturers' lower end product. 

Second, the lower end.  There is a very wide, almost infinitely adjustable, array of lower end equipment available for people who want basic to very passable equipment (let's say $1,500 to $3,000 for a system).  Used equipment, e-commerce, demos, clearance sales, patience, good luck:  all of these things have sustained my engagement, allowed me to splurge occasionally, and stay in the hi-fi game.  I'll go to my good local dealer; I'll go to the internet when it offers a good deal.  Dealer -vs- internet:  it's not an either/or for me; it's more choice for good equipment for me as a person on a budget.

Third the middle end.  Here's where I see problems from my vantage point.  Let's say this is $5,000 (we'll stretch my $3,000 budget from above) to the $20,000 (we'll bring down my $40,000 from before) for a system.  I have found through repeated exposure to products at seminars and trips to dealers (where I ended up buying something else, I do not waste their time if I walk in the door) great difficulty in reconciling the value-for-the money concept for my budget that expenditures require for products in this range.  I think this is the middle-class "squeeze" that manufactures and dealers worry about as it has most likely been a good, solid and reasonably predictable profit-maker for both.  Are these good products? Yes. Have manufacturers made an earnest and honest effort to engineer these products? Yes. Are dealers spending a lot of capital to market and sell these products honestly? Yes.  Are they worth what a down payment on a car might be? I am not convinced.

People of limited means like myself (and I'm a good way from the bottom and top of the income scale) will say:  "Am I really going to pay 3x to 6x times my last expenditure, to upgrade from what I currently have, to get an extra 20% to 30% (my criteria) improvement in sound?"  No. We,re going to look at car payments, 401k contributions, contingency savings funds for today's uncertain economy, and say "No, this goes over the red-line of responsible expenditures." 

People further up the scale are most likely also going to eschew these products with the very excellent, and more credibly superior, products that are further up the scale. 

Let's use a speaker-based example. My guess is that a more prosperous person than I is going to say in this example "Am I going to pay $3,000 to $10,000 for a product that is still mdf-build or wood-and-glue-product-based for its enclosure (differentiated from its lower-priced brethren by perhaps only a cross-brace inside, a fancier lacquer finish, with the same or nearly the same drivers, crossover, and specifications--and yes, we hi-fi fans have figured this out), when I can put aside some money for another year or so, and buy a $15,000 to $25,000 speaker made of advanced materials, built like a tank, with a very credible materials science and engineering story to say?"

So in summary, this is what I will say. Hi-fi fans, an older but shrewder crowd of people than mp3 generation to be sure, have figured a couple of things out, and increasingly belong to the bifurcated economic groupings that exist in our country: 

1) They have figured out that with patience, persistence, and luck, that lower end hi-fi equipment has in many ways never been better in quality, nor available in so many honestly brokered channels of distribution (and they can spot the junk and hucksters a mile away). 

2) The higher end crowd probably has concluded that for a truly long-lasting, and superb, experience with their equipment, they are going to wait a bit longer, or not if they are very well-heeled, and go with a range of products that is of manifestly superior build.  There is product between these extremes that will get squeezed, in my view.  It's too expensive and not a prudent bang-for-the buck upgrade for those of us with limited budgets; and probably not worth the investment for someone who can afford state of the art and obviously superior engineering and materials science.

COG's picture
We make this more complicated than it needs to be...

Great article Stephen. This is a topic I have carried on about for many years. Here's my most recent take on it:

http://www.positive-feedback.com/Issue65/next_genertion.htm

 

(and yes, I cleared it with Stereophile before posting the link)

DoggyDaddy's picture
markups

There seems to be a belief here that egregious markups are confined to Hi-fi.  Not so.  A relative of mine worked in the toy and game industry.  Yes, as in Hasbro (board) games.  If you go to a store and buy a game for 29.95, the retailer paid 15 - 100% is the norm.  The wholesaler in turn bought the game from the manufacturer for 7.50 or so - again 100%.  If you're selling a 2K cable, even though that's way under 5K, you're still not going to sell many of them.  So you need that markup to pay your rent, etc.

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