commodity liquidity

I've noticed the same development. As a worker in the mutual fund industry, I may be well positioned to offer an insight. As U.S. equity markets have gradually come down from their highs in Spring 2000, the level of disposable wealth in the country has diminished markedly. Though consumer spending has held up so far, new purchases of luxury items like high-end audio components may have slowed dramatically. (I'm not a dealer, and have anecdotal evidence of this only.) Those consumers who purchased expensive systems that appeared easily affordable in January of 2000 (with portfolios valued some 40% higher than at present) may view them anew as little more than a ready source of cash -- perhaps even a stopgap to replace lost income from a job loss. As voters told George Bush in the 1992 election: 'It's the economy...' Your observations are correct. It's a buyers market. There seems to be little reason to buy new at present.

This has been a great summer for bargain hunters here on AudiogoN. I believe this is directly tied to the economic downturn this year. When the economy picks up, and it will, we will all be paying close to full retail again.

Speaking as one who has friends who work in high-end retail, it's definitely been a slow summer. There a lot of bargain-hunters (bottom feeders) who price shop everyone to death.. it can be a real PITA to deal with chiselers like that. They (friends at stores) tell me that the Audiophile types are the worst customers: listening to everything, buying nothing, then buying used/demo on the net... have to admit to being guilty of this a touch myself.

The demos and such blown out at 1/2 retail only serve to erode the market worse than it is, which is sort of good for buyers in the short term, but has bad long-term implications of not growing the retail market for new equipment...more stores close... less used stuff for sale...harder to audition things locally... etc. There's several threads on this with many viewpoints, suggest searching the archives for better discussions on it than I can provide.

-Ed

I have been into audio for over 12 years.

These are very complex issues.

The primary problems this industry has are:

1 - Solid state electronics last virtually forever. If electronics seriously degraded (like automobiles do) over time, the industry would be fine.

2 - The industry is lacking innovation/technologcal advancement that advances it's market. There has been advancement in high end audio, but it has not done much to expand it's market. It can be compared to the PC industry right now. The PC industry suffers from many of the same problems as high end audio; however, it is MUCH more black and white in the PC industry, and their is much more competition. However, there is a MUCH bigger market for the PC than high end audio.

3 - Because electronics do not degrade per se, there is a pool of electronic gear in the market that is ONLY growning in size. Since online sites for used gear have sprung up, this has given new value to this gear and made it possible for people to both sell and buy it rather easily at 50% or so retail.

4 - High end audio retailers insist on marking up very expensive gear a healthy percentage. This is a double edged sword and a fine line these retailers must walk. If they sell the gear too cheaply, it floods the ever growing market. This flooding can impact all retailers' sales. If retailers mark the gear up too much, they risk never selling any pieces. This is a tough situation.

5 - More generally speaking... In the 60's and 70's stereo technology was expensive. A person would have to shell out some serious money to get good sound. Today, stereo has penetrated everywhere. Acceptable sound is so cheap for people that very few ever want to aspire for better sound.

6 - There is an emergance of online retailers (i.e. Outlaw, Perpetual Technology, Oddyssey, etc.) that produce very good products that can sell them for a lot less direct than a manufaturer can sell (a comperable) product through a retailer. Retailers that are mean spirited will say these online only products are hokey junk. They can say nothing else because deep in their heart is serious fear that these products are actually very good value.

7 - Lots of retailers are selling 'DEMO' equipment online. They are selling it almost at their cost. [See 4 above]

Ways the industry may be able to save itself:

1 - Personally, I think the industry needs to try to enter more mainstream. Sounds like heresey eh? I think the entire industry needs to band together and do a universal advertising campaign. Like the 'Drink Milk' campaign done by dairy farmers. When was the last time you saw an ad for high end equipment on TV???? I think we need an ad on TV that challenges people to go to their local hi end audio retailer and listen to real music.

2 - If hi end audio companies were really geniuses (this may be totally outlandish), they would consider banding together with a new sales strategy. The strategy would be simple. Only lease their gear. Do not give consumers the option to buy the gear until maybe it has been leased for five or more years. *THIS MAY TURN OFF SOME CONSUMERS* Some people really value the concept of ownership. But if enough hi end companies only leased their product (amps and preamps especially), their would not be the pool of audio gear on the market today. It would also give folks more brand loyalty because companies could give the option of trading up. *THIS IDEA MAY NOT WORK AT ALL* But, I'd like to see someone try this business model.

3 - Manufacturers need to control their dealers better and make better products. There are a few companies who have very tight controls over their dealers. (I can think of REL and Magnapan off the top of my head). These two companies make superior products. It is difficult to find this gear used or even DEMOED. Magnapan only lets dealers mark up their gear 35% as opposed to 45% of many dealer markups.

Anyway,

These are my 2 cents worth.

Peace.

Keith