Why is There Not More Consolidation in Audio?

I will be up all night thinking about this.

I'll go out on a limb and say there is just the right amount of consolidation that occurs all the time.

When I look at most product lines, there were once many companies that produced the items, but over time some became financially insolvent and closed, or they were bought up by better-positioned competitors.  This was true with beer.  This was true for soft drinks.  This was true with automobiles.  This was true with gems and jewelry.  This has been true with all sorts of food manufacturers.  We had many more options before and now we have few options.

 
That's a lot of examples. But the premise, that this happened because,  "some became financially insolvent and closed, or they were bought up by better-positioned competitors" is undermined by the examples.

In beer, from the beginning, the brewers were so small every town had one, big cities had several, and if a brewer shipped out of the town that was big. Beer was a craft product with many distinctive styles. Pilseners for example are a style characteristic of the water sourced in the town of Pilsen. IPA stands for India Pale Ale, a style originally deliberately brewed with a lot of hops because hops are a natural preservative and this beer being destined for troops in India needed to endure long ship times.

Prohibition came along and outlawed all brewing in the USA. After prohibition, the many small brewers having had their working capital destroyed, the market was open for mass dominance by whoever had capital. It was no longer about craft.

This is simply the history. But notice carefully, the human desire for quality and variety never left the market. The years since prohibition have seen tremendous growth in craft breweries, to the point where today once again we have a situation where every city has its own brewery, with the smaller ones being local while the larger ones ship within a region.

So it was government action, and not competition, that created the situation described- a situation which isn't even accurate since it actually is the reverse, there are more choices, not fewer.

A similar analysis could be done on the other examples. Beer was picked because we know it best. Slightly better than cars even.

In contrast, there never was any governmental regulation in audio. The closest we get was RMS/THD/THX. Before RMS & THD manufacturers were free to claim just about any number. THX is a variation on that theme, creating a defacto industry standard. Any time anything artificial like this comes along it disrupts the market, and so we had the power wars, the low distortion wars, the amps that measure good but sound bad. That was long enough ago a lot of audionoobs won't remember. But it happened. The market has since returned to the norm of naturally seeking greater value and quality as determined by the buyers own senses right there on the spot at the time of purchase.

So this did happen in audio, but only to a very small degree as mentioned. All the rest can be laid at the door of basic economics: the bigger you are the lower your unit cost thanks to economies of scale. Yet thanks to the inherent desire for quality this will never be enough for total dominance. Those for whom quality matters most will always seek out the smaller manufacturers of high quality components.

Which do by the way represent very high value. Once again, it is simple economics. Everything no matter what it is has to be packaged and shipped. The lower the price the greater the share of cost is wasted on the box it comes in. Even when price goes very high, still a large share of the cost is in basic items like the chassis, face plate, connections, and power supply. Only when price goes really sky high do we reach the point where it becomes economic to start using the very highest quality caps, transformers, etc.

So until and unless regulatory meddling comes along we can expect the trend to greater and greater diversity in quality high end audio to continue.

Incidentally, can't resist, the details are different but the results in cars exactly the same. The huge secular trend is to greater diversity in quality and performance. Porsche, once a micro niche marque has sailed on this tide to become the worlds most profitable carmaker precisely because, offering more high quality choices, it exemplifies this trend. To pick just one model, the 911, it is offered in something like 23 different versions! Not colors- versions! Add in options, the variety goes positively astronomical! Yet at the same time there is room for Singer, and Koenigsegg, and McLaren, and others.

So even where governments try everything they can to stamp out individuality, the innate human desire to just plain have fun is stronger. This in the end is the answer to your question.

We're telling you, they're not paying us enough for this.

Interesting question and one that deserves a long and thoughtful answer. But not from me.

But seriously, I have been a an audio dealer and worked with an audio distributor. Many people (me included) would say that there are too many manufacturers of high end audio gear for the size of the market. How many speaker manufacturers do we really need? (the correct answer, of course, if as many as I personally like)

High end audio is largely a hobbyist business. There are a few large companies producing gear but there are more small outfits that produce some some great and unusual gear. Not all audio hobbyist forms stay small but very few get gobbled up by large corporations.Why? Because most smaller audio manufacturers are barely profitable and don't have stable business models. One bad season or the principal passing on shutters the company. We've all see that recently.

But the audio hobbyists are also innovative and willing to be different. Without them we probably wouldn't have products such as modern tube amps, discreet DACs or any speaker that doesn't resemble a JBL studio monitor. But large corporation are only interested in gross profit margins. If they can make make a decent ROI by acquiring a unique brand, great. But most audio businesses do not show the kind of balance sheet that would attract investors or invite an M&A.

And that's probably the way it should be, IMO

High End Audio has, in my mind, always been seeded by the DIYer. The innovator. The team in a garage with an idea and a passion.

Also, they are emotional and financial masochists who will continue to brave the HE market regardless of outcome.