Celebrity Headphone Deathmatch

This story originally appeared at InnerFidelity.com

It's really all about making money ... and the price you'll have to pay for headphones.

Cast your mind back 15 years ... before the iPod. If someone told you they paid $129 for a portable CD player, you'd have thought that was pretty expensive. If they told you they paid $129 for a pair of headphones to go with it, you'd have thought they were nuts. Yet, today, we walk around with $500 iPhones in our pocket and $300 Beats Studios on our heads. In 15 years the culturally acceptable cost of your personal audio rig has skyrocketed. Why?

Obviously, part of the answer is that your average smartphone is enormously more useful than a Sony Discman. Five or ten times the price for a music player that's also your phone, camera, instant messenger, GPS, radio, TV, Angry Bird game center and more seems justifiable. Our portable media devices today are extraordinarily valuable to us, so we're willing to pay much more for them now.

But what about the headphones? Have they improved dramatically over the last ten years? In 2010, during truly sour economic times, domestic headphone sales in dollars increased a whopping 30%, and unit sales of headphones over $100 went from 2% to 3.5% of the market. Has the increasing price of headphones brought a similar increase in value to the consumer? Let's take a look at how we got here.

Over the last ten years I think four things happened that changed how the world thought about headphones: the iPod; Skullcandy; the headphone hobby; and Monster/Dre.

The iPod changed the headphone from an accessory to a necessity. You know the story, the iPod exploded into the popular consciousness and everybody had one. The iconic image of the time became the white wires of the Apple earbuds. The huge popularity increased the potential demand for headphones, and the dramatic increase in cost of the iPod over the previous portable players increased the potential price people would be willing to spend on headphones. The iPod opened the door.

The last decade has also seen the rise of Skullcandy, which made headphones cheap and fashionable. With their take-no-prisoners distribution channel development that brought headphones into skateboard and surf shops, and the very hip "Every Revolution Needs a Soundtrack" PR campaign, Skullcandy sold boatloads of affordable, colorful, and stylish headphones to kids with iPods. One of their keys to success was endorsements by action sport athletes. So successful were they eventually that by late 2010 they were second only to Sony with a 14% share of the headphone market. (Sony had 23%; Skullcandy 14%; Bose 12%; and Beats at 9% according to NPD Group.) Skullcandy made headphones fun and attractive.

Largely unknown to popular culture, over the last 10 years a vibrantly growing hobby of headphone enthusiasm has sprouted up. Head-Fi, the mothership forum for the headphone hobby, currently gets over a million unique visitors a month and is one of the largest audio websites of any kind. The rapid growth of this enthusiastic audience over the last decade gave the traditional headphone manufacturers the encouragement needed to start investing in higher performance. More expensive headphones started showing up. While previously $400 was expensive, we now have many headphones that sell between $500 and $1000, and maybe a couple of dozen over $1000. Headphone enthusiasts showed that high priced headphones could sell.

Late in the decade, with an enthusiastic hobby buying more and more expensive headphones, and with the broader public merrily swapping their white earbuds for Skullcandy's bubblegum, Noel Lee at Monster saw the rising demand for fun and performance with headphones and had an epiphany: "Headphones are the new speakers!" Evidently, he was the right person in the right place at the right time. In rapid fire succession, Monster started producing celebrity endorsed headphones. First with Dr. Dre and the Beats by Dre brand, and then by a multitude of artists under both the Monster and Beats brands including: Lady Gaga; Justin Bieber; "Diddy" Combs; Miles Davis; Lebron James; Earth, Wind, and Fire; and the Boston Red Sox. The tinder had begun to burn, and Monster poured gasoline on the fire.

In February of this year, the market research company NPD Group published a study: "Headphones: Ownership and Application." Their press release about the study is telling, here's some excerpts:

"...endorsements are extremely/very important to nearly 30 percent of consumers when deciding what headphones to buy. Music artist endorsements ranked highest among consumers purchasing headphones under $20 and over $100, and sales of headphones over $100 are growing. According to NPD's Retail Tracking Service, headphones $100 or more went from around 2 percent of the headphone market in 2009 to 3.5 percent of the market in 2010. Overall stereo headphone sales increased 17 percent in units and 30 percent in dollars in 2010."

"... on average, consumers said they bought a new pair of headphones every 14 months, but teenagers reported buying new ones even more frequently. Forty-one percent of 13-17 year olds bought new headphones within the past 3 months. Teenagers were almost twice as likely as the average consumer to say they plan to purchase new headphones in the next year."

"... headphones have been as much of a fashion statement as an audio accessory," said Rubin. "In particular, younger consumers are associating artists they admire with a premium portable audio experience."

So, headphones costing more than $100 grow 75% in one year ... endorsements important in purchases under $20 and over $100 ... teens twice as likely to buy ... youngsters wanting artists associated with their cans ... my what a whirl we're in. Since they were virtually the only game in town until mid-2010, I'm guessing almost all the hubbub in the above report is about Skullcandy at the low end, and Monster Beats by Dre at the high end.

Well, there you have it, by the end of the first decade of this century, the iPod, Skullcandy, a bunch of headphone geeks, and finally Monster, had woken up the consuming public to how cool headphones could be ... and headphones were flying off the shelves in the midst of a miserable recession. That really got the attention of other companies looking to make a buck in tough times, and today it seems like every company that's ever moved an electron in service of the music is making a pair of headphones. There's a dogpile of companies out there looking to get in on the headphone gold-rush, and because of Monster's success, many are using celebrity endorsement as their differentiating strategy.

Personally, I think headphones should be about good sound first, then comfort, then build quality and durability, and only then styling and bling. I'm very skeptical about companies putting a lot of focus on fashion and fabulosity. I'm very concerned consumers are getting style over substance with their headphone purchase. I'm afraid celebrity endorsements are driving the price of headphones up without a commensurate rise in performance.

But there's only one way to find out for sure ... let's go listen to some celebrity headphones!

Editors Note: In order to produce this article on a reasonable time frame, only full size headphones of circumaural (around the ear) and supra-aural (on the ear) types were tested. None of the in-ear models were evaluated --- perhaps another time.

I also want to thank Brian Gluck of Headphones.com who helped enormously getting many of these headphones to me for review. I simply don't think I could have done this effectively without his help. Thanks, Brian!