The fate of Hi-End Audio?

[James Tanner - Bryston]

https://www.soundstagehifi.com/index...high-end-audio

[nicoff]

There is comfort in buying products from established companies that have been around for a while and have earned a good reputation. They stand behind their products; have been through bad economic times before and survived; and the customer has confidence that it will not be left strandef. Bryston is definitely one of those companies.
I agree with the author that many companies will likely not survive the downturn.

[PHC1]

High End Audio is an extremely niche market. 65% of the US population did not have $1k in savings even in good times, let alone now. Now it will be more of a question how long will it be before one gets evicted for not paying rent or getting the house taken away by the bank.

So as far as the 99% of the population goes, they would not even know if high end audio disappeared all together nor miss it. Music will still be around and enjoyed in conventional ways as it always has.

So that leaves the small segment of the audiophiles.

Doesn’t take a rocket scientist to understand many who are in the position to engage in contemplating their next upgrade of speakers, amps, preamps often exceeding the cost of an “entry level” automobile or even a “luxury” automobile in some cases, are in a different category. What some pay for cables alone is enough to feed a small village for some time.

In this higher level of disposable income individuals, much will depend on how much of their 401k and life savings will evaporate due to market exposure. No doubt many will go on as if nothing happened. Real estate drop will also wipe out any desires to spend excessively on audio and other luxury related items as usual.

The high end audio has been dying a slow death for decades and for many reasons but after the pandemic, some will go under, some will survive but it will not die all together.

I’d be more concerned how to better cater to the younger population who are not in the position to afford the true high end audio yet but are clearly into headphones and music nonetheless. The youngsters may well grow into the next generation of audiophiles but their priorities and expectations of such concepts will clearly be different compared to the baby boomers and Gen X’s.

[kaarmstrong]

When I attend hi-fi shows with lots of people and young people as well it does not look like it is dying. There are new companys showing up frequently which target smaller incomes like Elac and Schiit. Look at all the company's that are manufacturing $10k speakers that are fantastic. I know of no better time to get into Hi-fi with all the options which are available be it equipment, steaming, vinyl resurgent. Dying? Nope. Not even close.

[PHC1]

Originally Posted by kaarmstrong

When I attend hi-fi shows with lots of people and young people as well it does not look like it is dying. There are new companys showing up frequently which target smaller incomes like Elac and Schiit. Look at all the company's that are manufacturing $10k speakers that are fantastic. I know of no better time to get into Hi-fi with all the options which are available be it equipment, steaming, vinyl resurgent. Dying? Nope. Not even close.

The insane profit margins built into audio is what keeps it from dying. Any other industry would have succumbed a long time ago. Certain components are sold at 2x the price of their home market on top of the already 70-80% of factory profit margin built in as compared to raw component cost. Dealers were enjoying 30-40% markup in the golden days of audio.

[cleeds]

Originally Posted by PHC1

The insane profit margins built into audio is what keeps it from dying. Any other industry would have succumbed a long time ago ... D

I do not think the margin on most high end audio equipment is nearly as large as it might look at a quick glance. There are certainly some outliers, especially when import/export "costs" enter into it, no matter how exaggerated that might be. And some things - such as cables and accessories - do have seemingly high margins. But overall, I don't think it's fair to call the margin "insane."

In any event, the cost margins are not "built in." Ultimately, the market determines the margin, no?

[PHC1]

Originally Posted by cleeds

I do not think the margin on most high end audio equipment is nearly as large as it might look at a quick glance. There are certainly some outliers, especially when import/export "costs" enter into it, no matter how exaggerated that might be. And some things - such as cables and accessories - do have seemingly high margins. But overall, I don't think it's fair to call the margin "insane."

In any event, the cost margins are not "built in." Ultimately, the market determines the margin, no?

Umm ok. The audiophile will always find a way to justify any cost when it comes to gear. That’s the beauty of it all. Some can make a great sounding DAC for $1200, others think $60k is “reasonable” price as well. Just don’t do too many double blind tests and don’t ask for raw price breakdown. You’ll be ridiculed.

[kaarmstrong]

Just to add the average retail mark up for most industries is 50%. Certainly not insane for an audio dealer to have a mark up of 30%- 40%.

Originally Posted by cleeds

I do not think the margin on most high end audio equipment is nearly as large as it might look at a quick glance. There are certainly some outliers, especially when import/export "costs" enter into it, no matter how exaggerated that might be. And some things - such as cables and accessories - do have seemingly high margins. But overall, I don't think it's fair to call the margin "insane."

In any event, the cost margins are not "built in." Ultimately, the market determines the margin, no?

[metaphacts]

Originally Posted by James Tanner - Bryston

https://www.soundstagehifi.com/index...high-end-audio

I love Ken's writing but he could have (and probably had) written something similar to what I quoted below in 2008 and in previous recessions that affected high end.

Industry credibility is a big deal. Always has been. Ken is correct even though size and longevity are not in and of themselves, reasons for a manufacturer's success.

"..What I would like to see happen is something which should have taken place decades ago. I would like to see the fly-by-night manufacturers go out of business. For good. Yes, I did write that: I would like to see 50 to 75 percent of all the so-called high-end audio brands just go away, close up shop, vanish. And you know what? We would still have too many choices.

Ask yourselves this: in what galaxy do we need 200+ speaker companies, 300+ power amps, and 200+ turntables? In what other industry are Two Schmucks in a Garage with a Soldering Iron considered a “high end manufacturer”?..

..Hi-fi manufacturers started out that way, too, but we don’t need any new ones. Too often, we apply this justification: how do you know those Two Schmucks in a Garage with a Soldering Iron won’t become the next David Hafler / Bill Johnson / Peter Walker? But that is to miss the point: we don’t need another David Hafler / Bill Johnson / Peter Walker!

Yet still we encourage the arrival of $100,000 turntables and $50,000 amplifiers and $10,000-a-yard cables from guys using their mothers’ credit cards to bankroll them. Sorry, but it’s no longer good enough. I don’t want to review something from a manufacturer with a turnover equal to selling one unit a year. I don’t want people buying something on the strength of my review, only for that company to go bust and leave him or her with a dead power amp, good strictly for ballast or as a doorstop."

ymmv

[PHC1]

The idea of a boutique show room with the 50% profit margin is pretty much done. Those manufacturers that have adopted direct online sales method with a certain period of try at home minus restocking fee with passing the savings to the consumer may have a chance longer term. There will always be black swan events in the economic cycles and this black swan event will put many more brick and mortar retail stores out of business. Adapt or become extinct. We will see this model more and more with everything across the board in the decades to come. Such is evolution and online retail revolution.