The Price Event Horizon

Last July and September I made two loudspeaker-related road trips: first to Rockport Technologies, in Maine, to audition their new Lyra; and then to high-end dealer-distributor GTT Audio, in deepest, darkest New Jersey, to audition YG Acoustics' new Sonja XV. Both speakers offer innovative, proprietary drive-units and heroic audio engineering, especially regarding their enclosures, which are constructed from aluminum. Both experiences took place in superbly well-designed and optimized listening rooms with front-end and amplification components that were beyond reproach. The sound quality offered by the Rockport and YGA speakers was simply superb, both stepping entirely out of the way to offer maximum communion with the music.

But . . . Rockport's enclosure-within-an-enclosure Lyra costs $149,500/pair, and YGA's four-enclosure Sonja XV costs $266,000/system!

On the drive home from GTT, I thought long and hard about the implications of these prices. Yes, we have reviewed speakers that cost more than the Rockport Lyras—Wilson Audio Specialties' Alexandria XLF, which Michael Fremer reviewed in January 2013 (and subsequently purchased) currently retails for $210,000/pair—and at the times of my visits, both Rockport and YGA had full order books for their new models. But I couldn't help wondering what relevance such speakers—one costing more than a quarter of a million dollars—have for readers of Stereophile.

I've written before that while I worked full-time as a musician before taking my first magazine job four decades ago, my formal education was in the sciences. I try to keep up with what's happening in that world, particularly in physics (footnote 1). And while I'd always accepted as logical the fact that the post–Big Bang universe is expanding, I'd also accepted as logical that the gravitational force produced by all the matter in the universe would cause the rate of that expansion to slow. It came as a shock, therefore, to learn, in 2011, that the universe's rate of expansion is accelerating. It's not just that the farther away anything is from us, the faster it is receding, but that the faster it moves away, the more its velocity increases. Physicists have postulated that this is due to something they call Dark Energys—but giving an unknown a name doesn't explain how it does it, or what it means.

What do these cosmological musings have to do with audio?

Think about it. In an increasingly expanding universe, there will come a point when a distant galaxy's speed of recession from us equals the speed of light. From that point on, light from that galaxy will therefore never reach us, and that galaxy will, to all intents and purposes, cease to exist for us, just as we will cease to exist for it (footnote 2). Similarly, if the prices of cost-no-object audio components are not merely increasing, but growing at faster and faster rates, those at the highest level will also, in effect, cease to exist, as far as readers of this magazine are concerned.

I make no moral judgment here. I discussed the ever-increasing prices of the highest-performance audio components in "The Upward Price Spiral," my April 2011 "As We See It." As I said in that essay, if an audio manufacturer has to gross a certain amount of revenue each quarter to meet payroll, cover fixed expenses, invest in parts for the next quarter's production, and pay the interest on any capital they've borrowed, the least risky business strategy is to bring to market a very small number of very expensive products. But, as I said in a talk I gave at the late Brooks Berdan's store, in Monrovia, California, also in 2011, if all someone is offered is a $150,000 pair of speakers—let alone speakers priced at a quarter-million bucks—that person will walk away from this hobby, or build his or her system by buying only used equipment. Either consumer choice turns the price spiral into a death spiral for manufacturers.

Where is the boundary? At what price does a high-end product cease to exist for the "normal" audiophile? In the November 2016 issue, Art Dudley said of the Auditorium 23 Hommage Cinema speaker, which uses re-creations of classic Western Electric horn-loaded drive-units and costs $55,490/pair with its field-coil power supply, that, "given the work and materials that have gone into the Cinema, the price seems fair." In this issue, Michael Fremer reviews a Boulder amplifier that costs $99,000/pair, and even my frugal self waxes rhapsodically about a pair of Magico speakers priced at $42,750/pair in the high-gloss finish featured on our cover. Heck, in the December 2016 issue, I nominated, as my Editors' Choice of 2016, Vandersteen Audio's Model Seven Mk.II speakers ($114,000/pair with dedicated M7-HPA monoblock amplifiers)! On the other hand, Wilson Audio's Sabrina loudspeaker, which costs a much more affordable $15,900/pair, was our Loudspeaker of 2016, our Overall Component of 2016, and the Editors' Choices of two of our Contributing Editors (Audio).

All I can say is that Stereophile will continue to cover as broad a spectrum of audio products at all price levels as possible. As we always have done.—John Atkinson



Footnote 1: To this end, I enthusiastically recommend Hidden in Plain Sight, the series of inexpensive e-books by British physics professor Andrew Thomas, available on Amazon. With a minimum of math, Thomas brings clarity and comprehension to modern physics.

Footnote 2: Reader Alan Schwartz, of the Physics Department at the University of Cincinnati, correctly pointed out that I am ignoring Special Relativity with this statement, which states that the speed of light is a constant regardless of the motion of the object emitting the light. Like all analogies, this one evaporates when examined closely.

COMMENTS
btcook's picture

Thank you for an insightful take on pricing!

Looking at Stereophile's media kit, it appears that the "average" Stereophile subscriber:
- Is a Male (99%)
- Is Married (65%)
- Is Middle-Aged (47)

While the Median Household Income for your subscribers is $138k, the majority of your subscribers (52%) have a household income UNDER $100k. This probably means that you have a relatively small minority of subscribers with a very high household income, which is pulling the median up to $138k. Also, since 2/3 of your subscribers are married, I would suspect their spouses contribute to the household income and have a big say-so about any large purchase decisions.

In addition, the average amount your subscriber has spent for their system is $18,500. So, when you refer to the $15,000 Wilson Sabrina as "affordable," keep in mind that those speakers cost nearly as much as your average reader's entire system!

I realize Stereophile reviews equipment across a broad spectrum of costs, but with the dearth of brick-and-mortar dealers, many of your subscribers have come to depend more and more on your reviews to make purchase decisions. I, for one, would appreciate reviews of more products that fit within your average subscribers' economic reach.

TNtransplant's picture

Admittedly I haven't looked at the data you're referencing but if 52% have income below $100K seems odd that the median is $138K? Median is the value at mid-point of the freq distribution and is therefore less impacted by outliers. I might expect the Median to be closer to $95-97K. Is the $138K value perhaps the Mean? Also Income is often not supplied by respondents so not sure how that's being treated.

btcook's picture

http://www.hometechnetwork.com/mediakit.stph.pdf ...Just going by what Stereophile is telling its advertisers...

monetschemist's picture

The median is the middle point in a sorted list of values (typically if the number of values is even then it is the average of the two "middle" points).

I fail to see how the median can be $138,000 when 52% of the values are below $100,000 - if half of the values are less than $100,000 then the median also must be less than $100,000.

btcook's picture

Let's not get too hung up on the math. I suspect the media kit was put together by marketing folks who didn't rigorously study the difference between Mean, Median, and Mode. The main point is that the "average" Stereophile subscriber has a household income somewhere between the high five figures and low six figures. His (99% male subscribers!) entire system costs around $18k. For JA to describe a $15k pair of speakers as "affordable" completely misses his average subscriber's demographic. For the average subscriber, a $15k pair of speakers would represent a MAJOR household investment!

monetschemist's picture

But I know math is not everyone's cup of tea.

Anyway, JA does not call the $15k speakers "affordable". He calls them "more affordable". I guess than the six-figure speakers. Which is self-evidently true even if the math is mmm suspect.

TNtransplant's picture

Okay, the math's a bit wonky. Something that seems to be missing from the conversation is the role of marketing, manufacturer's portfolio, and given the context, the role of audio journalism. Not to pick on Wilson, but since they're mentioned: How many "exclusive" listening sessions of the upcoming WAMM are on the various audio websites? How frequently is Wilson updating it's line-up and every revision seems to be accompanied by something along the lines of "this [new version] blows away the [old version] that I said was phenomenal, what maybe 3-5 years ago"? Outrageously priced components and constant line upgrades/refresh creates "news" that captures attention and builds brand salience. And "framing" pricing makes a $15,000 look "more affordable" when compared to the $645,000 speakers. Plus how many components are said to "sound like it could be $XXX [fill in your own outrageous #] more" Personally, I'd like to see more reviews that really do clearly articulate what more is being provided at the higher price points and what seems to be the "sweet spot" in the brand's portfolio.

cgh's picture

John, let's run with this one...

A quick google tells me that both channels of the Wilson Sabrina are about 90kgs; while the YG Sonja clocks in at about 430kgs for both channels. A quick back-of-the-napkin suggests that if we can get that pair of Sabrinas up to about 656 million mph (or about .97c) the relativistic mass of the Sabrinas will be equal to the rest mass of the Sonjas. So maybe the strategy for people with the Sabrinas who either can't spend, or choose not to spend, the additional $250,000 to get the bigger speaker, can simply work on a way of launching their Sabrinas really, really hard to increase their size and mass to that of the Sonjas. Of course the length would dilate too. Hhhhhm. Oh, and there'd be one hell of a doppler shift. Crap, .97c (light) is a heckuva lot more than .97c (sound).

I guess this proves, using basic physics, that there's no way to get the performance of a $250k speaker with a $16k speaker. QED.

Malcolm02's picture

... if you were to do that with equipment of this mass it would be in danger of undergoing gravitational collapse and become a black hole. Then all that money would wasted.

dalethorn's picture

While the humans on Earth will likely be gone in a few thousand years or sooner, even after a few thousand years the mere rotation of M31 (the galaxy in the photo) will not even be noticeable to the eye.

cgh's picture

I was just looking at M31 the other night. The first time in many years I spent time with a telescope. Of course, it didn't look like that picture. I remember the first time I viewed M31. I was using an equitortial mount and it took some time to find that little smudge. The other night, my ipad hooked up to my new 9.25" Nextstar via Wi-Fi, I just pushed a button and it found it immediately. Kinda took the hunt out of it all. Then I told it to move to M101. I lost the Wi-Fi. After aligning the scope to four objects I had to re-align it. Re-aligning probably took as much time as it took me to find M31 all those year ago. I guess that's progress.

dalethorn's picture

One very interesting thing about M31 is the relative size - more than 6 times the width of the full Moon, yet all you see with binoculars or small telescopes is the center bulge. With photography the big picture emerges. NASA has a 190 mb JPEG that's 17000-plus pixels wide, which shows individual star systems in a segment of the galaxy. To get there you have to click on the actual image size link, not the "full size" link.

I find it interesting also the assurances among some audiophiles that essentially everything there is to know about sound, once transferred to a CD, is all there is to know. I grew up when the Big Bang was unknown, and my parents grew up from horse-and-buggy times when galaxies were unknown. So I feel confident that we have significant discoveries ahead in the reproduction of music.

Malcolm02's picture

... it’s the expanding money supply, courtesy of the Federal Reserve in the US and central banks around the world, that enriches the few at the expense of the many. It creates asset bubbles in things like the stock market and real estate, which is how most of the rich get rich. Audio equipment is just a small manifestation of it.

dalethorn's picture

I was at the Louis Vuitton store this morning, looking at a $1100 fitted case for my iPad Pro junior, and an $1800 small shoulder bag to carry that case plus accessories. Those items didn't seem at all expensive against a $13000 (thirteen thousand $) 1.5 meter power cable, or a $12000 1.5 meter stereo interconnect.

I think that a middle-class earner who's very devoted to audio could set aside $20-$30k for their system, if they prioritize that above having a big Lexus SUV, or feeding children and sending them to a top-notch school. At $30k or less, high-quality vinyl components will eat up much of the money that's left over for speakers and amps etc. A digital-only system would be my choice to maximize the investment, but even then thousand-dollar interconnects would probably be a no-go. And that's $1 thousand, not $12 thousand.

noamgeller's picture

Lucky us mortal humans, most of the building blocks of Audio is availibe for us as well... Drivers from Accuton, Scan speak, Seas and so forth, as well as exotic Crossover parts from Mundorf and the like... ho, and of course Tons of information available on the web form very talented engeneers. And voila, one can build a state of the art Loudspeaker or Amp, for a fraction of this monsters price. Check out the new flagship Wilson, only Scan speak iluminator drivers... probably not more then 4000 euro in Germany where I live

barw41tst's picture

I wonder just how many of your readers will be interested in purchasing speaker models above $100k? my guess is about 5.

cgh's picture

Given that there's 20 or so of us I'd say 25% (5) is pretty good!

Patrick Butler's picture

There is plenty of room in audio for moon-shot and high value products. Car enthusiasts don't seem to be complaining about the escalation in price for cars at the top end. Perhaps this is because the quality of entry-level and mid-range cars continues to increase.

prerich45's picture

It's all good, I enjoy looking at the stars, even the faint ones. You know what else is good? Every now and then, a meteor or space junk falls from the heavens (and doesn't destroy the earth), and gives someone a nice souvenir.
Stars = expensive gear and gear totally out of reach for the average income
Meteor/Space Junk = used Hifi gear that used to be out of reach

I have a nice collection of space junk at my house, I love it!!!

low2midhifi's picture

I have complained, perhaps bordered on troll-ism (if such a word exists), in these pages regarding to cost of audio equipment. However, upon taking stock of this article, my viewpoint and outlook is perhaps more sanguine than it has been before. My viewpoint is perhaps even more sanguine than the concerns felt by the article’s author.

Audio’s biggest issue is to remain relevant as a hobby. While expensive gear moves the midpoint of relevance further away, the impact of this on the enthusiast is modest. Rather than the speed of cosmic expansion, I’d put the impact of expensive gear on the hobby’s relevance more like movements of a heavily weighted and constrained point on a graph. I’d use an analogy of the average speed of cars on a stretch highway year-by-year, at rush hour, where a few faster vehicles have skewed up the overall speed while 55 to 65 mph is still the mode for most drivers.

2-Channel, fixed equipment, stereo-music listening, hi-fi by its longer name, is probably shrinking as a hobby. The biggest task of the audio enthusiast community and publications is to stem or reverse this shrinking number of people who might adopt the hobby. This task can occur by promoting the hobby through word of mouth, social media, and other means.

Beyond this challenge of relevance, audio’s future may not be as bad as one might think due to the prices of the most expensive gear. The reasons a muted impact of pricing on the enthusiasts’ enthusiasm is that: 1. There is a wide price range of the gear available; 2. The variable costs of the pursuit are highly discretionary; and 3. Other hobbies are likely to be in far worse shape due to more inescapable cost increases. To the extent that audio enthusiasts fall into category 3. they actually might gravitate back to audio from other pursuits.

1. The price of entry has a wide range and modest entry point: For every Magico and Wilson speaker, with increasingly inaccessible prices, there is a new Dynaudio Emit or B&W 685 whose costs are still in the hundreds of dollars. For every Boulder Amp, there’s still a Marantz receiver whose performance still seems to improve with each new version (in my experience at least). For every dCS DAC, there’s a Mojo, Hi-Fi Man, or Arcam product. Lower prices are available to the enthusiast for used products.

2. The variable costs are highly flexible and discretionary: Audio has modest to high upfront costs, but the variable costs themselves are under the control of the enthusiast (see point 1). Once you have gear, how much you want to spend is up to you. If you listen every night, then only your electric bill and wear-and-tear costs exist for the enthusiast. (Maybe Stereophile can come up with an “AAA rate” for wear-and-tear.) If you want just 10 CDs or LPs, then buy 10; if you want 10,000, then that’s up to you too. Unless you stream with a service, you can avoid monthly bills by listening to BBC Radio 1x or RNE Radio Clasica for free. If you want unobtainium speaker cables and those little ceramic thing-a-ma-jiggers that keep the cables of the floor, then spend the thousands. If lamp cord from the hardware store meets your requirements, then you can do that, too. You get the point. With audio, you have a highly controllable array of fixed and variable costs. Some other hobbies offer this; many popular hobbies do not.

3. Other hobbies are worse (some far worse) on points 1 and 2:

a. There are some great hobbies for the cost-conscious enthusiast. There are hobbies that have low and discretionary prices of entry, and low and discretionary on-going costs. Examples of these hobbies are running, reading, swimming, bird-watching, walking, fishing, tennis, volleyball, bike riding, cooking, baking, watching TV, surfing the internet, etc. These hobbies should have no problems remaining accessible to their enthusiasts.

b. Then there are the hobbies that I think are screwed big-time for many people in our country. I’d go a step further and state that much of the “political discontent” in our nation is attributable to the growing inaccessibility of these pursuits being equated with a “lost way of life” in our society. Here are the high cost of entry and high cost of participation hobbies that will have a much more dire future for the average enthusiast than audio: golf, RVs, hunting, boating, skiing, equestrian sports, motorcycling, snowmobiling, car restoration, DIY remodels a ’la This Old House for its own sake, second homes, time shares, elaborate vacations a ‘la Rick Steves/Burt Wolf, frequent dining in restaurants, going to clubs and bars frequently, going to professional sports games, etc. When you look at these two groups of pursuits, you see that audio, while more expensive than the first group, is a heckuva a lot better economically than the pursuits in the second group. These pursuits will be doomed to less frequent participation by the enthusiast, and to a shrinking rate of growth.

I could go on, but I think, with this quick assessment, we can see that economics of audio are moving higher at a much slower and more manageable rate than one might think at first. The last group of pursuits I covered: there’s your expanding galaxy, which has seeped into our deeply charged political debate, to boot. At least no one, for now, seems to attribute losing his or her “way of life” due to audio. Audio’s OK for now if you ask me.

monetschemist's picture

I really appreciate any effort Stereophile (and its related publications) make toward covering more affordable gear.

I really appreciate Michael Fremer's coverage of moderately priced analog gear. I think it is wonderful that he can find pleasure in a $500 turntable / cartridge combo and communicate it to his readers, given the amazing record player he has in his listening room.

I really appreciate Art Dudley's often-stated concerns over the high cost of audio jewellery and his columns on refurbishing the great equipment of yesteryear.

I really appreciate Herb Reichert's focus on more affordable components.

And I really appreciate John Atkinson's wonderment at the six-figure speakers in the above article and his concern over their relevance to the average reader.

I miss Stephen Meijas' take on the entry level stuff.

For me, it's more interesting to read an article on a < $1000 turntable than it is to read an article on a > $10000 speaker, even though I don't see myself buying either any time soon.

So please, keep reviewing the three- and four-figure equipment, along with all the other things you do so well.

And as someone commented above, please don't shy away from manufacturers that employ or prefer alternative distribution channels. I'm all for supporting bricks and mortar shops, but for many the only bricks and mortar we have are audio-video-appliance stores and the kind of gear they tend to sell is not particularly interesting.

Peragulator's picture

Who subscribes isn't the information that's relevant it's who is purchasing this equipment? By the way comparing car enthusiasts to audiophiles is meaningless.

AndySingh's picture

I feel that expensive gear takes up too much space in your magazine. Since digital audio is the entry point for most budget audiophiles, it would make sense for you to review more digital gear.

For $30 a month I can subscribe to both Spotify and Tidal for a month - or I can buy a single brand new record, which will most likely not sound as good on a $500 Rega turntable as a $500 music streamer like the Bluesound Node 2.

This is not a digital vs vinyl thing - this is about getting maximum bang for the buck at a price which many people can afford.

barw41tst's picture

Thanks Andy for your rational approach. I for one have spent about $10k on my current system and would appreciate a more balanced coverage of available audio gear.

Glotz's picture

The cutting edge gear reviewed in Stereophile impacts the market immensely over time.

If the technology implemented in the latest Magico speakers brings innovation to the mass market over time, that is incredibly valid. Ex- Graphene.

I'm a bit surprised JA didn't write more of the innovations that graphene brings to the this market and consumers in general, several years from now.

There are a host of other innovations out there in this industry, but MQA is another great example that will allow anyone with CD's to reap the benefits of that research, without a MQA enabled player. That product alone points to the arc of technological advancement of a medium that many deemed worthless a few years ago.

malevolent's picture

perhaps " JA didn't write more of the innovations that graphene brings to the this market and consumers in general, several years from now" because there won't be any. Will graphene help cure diabetes, increase crop yields, end government corruption, stop the famine in Yemen, bring Saudi Arabia into the 21ST century, help deal with nuclear waste,stop child abuse? It's just another nanotech derived substance that will probably, and inadvertently, cause more harm than good. The microfibers that are now pervasive are already causing harm to our world. We need to put safeguards in our laws to protect us from all the nanotech products - and if you investigate this you would find little to no laws governing their use or manufacture. Let's learn to crawl before we start running

Glotz's picture

There are several high end audio components that already use the product to great effect.

What are you ranting on about like a lunatic? Diabetes and corruption? Sounds like a Flat-Earther scared of far much more. Another substance... it's carbon manipulated on a smaller scale. It has and will be used smartly by audio, and will continue to be done so. It sounds like you think there is something far more nefarious at play here...

The fact remains is that Magico and many other companies know that graphene is simply a refinement of existing carbon-fiber technologies (Vandersteen nowithstanding)... and it has made a huge influence on these and higher-end speakers in their line-up. It's an important breakthrough, and I don't care if TAS talked about this subject previously. (I look at both magazines for the past 30 years in a vacuum- I refuse to let magazines argue over each others' direction. JA and RH are AMAZING at their respective positions.)

No one is going to blow up the earth or create Nanotech Graphene DNA babies to kill you with!! Or maybe they should..?

You need you need to look up... the whole world is running past yourself crawling.

malevolent's picture

Maybe they should make Nanotech Graphene DNA babies to kill me? Really? A shining example of alt-thinking. Or is that nano thinking?