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jazzfan's picture
Last seen: 4 years 6 months ago
Joined: Sep 8 2005 - 8:55am
As We See It

From what I can gather reading JA's April '11 AWSI unless I somehow become one of America's super rich the further pursuit of high end audio is fast becoming a dead end. Good thing I've somehow managed to assemble a very nice sounding audio system since future upgrades will most likely be priced well beyond my means. I hope that JA turns out to be wrong but somehow I doubt it. In any event it was a good run while it lasted but I now know that my days as an audiophile are numbered (barring a big lottery win).

Louis-P's picture
Last seen: 2 years 10 months ago
Joined: Dec 7 2010 - 3:45pm
High end audio not just for the super rich


Please allow me to present an alternative scenario to the one presented in As We See it. In the May, 2011 Car and Driver, it is noted that the combined sales in 2010 of the Audi A8, BMW 750, and Jaguar XJ came to all of 18,052 cars. Not included in the comparison test were the Mercedes S Class and Lexus LX-460, so maybe the combined total would be double (my guesstimate). More sales figures are listed on page 32. BMW sold 100,910 3-Series', the Infiniti G37 coupe and sedan accounted for 56% of its sales, and 63% of Lexus sales were the RX and GS350 models.

So it seems that the rich don't buy that many high end luxury cars, yet there is a lot of action in the mid-range level. Not mentioned were the sales for the BMW 5-Series and Merceces E-Class, but I'll bet that a lot of people find that $60K models offer more than enough luxury, and don't see the need to spend an additional 50% extra for the high end models.

Now on the audio side, it's not clear why things should be much different. For example, the Wilson Audio WP/Sasha speakers cost $27,000, expensive, but not obscenely so. But you still need the rest of the system, and a typical WP/Sasha system is going to run somewhere in the $100-200,000 range. With speakers that are pushing six figures themselves, we are talking a quarter of a million or more. If the average rich person isn't going to spend an extra thirty grand for a car, I can't see anybody but a very serious rich audiophile going for these very expensive components.

So why are there so many hyper-expensive models chasing so few customers? Here's my theory. With the audio industry having matured over the last fifty years, there is a (relatively) large pool of talented designers. There are also a lot of people in the world who have made a really lot of money, and are looking for exclusive ways to spend it. Sports teams are one example. But there are barely 130 professional sports teams in the US, and few desireable teams are up for sale each year. This means a price tag of around a billion dollars or so to join that club, a rather high entry barrier.

But audio is much cheper. A mere few million is enough to get a small run of units built, and do the show circuit. Financial success isn't all that important, at least in the short term. Remember, only one in ten restaurants succeeds, but that doesn't stop many new ones from opening each year. And most high end restaurants are financed in the same way, money backing talent to get into the club.

I really think that it is a huge mistake to gloss over the middle market. Seven thousand dollars for a pair speakers is a lot of money for most audiophiles, even though the same amount of money can buy two power cords for a mega-system. More people will buy a BMW 328 than a 750. Far more people will by Accords and Camry's. There is a far bigger opportunity to snare these customers, than to chase after a very small number of very rich people. It also starts with the dealer, which is a whole 'nother can of worms. I am glad that there are companies like Magnepan who understand this, and I will be happy to give them my business as my finaces allow.

jazzfan's picture
Last seen: 4 years 6 months ago
Joined: Sep 8 2005 - 8:55am
nicely stated

Thank you Louis for that great post. I couldn't agree more with your point. Perhaps JA may be able to give us some additional insight as to why this "middle ground" is not being plowed by more high end audio manufacturers.

tom collins
tom collins's picture
Last seen: 11 years 3 weeks ago
Joined: Apr 3 2007 - 11:54am
middle ground

i believe the middle ground is hotly contested. if you consider the middle ground to be 6-9,000 for an amp, i have seen fined examples from pass, simaudio, bmc (new german import) vtl, cary, shindo and i don't know how many others. turntables, everytime i turn around someone is out with a new one. if we consider the middle ground for tables alone to be 3-7,000 (don't forget cartridges, step-ups, phonopres, software) the regular players, project, rega, vpi, nottingham, sota and many more exotic ones are there. speakers - too many to count.
i think this is truly the place to get a bargain because the competition is fierce in this range. the problem is that with all of the competition, margins can be thin at this range. as a maker, why not go for the carriage trade and make a huge profit on less units.
we in america tend to look at the world through our lens. here is a fact. honda sells about 250-300,000 motorcycles in the us each year. sounds impressive until you consider that in china, they sell 18 million a year. within 10 years, the us will not be the primary marketing target for luxury good makers.
you can put together a splendid system from these and other components for a moderate price.

hollowman's picture
Last seen: 3 hours 32 min ago
Joined: May 28 2009 - 12:59pm
The bottom line: high-$ gear affecting Stereophile's profit marg

"So why are there so many hyper-expensive models chasing so few customers?"

No sure but ... JA's article may also be linked to the mag's bottom line: high-$ gear affecting Stereophile's profit margin.

The ol' mean vs. median economic-statistics model...

The economy took a dive, and it may never recover. The rich -- the ones who can afford some of that high-$ gear -- have milked the 'system' and now the middle-class are getting poorer. Result: not as much $ for audiophiles to spend on $$ hi-fi gear. So fewer sales of the elite stuff. More demand for lower-$ gear ... so, $-wise, THAT'S WHERE THE AUDIOPHILE/HI-FI MARKET MAY BE HEADING.

What keeps the lights on at Stereophile and food-on-the-table for its employees is, NOW, lower-$ gear.

So articles like JA's April 'As We See It' may not have anything to do with high-$ or mid-$ gear or price 'ethics' ... it's (partly, maybe mostly) about the BOTTOM LINE.

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