Crowdfunding audio gear

[esldude]

Death Of A Sales Model | The High Fidelity Report

 

Saw this posted by the author on another forum. Considering the Pono project is a kickstarter crowdfunded campaign I thought this article looking into the sales model had some relevancy.

[mwheelerk]

I read it there also and thought Lee did a nice job.

[dbal]

I don't know that I agree, especially with high end audio, I depend on a discerning ear, not joe schmoe who may or may not know what they are talking about. I also like dealers, I like being able to demo a 10k pair of speakers and try other parts without buying off an internet wholesaler.

[mwheelerk]

I don't know that I agree, especially with high end audio, I depend on a discerning ear, not joe schmoe who may or may not know what they are talking about. I also like dealers, I like being able to demo a 10k pair of speakers and try other parts without buying off an internet wholesaler.

 

I don't think that is the point of the article. It's not about buying from some Joe Schmoe but a reputable manufacturer. It's not about buying from a wholesaler internet or otherwise.

[esldude]

Yes, this isn't about what should be happening, but about what is happening and a little bit about why. I agree Lee did pretty well with the article. I don't think he put more into it opinion-wise than simply what the facts warrant.

 

Whether one thinks this change is good or not is a different matter.

 

And it wasn't about wholesale direct. It was about how the business is changing to manufacturer direct, and direct customer review with less influence by professional reviews. Some of my friends have used some of these more recent companies. They aren't just direct selling. The good ones are doing things to as much as possible replace the information one previously got from dealers. They also are offering 30 day or longer money back satisfaction guarantees, and often have easy access to their designers or their assistants. So you aren't left out in the cold. Only in speakers does this present a large hurdle.

 

One could if they wish organize things get 3 or 4 competitive products in their hands at their house with their equipment in their room, and have a month long shootout. The winner stays and the others go back. I don't think that is the norm or even what makers wish to become the norm. But it is possible and it will make head to head comparisons very competitive. No review, recommendation or dealer can top having things in the exact system and room where it will get used. Learning which products are worth trying is the part currently not handled well. And things are evolving in that regard too.

[dbal]

It's not about buying from some Joe Schmoe but a reputable manufacturer.

 

Fair point, but what I also said applies to buying from a reputable manufacturer. I want to see, touch, feel, listen, demo, etc extremely expensive and subjective audio equipment before buying it. Maybe this isn't a big deal for a $50 DAC but when it comes to 10k DAC or 20k speakers, I'd rather not do an internet order. I'd personally rather have more dealers with more stock and more options. Even if the manufacturer allows you to return it, you won't get the benefit of a wide breath of choices.

[firedog]

I think the article described the situation well. Obviously the direct sales and crowdfunding isn't going to be for 20K items.

For under $1K items, it certainly makes sense. Schiit and "Geek" seem to both be very good items that sound above their price point. A slightly increased risk to the consumer to get a much better item than a given amount will usually get him/her.

 

I assume this model will become more and more common. The 30 day audition type setup takes almost all the risk away for the consumer.

[DigiPete]

Fair point, but what I also said applies to buying from a reputable manufacturer.

I want to see, touch, feel, listen, demo, etc extremely expensive and subjective audio equipment before buying it.

Maybe this isn't a big deal for a $50 DAC but when it comes to 10k DAC or 20k speakers, I'd rather not do an internet order.

I'd personally rather have more dealers with more stock and more options.

Even if the manufacturer allows you to return it, you won't get the benefit of a wide breath of choices.

 

Seems you are missing the point.

 

You are paying USD 6.000,- out of 10.000,- for the privilege of a brick & mortar.

To trial equipment that the shop often has to special order for you.

If you are lucky.

[Paul R]

Could be- but could it also be that this will cause a pricing readjustment in the industry? Instead of 10K, it may be $3K, instead of $20K, perhaps $6K? That type of thing? If so, it might certainly be for the good.

 

Getting someone like me to Magoo up $20K is indeed, quite some little chore!

 

-Paul

 

 

Fair point, but what I also said applies to buying from a reputable manufacturer. I want to see, touch, feel, listen, demo, etc extremely expensive and subjective audio equipment before buying it. Maybe this isn't a big deal for a $50 DAC but when it comes to 10k DAC or 20k speakers, I'd rather not do an internet order. I'd personally rather have more dealers with more stock and more options. Even if the manufacturer allows you to return it, you won't get the benefit of a wide breath of choices.

[astrotoy]

I think that separating the crowd funding model from the dealer vs manufacturer sales model is important. Crowd funding and manufacturer sales models are not a necessary pairing, although crowd funding may assure a product's success. Also, as Tesla has shown, a direct manufacturer sales model can be very successful if the product is compelling and the sales and service experience are excellent, even in an industry with as entrenched a sales model as the car industry.

 

Larry

[orgel]

I think that separating the crowd funding model from the dealer vs manufacturer sales model is important.

 

Good point. I thought the article was good but that it was a mistake to conflate crowd funding with manufacturer direct sales. I'm not saying I wouldn't participate in crowd funding (actually, I already have, for a non-audio project that didn't get off the ground), but I think that with crowd funding, the consumer is incurring an additional level of risk, especially with the Indiegogo-style variation, where -- as I understand it -- your credit card gets charged when you pledge.

 

For me, the manufacturer-direct model has already proven its worth. As esldude has pointed out, I don't think I'd buy speakers that way, but for most other components, the value proposition makes it worth considering seriously.

 

--David

[Audio_ELF]

I am unsure if this has been said... But Kickstarter and Indigogo work in different ways (as I understand it).

 

Kickstarter is a way of getting confirmed pre-orders which should help a company secure financing required in a startup. This is actually more like a standard business model.

 

On the other hand Indigogo is a way to directly raise funds by pre-selling the product. This is more radical and more open to abuse and result in court cases where the product ultimately can't be provided.

 

Eloise

[Audio_ELF]

[...] I hear what you're saying but let's not turn this discussion into a different topic. If you want to start a new thread about the issue you raised I full support you.

Can I suggest this subject would be better discussed on the http://www.computeraudiophile.com/f8-general-forum/crowdfunding-audio-gear-19719/ thread... Perhaps Chris could move the posts there or to their own (new) thread.

 

Eloise

[emailtim]

... as Tesla has shown, a direct manufacturer sales model can be very successful if the product is compelling and the sales and service experience are excellent, ...

 

FWIW, low interest government loans, huge subsidies paid by the taxpayers, tax credits and political favoritism doesn't hurt their sales model either.

 

Do $100K cars really need tax subsidies if they are "that great" ???

 

Tesla's Success Is the Result of Politics and Subsidies - US News

[dbal]

Seems you are missing the point.

 

You are paying USD 6.000,- out of 10.000,- for the privilege of a brick & mortar.

To trial equipment that the shop often has to special order for you.

If you are lucky.

 

I am paying a premium to support local dealers which give me the benefit of being able to browse and listen to a variety of high end equipment without having to buy it over the internet.

 

This is no difference to buying something at best buy or amazon. If its a fixed item, like a movie, I can see buying it over amazon, but if its something highly subjective, like a TV where I may want to see the picture or hear the sound, I'll happily shop at best buy.

[mwheelerk]

The problem with the dealer model is that this model has been evaporating over the last few years. I would estimate that more than 80% of brick and mortar audio speciality shops (if not higher) in this major metropolitan area have vanished. Ten years ago I had a broad choice of where to shop and products to consider. Now I would have to travel about 350 miles to expand my search beyond one or two dealers (not accounting for big box stores and even those are limited in choice). Something needs to change in the model.

 

I can't imagine what the challenge is for those that live in smaller locations where the choices were probably limited in the first place.

[mav52]

The problem with the dealer model is that this model has been evaporating over the last few years. I would estimate that more than 80% of brick and mortar audio speciality shops (if not higher) in this major metropolitan area have vanished. Ten years ago I had a broad choice of where to shop and products to consider. Now I would have to travel about 350 miles to expand my search beyond one or two dealers (not accounting for big box stores and even those are limited in choice). Something needs to change in the model.

 

I can't imagine what the challenge is for those that live in smaller locations where the choices were probably limited in the first place.

 

Well said. Back in the day, we had Stereo Shops stocking gear in the towns I lived in, now they are pretty much gone. Unless a person in the states, lives in Atlanta, New York , Chicago or LA and maybe Dallas few if any shops carry the gear we want to hear. Sure there might be a local guy somewhere that is still fighting the madness trying to eek a living out of real 2 channel audio gear, but they are few and far between... You walk into a B&M store and ask to see an external DAC, most don't have a clue, make some nutty remark wants wrong with the one in your blueray playyer or AVR. Typical. Thanks to Internet sales with those 30 day return policy a person can try new gear. The dealer model is all about gone except in those large cities, but still those dealers do not carry everything. Crowdfunding sounds like the new way for a small project to get funded by investors. Found this comparison https://nonprofitquarterly.org/management/21146-crowdfunding-101-a-comparative-look-at-kickstarter-indiegogo-and-razoo.html

[dbal]

The problem with the dealer model is that this model has been evaporating over the last few years. I would estimate that more than 80% of brick and mortar audio speciality shops (if not higher) in this major metropolitan area have vanished. Ten years ago I had a broad choice of where to shop and products to consider. Now I would have to travel about 350 miles to expand my search beyond one or two dealers (not accounting for big box stores and even those are limited in choice). Something needs to change in the model.

 

I can't imagine what the challenge is for those that live in smaller locations where the choices were probably limited in the first place.

 

It's a similar problem for me so I completely agree. From a standpoint of what I prefer: I'd rather have 80% more dealers than an Amazon of Hi-Fi. More dealers and volume would produce more competition and drive down prices also. The main issue right now is there is no competition for dealers even in most large cities.

[dbal]

Well said. Back in the day, we had Stereo Shops stocking gear in the towns I lived in, now they are pretty much gone. Unless a person in the states, lives in Atlanta, New York , Chicago or LA and maybe Dallas few if any shops carry the gear we want to hear. Sure there might be a local guy somewhere that is still fighting the madness trying to eek a living out of real 2 channel audio gear, but they are few and far between... You walk into a B&M store and ask to see an external DAC, most don't have a clue, make some nutty remark wants wrong with the one in your blueray playyer or AVR. Typical. Thanks to Internet sales with those 30 day return policy a person can try new gear. The dealer model is all about gone except in those large cities, but still those dealers do not carry everything. Crowdfunding sounds like the new way for a small project to get funded by investors. Found this comparison https://nonprofitquarterly.org/management/21146-crowdfunding-101-a-comparative-look-at-kickstarter-indiegogo-and-razoo.html

 

Don't get me wrong, I like the 30 day trial policy like PS-Audio but its not a replacement for demo'ing a wide variety of products at a B&M store. What it is great at is letting you A/B an option in your exact environment. There is a place for both and while it works well enough with DAC's, the same can't be said for many other audio components. Wilson isn't going to ship me a 30k pair of speakers for a 30 day demo. A dealer may loan me a pair for a week though.

[esldude]

Like others it really is irrelevant as there are no dealers anymore. I live in a top 50 metro area in the US of over a one million people. Nearest dealers are more than 150 miles away. So second hand local is about the only auditioning option without some travel.

 

I also never found competition in this area to make much difference. The high end dealers all made sure (or maybe the distributors did) that none of them carried the same brands. So with things like panel speakers I prefer, a dealer with some of the nicest box speakers in the world is no option if I prefer panels. Maybe if you were lucky you have a choice between Maggies and M-L's. Even those are not really stealing sales from each other in a competitive sense.

 

And maybe I was unlucky, but dealers were never a help or benefit. Every time I did business with them I had reason to regret it. More than once trying to listen to speakers, was denied that chance. Yes, denied, as in refusal or no effort to play them for me. Something I still can't get my head around. Have an expensive product there and someone interested why in the world would you not let someone listen? In one case, the dealer said he didn't think they were for me ( with no information to go on) and pulled speaker cables off them. Then began trying to get me interested in an alternate product I had no interest in. Now sure I would listen to his suggestion because hopefully he knows something. But he wouldn't let me hear the pair I originally had in mind. Crazy if you ask me, and likely why there are now no such places in the middle of a million people.

[Jud]

Like others it really is irrelevant as there are no dealers anymore. I live in a top 50 metro area in the US of over a one million people. Nearest dealers are more than 150 miles away. So second hand local is about the only auditioning option without some travel.

 

I also never found competition in this area to make much difference. The high end dealers all made sure (or maybe the distributors did) that none of them carried the same brands. So with things like panel speakers I prefer, a dealer with some of the nicest box speakers in the world is no option if I prefer panels. Maybe if you were lucky you have a choice between Maggies and M-L's. Even those are not really stealing sales from each other in a competitive sense.

 

And maybe I was unlucky, but dealers were never a help or benefit. Every time I did business with them I had reason to regret it. More than once trying to listen to speakers, was denied that chance. Yes, denied, as in refusal or no effort to play them for me. Something I still can't get my head around. Have an expensive product there and someone interested why in the world would you not let someone listen? In one case, the dealer said he didn't think they were for me ( with no information to go on) and pulled speaker cables off them. Then began trying to get me interested in an alternate product I had no interest in. Now sure I would listen to his suggestion because hopefully he knows something. But he wouldn't let me hear the pair I originally had in mind. Crazy if you ask me, and likely why there are now no such places in the middle of a million people.

 

When I first began looking to research and eventually purchase high end audio equipment, I found many dealers meeting your description. Very fortunately, I found a single one who didn't. Twenty-five years later, we're still friends. Much of my system is still made up of equipment I bought from him, and most of the rest is equipment I first learned to appreciate at his store or home.

[esldude]

When I first began looking to research and eventually purchase high end audio equipment, I found many dealers meeting your description. Very fortunately, I found a single one who didn't. Twenty-five years later, we're still friends. Much of my system is still made up of equipment I bought from him, and most of the rest is equipment I first learned to appreciate at his store or home.

 

So even your experience is a good dealer is rare item. I don't doubt they exist. I doubt they are the norm. The disappearance of dealers in general is proof that one way or another they didn't offer adequate value. I think that being the case has resulted in the diminishing of high end in general. One can look at it different ways, but at large in society, at least in the USA, the High End is dying or is practically dead. Looking at it another way, it has died for me and a million others in my area. So any workable alternative is superior.

[Paul R]

So even your experience is a good dealer is rare item. I don't doubt they exist. I doubt they are the norm. The disappearance of dealers in general is proof that one way or another they didn't offer adequate value. I think that being the case has resulted in the diminishing of high end in general. One can look at it different ways, but at large in society, at least in the USA, the High End is dying or is practically dead. Looking at it another way, it has died for me and a million others in my area. So any workable alternative is superior.

 

Alternatively, the dealers who have survived to today are probably the best ones who offered customers what they wanted and needed. Both in equipment and in service, consultations, and expertise. No?

[mav52]

Don't get me wrong, I like the 30 day trial policy like PS-Audio but its not a replacement for demo'ing a wide variety of products at a B&M store. What it is great at is letting you A/B an option in your exact environment. There is a place for both and while it works well enough with DAC's, the same can't be said for many other audio components. Wilson isn't going to ship me a 30k pair of speakers for a 30 day demo. A dealer may loan me a pair for a week though.

 

Well if a person had $30K for speakers, I really don't think they would be worrying about contributing to a crowdfunding project. Just saying, but I do get your point.

 

 

Paul

Alternatively, the dealers who have survived to today are probably the best ones who offered customers what they wanted and needed. Both in equipment and in service, consultations, and expertise. No?

that's the way I view it from those that I know that remain in business. Not to mention a few do authorized repairs.

[Audio_ELF]

Alternatively, the dealers who have survived to today are probably the best ones who offered customers what they wanted and needed. Both in equipment and in service, consultations, and expertise. No?

Not sure how it goes in USA; but one issue in UK is that a lot of dealers have been around for 20-30 years. The owners though are now retiring and finding no one wants to buy the business so it closes.

 

The secondary problem (with the high street generally) is one of greedy landlords. Shops who have had long leases (10-15 year) with rent controls are finding when the lease comes up for renewal the landlords are wanting huge increases. Ironically in one of my local cities this latter problem has also hit Starbucks :-)

 

Eloise