Invaded by the Grays Page 5

"Say I have a CD player I want to sell. I've had it for a couple of years and now I might be able to get half of list for it, more or less. I have to compete against a dealer trying to unload his demo unit of the same kind at a lower price, and with a warranty. I'm taking a bath on it, while he's used it as a sales tool for two years and at the same time has written it down as a business loss. Is that fair to me as a seller? You can't play both sides."

Playing both sides is an issue that raises David Manley's hackles, too. He tells of an afternoon he spent in one of the oldest, most well-established high-end stores in the Northeast, a store owned by, as Manley describes him, "one of the Grand Old Men of Audio." This GOMA happens to be not only a retailer, but also a founding partner, majority shareholder, and director of a corporation in the business of making and marketing very-high-end audio products worldwide, a corporation that we'll dub "Cosmic Electronics, Ltd."

The full line of Cosmic products was prominently displayed in the GOMA's store. A customer from Switzerland strolled in, inquired about the availability of two massive Cosmic amplifiers, and said he was "paying cash and flying out that afternoon." GOMA's reply: "Cash? Right. You're on. Give us an hour to convert them to 220V." Manley said to GOMA, "What about the poor bastard distributor in Switzerland who's trying to make a go of it supporting the Cosmic Electronics empire?" GOMA responded with a shrug, "It's the law. I have to sell to anybody who walks in my store."

As he was relating this tale later, Manley said, "Grand Old Man of Audio: founder, director, shareholder, true religious believer, and liberally prepared to screw anybody over for a quick cash deal. Those who sell their souls for money have a lot to answer for...The buyer then got the stuff on the plane, with a 'creative invoice'---from someone I can't name---so he paid less import duty, or none at all if he got airline shipping privileges for two people. Now the stuff breaks down and the poor Swiss guy who lost out on the sale has to waste money trying to take care of it...You know this 'customer is always right' thing? Well, I believe in it to the extent that if the customer has played a fair game of cricket, then the customer is always right. But if the customer has a degree in being a dedicated asshole, he may not always be right. That's where I apply discretion."

Playing both sides is a strategy with a built-in booby-trap for a manufacturer who sells directly to customers as well as through a network of dealers. Several years ago, a loudspeaker company whose star was rising pulled the plug on itself irrevocably by undercutting its dealers, one of whom was less than five miles from the factory. Stupid, but true. PBN Audio's Peter Noerbaek laughs in bewilderment at this story: "If you have to sell direct, if you have a customer who insists that that is the only way he will deal with you, then you sell to him at 100% of retail or more, no discounts. You have to support your dealers totally; let them be the ones with the negotiating room on price, so that it's in the customer's best interest to patronize them. It's the only way you can survive and grow."

Occasionally the ubiquitous urge for a quick buck or a cheap deal crosses the line into real criminal activity. Stereophile received a number of serious complaints about Westcott Audio, of State College, PA, before John Atkinson stepped in with a warning to readers ("Industry Update," October '95). In a similar vein, a well-known high-end shop in suburban Atlanta folded last year after one of its partners vanished, apparently with many thousands of dollars' worth of customers' deposits. In the January '96 "Final Word," Larry Archibald issued a different warning about sellers of used gear being stung by a rash of counterfeit cashier's checks.

Criminal intent cuts in all directions. Unsuspecting retailers have been duped by clever scam artists. In November 1994, Meridian dealer Ken Askew, of Marin County, CA, was taken for an expensive ride by a mail-order customer in San Francisco using a phony credit card. Askew's complaint was not treated with any special urgency by the overworked SF police department. Louis Hamilton, of Audible Excellence in Cincinnati, lost two Linn pieces (a Karik and a Numerik) to a man in Michigan who was later charged with possession of stolen credit cards. Birmingham, Michigan police didn't give his case top priority either. As of this writing, the perpetrator is on probation in Florida. Hamilton no longer advertises in hi-fi magazines.