CES: No Easy Anwers for High-End Growth Problems, Panelists Agree

The music business is a $13-billion-a-year industry, but the high-end audio industry reaches only a tiny fraction of the music lovers that number represents. "Everybody loves music, so why don't they love specialty audio?" was the question addressed to a group of industry experts at one of a series of AudioCafe.com-sponsored panel discussions on Friday, January 7, at the Alexis Park, during the 2000 Consumer Electronics Show in Las Vegas.

The panelists—Ray Kimber of Kimber Kable, Janice Mancuso of Reference Recordings, Peter Noerbaek of PBN Audio, Russell Kibbee of TagIt, Doug Schneider of SoundStage!, and Kathy Gornik of Thiel Loudspeakers—attacked the issue from several angles. Almost all agreed that dealers, who are the primary interface between manufacturers and consumers, are to blame for the continuing failure of the High End to reach the mass market. "Esoteric jargon" and "snooty attitude" were but two of the easily identified turn-offs encountered by newcomers to specialty audio. Several members of the near-capacity crowd in the Zeus meeting room said that dealers had ignored their musical requests during product demonstrations, often belittling their tastes or implying that only certain genres, like jazz and classical, are suitable for high-end systems.

Gornik, Noerbaek, and Kimber, the three manufacturers on the panel, all acknowledged that the customer's wishes should always come first, and bemoaned the fact that this obvious, basic tenet of retailing is still violated as often as it is observed by specialty audio retailers. Doug Schneider related a story of being completely bewildered and intimidated by the attitudes of some dealers when he was a young audiophile. Luckily, his fascination with the hobby prevailed, but he acknowledged that few of his friends were bitten deeply enough by the bug for them to overcome the many obstacles to entering what is still a private club. "Education is the key," Kibbee said. "Winning new converts to the High End is simply a matter of teaching."

Mancuso and several members of the audience were especially incensed that few dealers today emphasize music. "They push technology," Mancuso said, "and forget that it's all about music." What qualifies as music is an issue as old as the human race, and dealers who allow their own tastes to interfere with a customer's developing interest do themselves and the industry a disservice. "Why won't they play my discs?" came a question from the floor. "I'm buying this equipment to hear my music."

Will the Internet help or hinder the High End's expansion campaign? It offers consumers unprecedented access to information, and provides manufacturers a potentially global market. Internet entrepreneurs Kibbee and Schneider firmly believe that the Net is a force for growth for the industry, as did their fellow panelists—with reservations. Kimber and Gornik were especially adamant that the Internet not enable their dealers to violate territorial agreements. Gornik even went so far as to tell an audience member who wished to buy Thiel speakers over the Internet that he was not a Thiel customer. "All transactions must be in person between dealers and customers," Gornik stated. "Either the customer comes to see the dealer, or the dealer goes out to see the customer."

Noerbaek emphasized that dealer relations are the key to any manufacturer's survival, and stated that Internet inquiries to PBN Audio are referred to the nearest dealer: "No direct sales, period," he said. None of the panel members was willing to venture a guess as to how the growth of the Internet might ultimately affect the High End, but Kibbee and Schneider agreed that the proliferation of music—even in the relatively low-resolution MP3 format—does, in the long run, bode well for specialty audio.