News

The news is not simply that Best Buy/Magnolia stores' 82 Hi-Resolution Listening Stations which they developed in the US in conjunction with Sony, have proven so successful, and generated so much interest in hi-res, that the company has added 250 more listening locations around the country. It's also that we now have data that shows a major reason for the expansion: Far more people care about sound quality than many would have you believe. In fact, we audiophiles represent far more than a thin slice of the listening public pie chart. Audiophiles comprise a 15% market segment that exercises a significant (albeit not dominant) influence on the decisions of software and hardware companies involved in music and home theater.

The Best Buy story first. Just two days after NPR ran a story on Best Buy's turn-around success as a multi-platform, retail chain that maintains a successful presence on both brick-and-mortar and internet levels, the company announced a much-expanded commitment to the Hi-Res initiative that is coordinated by the Digital Entertainment Group (DEG) on the part of the three major music companies: Sony, Warner, and Universal.

According to Marc Finer, Senior Director DEG, the purpose of the new Hi-Res Listening Stations is twofold: 1) provide, in a controlled environment, a convincing hi-res listening experience on compatible devices and headphones, and 2) also provide, three times a year, an update/refresh of the music, both in terms of new and newly reissued titles in all genres. The genres are primarily pop, rock, country and EDM, but there is also a lot of jazz, some classical, etc. At the stations, listeners are also able to access metadata about the origin of the recordings, including some artist interviews about the experience and significance of recording their music in hi-res, and, of course, cover art.

One significant change to the Hi-Res Listening Stations that has come with the expansion is that the equipment is no longer solely from Sony. While the listening device continues to be the Sony Walkman file player, the new displays include headphones from a variety of manufacturers, including Sennheiser, Polk, Sony, and V-Moda. As such, the High-Res Listening Stations are designed to appeal to both head-fi aficionados and the general public, and fit the lifestyle needs of the growing number of consumers who are downloading and streaming music.

The other piece of juicy news is that market research has identified four core groups of music participants. Finer broke them down as follows:

The largest, at 44%, is the digital-based "music lifestyle group" that listens to music as background to their work, travel, or other leisure activity. These are the "Low-Tech Listeners" who listen more for convenience and lifestyle versatility than fidelity. They like music, but they are not passionate music fans.

The smallest segment, at 9%, are "Disinterested Consumers" who don't care about music at all. To them, music is a total backdrop experience that they barely notice. This group's main exposure to music may be in elevators or public spaces.

A significant 15% of the market is "High-Tech Audiophiles." That's us—people who are into music and listening in a very big way. The audiophile phenomenon, at least at present, seems to be largely a boomer-based passion of people who grew up in an era when music was a primary source of emotional connection and entertainment.

The fourth, at 32%, is the growing "Emotional Music Lovers" millennial segment of people in the 20s to mid-30s. These folks are totally committed emotionally to music. They spend thousands of dollars going to festival, clubs, and concerts. While they are also buying vinyl, they primarily seek digital convenience to fit their lifestyle needs. They also want to be in the studio with their favorite artist or band, which means they want to get as close as possible to the music of artists they love.

"They're streaming customers," said Finer. "For the most part, they don't download or buy physical media for their day-to-day listening. They are the future of hi-res music. If we can find a convenient and flexible way to get them their favorite music, we hopefully will be able to enrich their experience both sonically and socially through streaming."

Finer contends that while the general mass media and so-called analysts refer to music in singular terms, there are in truth multiple types of customers, and multiple types of music experiences. The answers to questions aren't as simplistic as mass media and so-called audio experts make them out to be. In other words, people who dismiss the Hi-Res listening experience, and claim that it and formats/delivery systems (eg, MQA) that promise better sound quality are a fringe phenomenon that appeals only to a tiny group of audiophiles, have not seen the research that proves them incorrect.

Finer acknowledged that the problem with streaming is that besides the services themselves, no one, least of all indie artists, seems able to make any money off it. "We're examining the viability of the streaming business model, which works on a different principle than downloading," he said. "Everyone is aware that without the involvement and support of the artists, songwriters, publishers etc., there's no industry. The dialogue is underway, but evolving a new model and getting everyone on board takes time.

"What's important about the High Resolution Listening Station success story is that not only is retail still viable, but it is also very valuable. It is the recorded music industry's touchpoint to get people to experience what we're all committed to in terms of delivering better quality music and sound. We're hoping the Magnolia Hi-Res Listening Stations in these Best Buy stores will motivate other specialty dealers to do the same thing, and create additional opportunities to hear what hi-res has to offer."