August 22, 2006

In This eNewsletter:
• From the Editor's Desk, The Great Wall of China, by John Atkinson
• Setting the Music Free?, by Ken Kessler

The Great Wall of China, by John Atkinson

You could sense the frustration in Keith Pray's e-mail. "We are on the same team. I have always respected your wishes and will continue to do so," he had written me. At the request of a possible advertiser, Stereophile's associate publisher had asked me a question about something appearing in the issue of Stereophile we were preparing. I had responded that not only would I not give him an answer, I felt it inappropriate for him to ask.

I wouldn't usually mention an internal and inconsequential matter like this if it weren't for the fact that the day Keith and I had our altercation, the news broke about another magazine editor, who doesn't appear to share my reticence about crossing the "Chinese Wall" between a magazine's editorial and advertising sides. In fact, according to an August 6 report in the Orange Country Register, the longtime editor of Fanfare, Joel Flegler, doesn't just cross the wall, he leaps over it.

In a July 19 blog, the OCR's classical music reporter, Tim Mangan, had reprinted a letter Flegler had sent to an independent record company that was inquiring about review coverage in Fanfare. Flegler had proposed a quid pro quo: that while his magazine might review the CD in any case, a way to guarantee publication would be for the company to buy advertising space. Flegler's letter included a list of what ads of various sizes would cost and suggested that the more money the record company spent on advertising in Fanfare, the more editorial about them could be published—such as an interview with one of their artists.

It is important to note that Flegler had not promised the record company positive coverage, something confirmed by a couple of Fanfare reviewers in the blog discussion. But without the company buying advertising in Fanfare, Flegler would not give reviewing the CD "top priority" in the publication queue. And, as Mangan said, "So what? An editorial decision had already been made, before the review."

I agree with Mangan that such a direct connection between editorial coverage and the purchase of advertising renders a magazine's content "worthless." I am ashamed that Flegler and I both put "magazine editor" down on our job descriptions.

I wouldn't usually write about a matter such as this. I feel that magazines should not take public potshots at one another. But I have received questions from Stereophile readers asking about this practice, suggesting that if Fanfare's editor has no qualms about trading review coverage for advertising, then how can they be sure I don't? Such accusations are hardly new. In a Manufacturers' Comments" letter published in our December 1989 issue, responding to a 1989 review (recently posted in our free online archives), Waveform's JohnÖtvös had whined that the negative comments we had made about the sound of his speaker and the measured problems I had found owed more to the fact that Waveform wasn't an advertiser than to anything real. Which was as much BS then as it would be now.

I have written many times in Stereophile about the separation between our editorial decisions and the presence or absence of advertising. (See, for example, my March 1996 essay, "The Great Wall of China.") I assure you that that separation has survived many management changes at Stereophile. "We are on the same team," Keith had reminded me in his e-mail, and in a wider sense he is correct. But I play primarily for the editorial team, which is, I believe, why on October 2 I am about to celebrate 24 years, without a break ,of successfully editing audio magazines.

But don't take my word for that separation. Look at the evidence. If I gave Flegler's "top priority" to reviews of products made or distributed by advertisers, that would be readily evident from an analysis of our coverage. Here is such an analysis:

I added up how many products had received more than a nominal mention in Stereophileie, products that had been written about in a formal equipment report, a Follow-Up report, or in a column by Sam Tellig, Mikey Fremer, Art Dudley, Kal Rubinson, or John Marks—between October 2005 and April 2006. I split the list into current advertisers in Stereophile and non-advertisers.

The results: 42 products reviewed were from advertisers, 48 from non-advertisers. So if anything, we favor non-advertisers when choosing what to write about.

However, if there are very many more non-advertisers than advertisers, and if we chose a representative selection of audio products from both groups, this means that reviews of products from advertisers should be much fewer in number than reviews of products from non-advertisers, instead of only slightly fewer. How do these statistics look when examined in that light?

We are in the processing of compiling our 2007 Buyer's Guide, due to be published in November, which excludes by intention audio products intended for home theater and architectural use that we don't cover in the monthly magazine. The database we have compiled over the past four years of companies that manufacture products eligible for review in Stereophile lists 363 separate brands. Inevitably but regrettably, some brands get omitted. So let's say that the set of brands eligible for review in Stereophile is 370 at maximum, but probably less, given that we list brands in the Buyer's Guide that don't have the necessary five dealers to qualify for a review.

I don't track advertising in Stereophile, so I asked Keith Pray for a list of active advertisers; ie, brands that had been advertised in Stereophile in the past 18 months. That total is 120, not including brands that had advertised only once, which would require rather a deeper dip into the database than he had time for. Let's assume that including those onetime advertisers would increase the total number of brands currently advertising in Stereophile to 150.

The results:

Number of advertisers as proportion of eligible brands: 40%
Proportion of advertised brands featured in Stereophile reviews: 47%
Number of non-advertisers as proportion of eligible brands: 60%
Proportion of non-advertised brands featured in Stereophile reviews: 53%

So, in the worst case, there is a slight bias in favor of advertisers, in that instead of 40% of the products we choose for review coming from advertisers, the proportion is actually 47%. But you don't have to accuse me of "pulling a Flegler" to explain the 7% disparity. There are many other factors involved. The set of companies that advertise in Stereophile has high correlations with: the set of companies that have a high profile in the marketplace; the set of companies that have been in existence for 10 or more years; and the set of companies whose products have been favorably reviewed previously, not just in Stereophile but in all audio magazines, and are thus more successful in the long term. Such companies also exhibit more regularly at Consumer Electronics Shows and have a higher profile at dealers, and are thus more likely to have their products auditioned by Stereophile's reviewers when they are trying to decide what to write about in future issues.

The effects of these factors are impossible to predict, but I believe it is fair to point out that they will diminish the slight correlation noted above. Which, again, arose from looking at the raw data in the worst possible light for Stereophile.

Normal service can now resume, now that I have shown that "The Great Wall of China" is in a state of good repair at this magazine.

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Setting the Music Free?, by Ken Kessler

Where you stand on profit-making will determine which side you take in the current debate about the record companies vs the public. I, a militant capitalist, believe firmly that a provider of goods or services deserves to be recompensed, tempering this only with the words within reason. You will never, for example, see Kessler defending UK bank charges. Thus, if Warner or CBS or EMI sank $2 million into a new act, and said act worked for years to get where it is, and a retailer bought, stocked, and then resold its discs, they all deserve to make some money out of it.

If, on the other hand, you're a Che Guevara-worshiping, closet-Commie hippie, then you probably think music should be free. Leaving aside how even the Grateful Dead, Paul Weller, Pete Seeger, or Billy Bragg might feel about a reduction in their royalties, the biggest upset caused by downloading music files via the Internet has been the removal of a range of real-world expenses for all concerned: manufacturing overheads, the materials in the discs and packaging, packing the finished discs, warehousing, shipping, retail overheads, shopping bags—all gone when it comes to downloads. So we grow closer to (theoretically) free music.

(There are also green issues at play. The complete removal of the physical disc saves all sorts of resources, from plastics to paper to energy. Even I, who prefer holding a disc to clicking a mouse, accept that this is A Good Thing. Actually, it may be the only Good Thing about downloads—unless you're agoraphobic or misanthropic, in which case not having to go to a store is also A Good Thing.)

This newsletter has already covered the backlash against downloading, especially in Europe, about based on such concerns as the failure of Apple iTunes and others to produce price parity between countries, and especially the failure of the record companies to pass on even token savings to those who have eschewed the possession of a factory-made, decorated, annotated disc. After all, aren't downloaders sparing the record companies all of the above-listed costs related to physical music carriers? Surely a downloaded album should cost at least 20% less than a disc in a jewel box?

For the time being, this debate rages at the government level. As I said, I believe in profit within reason; thus, I will be the first to argue that downloads should sell for less than physical carriers. In this respect, the same mentality applied to downloaded software should apply: I pay less for downloading, say, my preferred antivirus program than I would buying it on a disc, in a box, from a computer store.

However, at least in the UK, it's not the prices of downloads that have substantially decreased, but of CDs and DVDs. Those of you savvy enough to know that the US is the biggest bargain-hunter's paradise on earth are probably thinking, "Dropping chart CDs down from £15.99 ($30.40) to £11.99 ($22.78) is still a ripoff." True: the UK remains criminally expensive for everything. But the major stores here are chopping prices to the point where some chart CDs now cost only £9.95 ($18.90). I've even found recent DVDs at that price. (This was written on August 10, when the exchange rate was a scary-for-Yanks £1=$1.90. To put these prices in the context of true cost relative to the UK's cost of living, it's like Americans getting chart CDs for $8.99 each.)

Most common of all are deals like "3 DVDs for £20," or piles of CDs at £5.99 apiece. And I'm not talking about swill, but almost the entire catalogues of Led Zeppelin and the Eagles, Motown's dazzling new two-CD best-ofs, recent chart stuff like the Zutons and Franz Ferdinand, and shelves full of heavy metal, thrash, and hip-hop. It's Christmas in August.

I asked a colleague of mine, who owns a film-distribution company that moves a lot of foreign-language DVDs, if there was some deception going on—were these just overstocks? I mean, the Sideways DVD for £2.99??? It's recent, it's great, and it's neither Dude, Where's My Car? nor Battlefield Earth!

No, he assured me. The stores were genuinely buying in loss leaders, fighting back against downloading. In addition to the pressures of downloading and online shopping for discs—and we have yet to see the massive bite that downloading feature films will take out of DVD sales when that becomes commonplace—retailers have been suffering badly of late, not least because unleaded, regular-octane gas is up to $6.84 a gallon in the UK. (That's 99p a liter, deducting 20% for the smaller US gallon.) But the biggest threat may be UK supermarket chains such as Sainsbury's and Tesco (the latter soon to enter the US market), which sell CDs and DVDs at prices far below the specialists' prices. Recently, at a Sainsbury's, I snaffled up Cinderella Man on DVD for £5.99.

London's Financial Mail reported in July that HMV, one of the UK's biggest record-store chains, is fighting both Internet vendors and the supermarkets with slashed prices in its 200 stores. (HMV also sells online.) As a general policy, chart CDs have been cut by a third, to the aforementioned £9.95, while back-catalog titles sell for £5, £7, £10, or £12. Virgin, a primary retail rival, offers similar deals, as does W.H. Smith. And if you have too much time on your hands, it's fun charting the movement of prices online: I notice that now sells Cinderella Man for £6.97. The list price is £19.99.

So, ironically, in the UK there's never been a better time to buy CDs or DVDs. I mean, why download a disc, then burn it to a blank, and produce your own ham-fisted artwork, when you can buy "the real thing" in nice packaging for the same price or less?

This downpricing simply reduces prices to levels that are far more realistic, though it's a shame that it took the threats of downloading and online sales to do its. But will this mean a boost in interest in the quality of playback hardware? Will people start going back to hi-fi stores? A cynic would suggest that this computer-oriented society, especially the under-25s, will still turn to portables or the computers themselves for playback, even if their music is on CD rather than on a hard drive or in an MP3 player. What they'll be missing is the concurrent drop in the price of hardware.

Last week, I bought a standalone DVD player-burner for my home-theater system, something strictly for time-shift. Its case is 16.75" wide and 1.5" high, and it looks nice. It bears the name of a now-defunct, very famous, "extreme" high-end make that probably had nothing to do with it, because this unit most assuredly came from China. It will play back any CD or DVD and burn any type of blank (though not, I hasten to add, SACD or DVD-Audio!). With the exception of HDMI it has every output I need, including S-video, SCART, stereo analog audio, and coaxial digital audio. It came with a full remote control, plays all regions of DVD, and outputs DTS and Dolby 5.1. It even came with a free blank DVD. And it ain't bad at all.

Best of all, it has a timer and a TV tuner, so it will replace my aging VCR, delivering a watchable six hours of video on a standard DVD-R. I bought it online, from a company I'd previously used strictly for computer wares: toner, cables, memory cards. Including sales tax of 17.5% and shipping, it landed on my doorstep for £54. Don't get out your calculator: that's a hundred bucks.

Kinda puts that £2.99 copy of Sideways in perspective.

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