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Some thoughts about value in high-end audio

Richard Hardesty (former co-owner of high-end retail store Havens & Hardesty, and former equipment review editor for Widescreen Review magazine) recently published Issue #8 of his online audio journal, The Audio Perfectionist, which contained a section on the importance of value in high-end audio. Hardesty commented that he originally wrote the piece for publication in one of the high-end audio mags, but the mag refused to print the article.

I think Hardesty’s comments are worth sharing in somewhat summarized form. I am not going to quote the entire piece, since it is rather long, and if you are interested in reading the full piece I urge you to subscribe to Hardesty’s journal for $35 a year. The main points of the article appear below. I encourage Audiogon members to share their thoughts and/or criticisms.

“Can an $80,000 pair of loudspeakers or a $20,000 pair of speaker cables represent good value? Do hyper-expensive products really perform better? While astronomical price tags have become commonplace in high-end audio, few reviewers have questioned whether these ever-escalating prices can be justified on the basis of actual manufacturing costs or if the highest-priced products offer any real performance benefits when compared to well-engineered components which cost far less.

Instead, it has been generally assumed that those components, which cost more, are built to higher quality standards and sounds better than those components, which cost less. These assumptions are not necessarily true, and they have taken a toll on the high-end audio industry. Infact, retail prices for high-end audio components are often completely unrelated to manufacturing costs and may be used solely as market positioning tools. In the instances where hyper-expensive products actually do provide some audible advantage, the gain is likely to be small and may be achieved at the expense of some other aspect of performance.

When an industry is filled with a variety of products which are artificially priced to position them in the marketplace, that entire industry becomes suspect. Customers get less for their investment in a market where manufacturers are vying for prestige rather than competing to provide value for money.

As is true in most industries, high-end audio manufacturers used to vie for market share by trying to offer more for the money than their competitors. Originally, “more” meant audibly superior performance, but eventually “more” evolved to include better cosmetics or industrial design and/or enhanced prestige. Some manufacturers discovered that, while it was difficult to produce products, which actually sounded better, it was easy to generate lots of attention from magazine reviewers by simply claiming to offer higher performance and attaching a high price tag to new products. Many inexperienced listeners fell into the trap of assuming that a high price was a guarantee of high construction quality and high performance, just as they (often falsely) assume that an expensive car is made better and performs better than a less expensive model.

Because it is entertaining to read about the most esoteric products available, the high-end audio press has emphasized coverage of extremely expensive components and devoted less attention to the high-value, high-end products that most people are actually interested in purchasing. Super expensive audio components have often been subjected to far less scrutiny by the high-end press than these products deserve. Readers have been led to believe – falsely, in my opinion – that affordable audio components can’t really perform at the highest levels and that true state-of-the-art performance is reserved exclusively for the wealthy.

As specialty publications have focused more and more on products that most people simply can’t afford, the high-end audio industry has suffered. Many music lovers have been turned away from our hobby because they felt excluded from a club where components they own or can hope to obtain are subtly denigrated in print, and components with ridiculous price tags are accepted with little skepticism. Many readers of the high-end audio publications have become dissatisfied with components which offer outstanding performance simply because these components sell for only a fraction of the cost of those esoteric products lauded by the magazine equipment reviewers.

While designers will always experiment with components on the fringe of practicality in order to advance the state of the audio art, you don’t necessarily have to participate in their experiments to achieve true, high-end audio performance...I believe it is time to re-examine many of the products at the upper limits of the price spectrum to determine whether they are fairly priced...and whether they present a good value to the consumer in terms of actual performance.

There is an industry benchmark for establishing the fair market value of an audio component – the five-times ratio of parts cost to selling price...A five-times ratio of parts to selling price provides a lean but acceptable profit margin to the manufacturer and the retailer...

An audio component that performs at the highest level is not likely to be cheap. Less consumer demand means lower production numbers and higher costs. Products which are made in very small quantities will have to sell for much more so that the makers, and the dealers, can recoup their costs from a smaller group of buyers...Many high-end audio components are over-priced when judged solely by the cost of manufacturing. When the selling price to parts cost ratio gets to be 10:1 or more, you are surely buying something other than high quality merchandise. That “something” may have value to you...

(At this point, the article goes into an interesting comparison of several sub-woofers made by Paradigm, B&W, Aerial, and Wilson Audio. Hardesty notes that each sub-woofer in his comparison uses drivers ranging from 12” (Aerial and Wilson) to 15” (the Paradigm and B&W), and have built-in amps with nearly identical power. Cabinet construction is also very similar in each case. Prices, however, range from $1500 for the Paradigm to a whopping $10,000 for the Wilson unit.)

I believe that runaway pricing has damaged our industry. Many products are vastly over-priced based on manufacturing costs and few of the over-priced products offer better sound than what can be had for less. Often far less. In the best cases, where a hyper-expensive product actually does offer some audible performance benefit, that benefit is likely to be a small incremental improvement over products that are more reasonably priced.

Many reviewers subtly denigrate the performance of affordable high-end audio components when reviewing hyper-priced components. Reviews often suggest to the reader that extremely expensive components offer dramatically better performance than that available from components at the upper midrange of the price scale. Based on my experience, and I’ve had a lot of it, that is seldom the case...

Value is not a forgotten artifact of the past. There are many audio products available today that are fairly priced based on manufacturing cost, and some of these products provide performance that was unattainable at any price just a few years ago. The very best performance is often provided by components that are affordable by common folk like you and me. If you listen and compare before you ask for prices you may find that you can afford a lot more performance than you expected.”
sdcampbell
paulwp
585 posts
 
Actually, Lucy, I did a marketing study of the high end and general audio industry for a manufacturer's rep firm, as part of an MBA program, 25 years ago. A little out of date now. I made some specific recommendations that were used by some well known manufacturers with some success. But I must confess, I did not anticipate the phenomenon of increasing demand and volume by raising prices to irrationally stratospheric levels.

Consumers buy what they buy because of the good feelings they want to have about themselves. Some, because it makes them feel good that they can afford to spend $3,000 on a cable. Some, because it makes them feel good that they are smart enough to find a $300 integated amp that's as good sonically as a $3,000 amp. Objective performance is irrelevant.
detlof
1,899 posts
 
Paul, objective performance is indeed irrelevant. You've brought it down to the basic principle underlying our behaviour, often even here on A. This is so, because it is so difficult to objectivise performance. Measurements fall short, HP's idea of the "absolute sound" falls short. We cannot find benchmarks of performance, which not even all, but at least most of us would agree upon. We fall into different camps, which feud with each other about what is "better ", "truer" " more factual or reasonable", whatever that my be. These kind of feuds, which of course also happen in other fields, are generally a safe indicator for underlying irrationalities. So be it. We are on a playground and so lets enjoy ourself .
tfta
44 posts
 
Boy, oh boy, have you guys started up a tall tree with this one. This is, over all, a pretty difficult issue to debate. Can you realistically expect any industry like ours to exist on the basis of cost plus alone? And I would put forth that the entire argument is moot and based on jealousy or envy anyway. If you know that you can find superior equipment for less, why would you care that more expensive, lower performing items exist? Because you didn't get the trophy value, that's why. As I see it, this whole argument is about the trophy value. I suspect I was reading over and over in each of the posts in this thread that "the stuff I bought sounds better than stuff that's twice the price, but my stuff doesn't get the respect the higher price stuff gets." You shouldn't care, but you do. Matter of fact, most of us do. Ever watch two audiophiles get acquainted with one another. "Yea, yea, so...whatcha'got?" "Well, I have a Levinson front end,..." "Yea, what else...?" I have a Krell amp..." Hmmm,what else...?" "I've got a CAT pre-amp..." "Wow! Yea..." "...and a pair of B&W Nautilus speakers." "Well, pretty nice system you got there." It's like two guys taking a ruler to their trousers. That's a BIG part of the reality of our beloved hobby. Who's got the confidence and self esteem to go to the Stereophile show at the end of the month and say, "Well, I've got an XYZ CD player that I modified myself. Sounds better than the $20K Linn. And a pre-amp I designed and built myself, sounds better than a Jadis... and a pair of ABC monoblocks, better than a pair of Krells... and a pair of Acoustic Mountains, best speaker I ever heard." You see my point. Number one, most of you walk away thinking, "What a loser." Number two, he compared everything he had to trophy stuff you recognized! Every industry like ours; cars, wine, scotch, cigars, stamps, coins, art, you name it, has to have a pecking order, or it doesn't exist. What I think you're really complaining about is not the exorbitant cost of some equipment or some level of performance, but the exorbitant cost of the mystique to be seen as a high level player in the hobby. I've owned some stuff that many people don't recognize and I'll acknowledge that it doesn't feel as good when people say, "What's that?!" instead of, "Oh, you have one of those!!!" To be quite honest, I think our hobby is one of the most reasonable hi-end industries in the world. We demand, and get, a very high level of performance for our dollar. When you consider that paintings are worth millions, watches sell for hundreds of thousands, bottles of wine for tens of thousands, we're doing pretty well in the value category. Let me ask you a question... does one painting from a modern artist sell for $30,000 and another sell for $5000 because the first guy used better, more expensive paint or canvas?! Of course not. Does a Bentley get you there any better or safer than a Lexus? Maybe I should make that one a little tighter. What does a $350,000 Bentley do for you that a $100,000 Mercedes won't? I hope you can see my point. People exist who can and need to spend more to set themselves apart from those of us who cannot. Manufacturers then come around to oblige them. Nobody would make a $15,000 speaker cable if no one would buy it. Since somebody will buy it, people rush out to make it. You can't blame them, nor should you be pissed that you think it isn't worth it. It's worth it to the guy who bought it and that's really all that matters. The one real shame of all of this is that good ideas can't get off the ground because no one will buy something they've never heard of. We are a group that overwhelmingly will not trust ourselves! Many of my customers won't make purchases based on their own auditions. I can sell a name brand without opening the box. A great product that no one has heard of you can audition till the electricity gets cut off and nobody wants it. This is not the fault of the manufacturers, it is a combination of ourselves first and the media in the industry that we beg to abuse us. Let any reviewer in Stereophile say a product is killer and we go out in droves to buy it. I will say they do some irresponsible things in this vein, but who's fault is it really? They didn't take your credit card out of your pocket and make you buy it. WE give them that power by making these purchasing decisions based on their word. I can't tell you how many times I've auditioned a product that clearly outperformed a newly reviewed item only to have the customer take the item in the review. You simply can't blame any manufacturer or any 'lack of value theory' for that. It's clearly our own stupidity. Finally, I'd like to say that listening to music is a very singular and personal experience, and we're all looking for that 'clearer view'. Trust your own ears and you'll be further down the path before you know it.

Thanks for listening.

Sincerely,
Mario
clueless
763 posts
 

Here is Lynn Olson's description of the 1980s. Has a familiar ring.

"The Gatekeepers (www.aloha-audio.com)
1980-1990

From the perspective of an outsider, the Eighties were not the best decade for audio. As CD's wiped out LP's, many high-end consumers gradually forgot what good sound was like, and looked for guidance from the Big Two audio magazines. As these publications grew in circulation and ad revenue, they tightened their grip on the industry, becoming a gatekeeper that told everyone who was "in" and who was "out." In a few years, things reached the point where high-end audio was no longer about sound, but perceived status, with high-profile reviewers passing out awards to the "inner circle" of manufacturers. Dealers had little choice but to go along and get along; customers came in to the store clutching a dog-eared copy of the magazine, and by golly, they wanted that "Component of the Year" right now. At a discount. Especially if the review said it was much better than last month's favorite.

....
One reason American magazines of the Eighties never compared Western Electric and Golden Age tube equipment to modern high-end was brutally simple: nobody ever paid advertising money for something that was 40 years old ... so it was off the radar screen entirely. Didn't exist. Hey, it's old, how could it be any good? Since Americans were taught by the magazines that old stuff was junk anyway, guess where it ended up? Tokyo.

Big-name equipment reviewers came up with their own bizarre vocabulary for aspects of sound ... words having nothing to do with sound or music, "bleached," "chocolate," "white," and others became part of audiophile jargon. This trained the audiophile to zero in on abstract sound elements, instead of the simple pleasure of listening to music. The magazines eventually came out with their own CD's complete with listening instructions for each track ... truly "Hi-Fi for Dummies," marking the degeneration of High Fidelity into a lifestyle statement.

The reader might think this is a pretty harsh assessment of an entire decade, but seriously, what has endured? Are there any classics from this time? Would you want a 1986 "state of the art" cable? A "statement" 1988 CD player? A 200-lb transistor amplifier chock-full of silicon goodness? I didn't think so. Nothing goes stale faster than yesterday's hype. Nothing exemplifies that better than the magazines themselves; it's a thrill to read Fifties enthusiast magazines, J. Gordon Holt's Stereophile of the early Seventies, or practically any issue of Audio Amateur. But seriously, who wants to read a 1985 issue of Stereophile or Absolute Sound? Anyone?"
ozfly
887 posts
 
Paul, Detlof -- well said. Objective performance measures don't exist and we consumers are highly subjective and passionate. Add to that the fragmented industry, easy entry to production, generally cozy co-existence of producer and reviewer (in part leading to the price/quality quandry discussed), virtually unlimited supply and on and on. Ho Boy! Is there another business like this? No wonder this is so much fun!
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