[doug s.]

I have been buidling high-end gear about 20 years longer than you have. My experience backs up my statement. The people who complain the loudest are usually the first ones sucked in by hype. And since those types are not my customers, I can ridicule them in public.

You are right that they are more interested in talking about their gear than whether or not it sounds good. As long as they can read somewhere that it sounds good, that is all that it takes. How else can your explain someone buying cables that cost more than a cheap used car, and are the same in terms of functionality.

hi art,

perhaps we are talking about symantics, & do not disagree.  the people *you* refer to are *not* really complaining.  they are *BRAGGING!!!*  - about how much money they have spent!!!  

regards,

doug s., *zero* years experience building hi-end gear.  

[art]

Well..........I guess they are doing both. They complain to me that I charge too much..........still much less than "Krill".........while bragging that they were sucked in by the hype from some wire bandits that borrow the name of a fancy engineering university in the Northeast. They waste my time, and I do not deal with them any longer. At one time, I tried. Didn't take long to learn to ignore them. I may miss a sale or two, but that type of customer usually turns into a headache.

What it probably comes down to...........

They can not brag to their buddies that they own my gear, and therefore it has almost no intrinsic value. Unlike their highly educated copper conductors. So, I charge too much..........and their new cables are a bargain.

Pat

[Kevin P]

C'mon, folks...it's really simple.  There are a ton of high end speaker/audio-gear manufacturers serving a relatively small niche of audiophiles.  Coupled with the used market, it's just a case of there being more manufacturers and products out there than the demand for products warrants.  Some companies are going to go out of business for the simple reason that there's not enough demand to sustain all of these companies.

Which companies survive is a function of many things...quality, quality control, ma ...

I think you hit it on the head.   All you have to do is go to CES a couple years and there are more companies than you can shake a stick at.   All of them are fighting for a small group of customers.  The ones successful, like Brian, know their customers and through creative methods, good business sense and hard work scratch out a living.  

In terms of things made in the USA vs. overseas it doesn't concern me.  My products are truly international in origin.  Capacitors from the UK, inductors from Poland, drivers from Chile & Taiwan and cabinets made in the USA.   I don't value American jobs any more than I do international ones.   Why does an American deserve a job more than a European, Indian, or Chinese person?  

My family probably colors my perception though.  My kids are Ethiopian, American (biological) and Guatemalan so I’ve got a broad swath of colors and nationalities.

[doug s.]

II think you hit it on the head. All you have to do is go to CES a couple years and there are more companies than you can shake a stick at. All of them are fighting for a small group of customers. The ones successful, like Brian, know their customers and through creative methods, good business sense and hard work scratch out a living.

In terms of things made in the USA vs. overseas it doesn't concern me. My products are truly international in origin. Capacitors from the UK, inductors from Poland, drivers from Chile & Taiwan and cabinets made in the USA. I don't value American jobs any more than I do international ones. Why does an American deserve a job more than a European, Indian, or Chinese person?

My family probably colors my perception though. My kids are Ethiopian, American (biological) and Guatemalan so I’ve got a broad swath of colors and nationalities.

i agree w/everything here.  my only beef is w/companies like red rose music, who sell $1200 chinese korsun amps for $7k.  of course if mark levinson can find the suckers, i guess i shouldn't begrudge him that fact.  yust not my cuppa...

doug s.

[PhilNYC]

i agree w/everything here.  my only beef is w/companies like red rose music, who sell $1200 chinese korsun amps for $7k.  of course if mark levinson can find the suckers, i guess i shouldn't begrudge him that fact.  yust not my cuppa...

doug s.

While I agree that Red Rose marked up the Korsun stuff by a lot, I don't think they marked it up as much as people think once you take into account all the costs they incur to offer their products here.  Shipping, quality control, spare parts for service, etc can add up.

Two years ago, I had an opportunity to participate in a group-buy of Aurum Cantus monitors.  The monitors retailed for $300 in China...but after all the shipping and customs duties, they eventually cost me about $600/pair.  And of the 10 pairs bought in the group-buy, there was one pair that was dead on arrival.  So we're looking at about $660 per pair.  The standard pricing model that I've seen in this industry is that retail is about 5x the cost of goods, so that would dictate a $3300 retail price...and that's about what Red Rose priced their version of the Aurum Cantus speaker.  Obviously, the $700/pair could be reduced by purchasing in much higher volumes, but still it shows that they weren't all that far off...

[JoshK]

The standard pricing model that I've seen in this industry is that retail is about 5x the cost of goods

I think some, myself included, would argue that that pricing model is out of whack.  With there being, as you said yourself, many sellers and few buyers that margin should be a LOT LOT less.

[PhilNYC]

I think some, myself included, would argue that that pricing model is out of whack.  With there being, as you said yourself, many sellers and few buyers that margin should be a LOT LOT less.

Remember, tho, that the 5x cogs pricing model is for retail pricing.  Take into account that a dealer is going to get a margin between 40-60%, and a distributor is going to get a margin as well, the manufacturer is only seeing perhaps a 2x markup on their cogs. So for example, on a pair of speakers that retails for $1000, a manufacturer probably only has a gross margin of $200.  After all of his operating and marketing expenses, the manufacturer isn't making a ton of money here...

[JoshK]

C'mon, folks...it's really simple.  There are a ton of high end speaker/audio-gear manufacturers serving a relatively small niche of audiophiles.  Coupled with the used market, it's just a case of there being more manufacturers and products out there than the demand for products warrants.  Some companies are going to go out of business for the simple reason that there's not enough demand to sustain all of these companies.

Which companies survive is a function of many things...quality, quality control, ma ...

Exactly!

...why they didn't declare bankrupcy and use the associated legal protections to work their way out of it is a mystery...

Exactly my first thought when I read that story.  I was scratching my head wondering what the heck they were thinking.

[JoshK]

Remember, tho, that the 5x cogs pricing model is for retail pricing.  Take into account that a dealer is going to get a margin between 40-60%, and a distributor is going to get a margin as well, the manufacturer is only seeing perhaps a 2x markup on their cogs. So for example, on a pair of speakers that retails for $1000, a manufacturer probably only has a gross margin of $200.  After all of his operating and marketing expenses, the manufacturer isn't making a ton of money here...

I am not exactly espousing the manfacturer is all cases. But the margins for the standard retailer and distributor in the hi-end market are often the most problematic, and where the issue really lies imo.

[PhilNYC]

I am not exactly espousing the manfacturer is all cases. But the margins for the standard retailer and distributor in the hi-end market are often the most problematic, and where the issue really lies imo.

Given the number of dealers and distributors going out of business these days, you could argue that the margin isn't enough  

Seriously, tho, the premise of "high end" is another way of saying "not mass market".  And when you can't rely on a high volume of sales to generate the profits to stay in business, you need a bigger margin.  I don't think this is unique to high end audio.  Of course, there are companies that take the 5x pricing model up to 10x and more (eg. Wilson Audio, etc)...and there are plenty of debates that go on regarding the merits/issues of that...

[WEEZ]

In regard to Meadowlark- what is sad to me, is that Pat is apparantly 'not to be found'. If he got in over his head- there surely could have been avenues taken to arrive at a solution, it would seem to me. Maybe just not enough is really known, yet.

I really hate to see small companies go out- regardless of the industry. But as others have said here, there are quite a few audio companies chasing a very small market. As was opined in a recent Sterophile editorial; manufacturers and dealers will have to find creative ways to expand the market for high-end 2 channel stereo. (Feb. '05 issue). If that doesn't happen- there will likely be more Meadowlark stories.

At some point- the market for any product matures. Sadly, I'm afraid it happened to 2-channel a long while ago. I grew up in a day when you bought your music. You didn't rent it or download it. You owned (2) nice speakers- not (7) crappy ones. But I'm an old fart who sees no need to have an MP3 player and a digital camera built into my cell phone- so there you go.

I really hope Pat McGinty finds a solution to his problems. But it sounds unlikely.

WEEZ

[doug s.]

While I agree that Red Rose marked up the Korsun stuff by a lot, I don't think they marked it up as much as people think once you take into account all the costs they incur to offer their products here. Shipping, quality control, spare parts for service, etc can add up.

Two years ago, I had an opportunity to participate in a group-buy of Aurum Cantus monitors. The monitors retailed for $300 in China...but after all the shipping and customs duties, they eventually cost me about $600/pair. And of the 10 pairs bought in the group-buy, there was one pair that was dead on arrival. So we're looking at about $660 per pair. The standard pricing model that I've seen in this industry is that retail is about 5x the cost of goods, so that would dictate a $3300 retail price...and that's about what Red Rose priced their version of the Aurum Cantus speaker. Obviously, the $700/pair could be reduced by purchasing in much higher volumes, but still it shows that they weren't all that far off...

while we could argue as to whether or not red rose shoulda sold a $1200 amp for $7k, or mebbe they woulda still been able to make a handsome profit if they sold it for $6k instead, this totally misses the point.  which is:  red rose adds little (if anything?)  to the quality/value equation, & yust rips folks off.  i have no problems buying chinese gear, marketed as such, from distributors who take their fair profit.  which is why it costs $1325 (shipping included) for that korsun amp, when purchased from a bone-fide usa distributor, instead of the street price of ~$600-$700, in china.  and, which is why that aurum cantus leisure ll sells for $649 delivered, purchased from a bone-fide usa distributor, instead of the ~$300 they cost in china...

$7k & $3k for the same thing, w/a different name on it?  gimme a break...

doug s.

[PhilNYC]

doug...it will be interesting to see if that distributor can stay in business.  He's going to have to sell 1000 pairs of Aurum Cantus Leisure II's just to make a $49K salary (assuming he has no other expenses like rent...)

[Kevin P]

while we could argue as to whether or not red rose shoulda sold a $1200 amp for $7k, or mebbe they woulda still been able to make a handsome profit if they sold it for $6k instead, this totally misses the point.  which is:  red rose adds little (if anything?)  to the quality/value equation, & yust rips folks off.  i have no problems buying chinese gear, marketed as such, from distributors who take their fair profit.  which is why it costs $1325 (shipping included) for that korsun amp, when purchased from a  ...

The problem is determing what "fair value" means.   I don't care what the mark-up is in a given item.   The market will take care of excessive pricing.  There are not many people getting rich in audio.  Most of them are rich to begin with and then loose a bunch when they decide to run an audio business.   Consumers really get a lot of free lunch in this market because there are so many people willing to subsidize it.   The reason larger companies don’t play is simple.   There isn’t any money to make or they would be in the game also.   The ones who do play only seem to do so for name recognition.   It is a way to promote the product name rather than a way to generate revenue.

[doug s.]

doug...it will be interesting to see if that distributor can stay in business.  He's going to have to sell 1000 pairs of Aurum Cantus Leisure II's just to make a $49K salary (assuming he has no other expenses like rent...)

yup, yure right.  which, as others have said, it's hard to make a living in the "hi-end" audio biz.  it has *always* been a fringe market.  w/more folk wanting to sell than wanting to buy.  which is why i prefer to support those that actually have something to offer.  

when mark levinson designed/made his own gear, sure it was outrageously priced, but it could stand on its own, & offered something of walue to its owner.  even if it was expensive, or mebbe even overpriced.  red rose music offers nothing.

doug s.

[rosconey]

its all about over saturation-
think about all the tube amp ,digital and solid state makers-
speakers are just as bad if not worse --

has alot to do with our economy-guy gets laid off because his job went to india or china so he starts a small audio company-add in the big guns with mega resources and the ultra cheap crap from overseas-

its a wonder that anyone would want to do it full time

[JoshK]

this is all the more reason to DIY.  American require a 50K salary to produce a commodity while others abroad don't.  You can buy abroad, get raked by US dealers/manufacturers or learn to DIY.  With the exception of current class D amps, the technology has been around for 30+ years, nothing is new and the component are off the shelf and the info is on the internet.  The rest is marketing.

[PhilNYC]

Josh...I understand your point, but it does not take into account the value of time and labor.  DIY is cost-effective from a materials standpoint, but the 20-30 hours it might take to assemble an amplifier or speakers from scratch is more effort/trouble than some people are willing to put up with (let alone the time it takes to become skilled enough to learn to actually build something).  

Also, if I'm an audiophile and I want one pair of speakers, I'm not going to set up a carpenters' shop in my basement and buy all the tools just to make that one pair of speakers.  Even if I wanted to change my speakers every 3 years, I don't know if I would make that investment.

You could apply the cost-effectiveness of DIY to a lot of things...DIY bicycles, beer/wine, furniture, etc.  For many people, it is an excellent option.  But for the majority of folks out there, particularly in the go-go USA, time and labor aren't on their side...and the option to pay someone else to do it is completely reasonable (and not getting "raked").

[JoshK]

absolutely, which is why you can get raked over the coals.  There are few things in life where the best matters as much, it is my hobby, so for that I am willing to invest my time and no just open a drain for my money to go down.  other people have their own interests and I would advise them to do likewise for theirs.

[elcaptain88]

Regardless of the current market with regards to traditional 2-channel audio - the demise of most small businesses can usually be linked to poor financial decision making and planning. There are plenty of good products and services that ultimately fail not because they are poor or not in demand, but rather poorly executed. As an accountant/financial advisor I've seen plenty of small businesses and owners run themselves into the ground either because they don't know how to operate a business from an operational and financial standpoint, or they're not willing to seek out advice from someone who does.