Fine Tunes #19

Good Lord, it's 2000. Happy New Year, everyone!

And what's the hot audiophile topic of the new millennium? Looks like e-commerce to me. To what extent can a specialty audio manufacturer, whose business model has traditionally depended on bricks-and-mortar retailing, define and protect its market? It's a dilemma, all right. Companies such as Equity (B&W and Rotel) are rabidly against e-commerce. They take great pains to track down unauthorized online sales and the offending dealers shipping product out the back door to these sites. VTL's Luke Manley points out that his company's thumbs-down on e-commerce protects the consumer, enabling factory-authorized hands-on audition, service, and installation. As far as Manley's concerned, the Internet is nothing but a huge mail-order morass. But some companies—like Audio Advisor, Ultra Systems/Cable Company, and a few others—manage to coexist with the brick'n'mortar crowd. Take Sony Direct. Like B&O, they'll sell you anything you want, apparently competing directly with their own dealer network.

Denon also is cautiously dipping its corporate toe in the turbulent online waters. As revealed by Stereophile newshounds, Denon has established separate Internet authorization agreements with retailers handling Denon and Mission products. Denon says they're "adamant" that the consumer get the same level of service and information on the Net as is (hopefully) found in stores. Denon requires: a dedicated Net staff; live technical support at least 12 hours a day, six days a week; in-house Denon authorized service; assurances that items offered for e-sale are in stock; no auctions or shipments to resellers; prompt shipment, with access to order tracking; and secure financial transactions. Similarly, the Harman Consumer Group has authorized several "rigorously selected" sites to sell their H/K, JBL, and Infinity lines.

As also revealed on our fast-breaking website, Celestion America has signed an exclusive deal with Hifi.com, the online face of Cambridge SoundWorks. Philips subsidiary Marantz also unfurled an exclusive agreement with Hifi.com in a notable shift in strategy for the Dutch giant.

The beat goes on. GetPlugged.com, the front-end of KnowledgeLINK, proffers "information" as opposed to products in an interactive environment that puts a potential customer in touch with a network of affiliated dealers and custom installers in his or her geographical area. E-Town has established a similar business model in its attempt to bridge online and traditional retail values. Coolaudio.com, a flashy new startup, offers (among other things) desirable European audio brands like Roksan, Chord, and Wilson Benesch—all makers of fine products that, up to this point, have had difficulty cracking the US market. Coolaudio sells direct over the Web, and is purportedly signing up dealers so that consumers can see and audition products in person. AudioCafe.com is yet another site that apparently intends to enter the online sales fracas (footnote 1).

Trying to figure out how all of this will shake out is tough. Like many things Internet, the value of companies offering online sales lies in their potential for making big bucks—a fistful of dealer agreements can make a $10 million company that's losing money on the Web actually worth $20 million to a buyer. Hey, it's a brave new world.

Let's now shift focus. Take your typical audio dealer. I stay in touch with the New York audio retailers: I'm a journalist, they provide information—even if sometimes it's in code! Most of these retailers view the Net with a jaundiced eye. If a dealer is considering carrying two lines of speakers—one offered on the Net, the other not—which do you think they'll choose? New York is a tough market, and they all work hard to develop their customer base. But the listening rooms are busy—audiophiles are still coming in, trying to get their music right.

By the same token, dealers absolutely cannot ignore all the e-changes—they must provide enhanced, value-added, and more encompassing environments in which to purchase audio or video equipment. Buyers: Use audio dealers to best effect, make them perform, insist on well set-up auditions. But when it's time to pay, don't drop them flat to purchase your chosen component on the Net or to mail-order transshipped out of another dealer's area to save a few measly bucks. My advice: Support your local sheriff.

And how about the consumer? Let's say you live in the boonies and there are only a few speaker lines you can actually audition within a 100-mile radius. Suddenly, the Net looks more interesting. But it's a giant leap to buy audio components online. Typing in your credit-card number means you're buying a component sight unseen and, more critically, sound unheard. Which makes reading equipment reviews more important to your buying decision than ever before.

Well, there's plenty of "information" available on the Net, you say. Question is, what's it worth? And, of course, that calls into question the "reviews" available on sites that sell these items. Are they actual reviews, or simply advertorials provided by "content providers"? Who draws the line between ad copy and editorial copy, and where? We draw that line very precisely each month in the pages of Stereophile, paper magazines having a strong "Chinese Wall" tradition about the separation between content and commerce. By contrast, nothing about the Web has been in existence long enough to develop any such tradition.

I don't believe anything about the High End can be "commoditized" to the point where a few mouse clicks can lead to sonic bliss. The human contacts between audio manufacturer, dealer, and customer are of utmost importance to the soul of the High End. You've got to work at it, though—there are no shortcuts. In any case, you can be sure that we're poking around and seeing what jumps, taking notes, and even kicking some butt. Whatever happens, you'll read about it here in Stereophile.

Enjoy.



Footnote 1: Such is the fast pace of life on the Internet that AudioCafe.com went out of business within weeks of this column appearing on the newsstands.—John Atkinson
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