The Hi-Fi Industry and Hobby

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Dr Bunsen Honeydew
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The Hi-Fi Industry and Hobby

Unread post by Dr Bunsen Honeydew » Fri Dec 23, 2016 1:28 pm

I thought I would put a few words together to cover where we are and how we got here.

In reality Hi-Fi started with the production of microgroove records and stereo LPs using two different recording systems in the mid 50's by Capital in the USA and Decca in the UK. Music reproduction in the mainstream was record players and radiograms, but there were a small number of electronics enthusiast who had learned the tech aspects in the war who wanted to play. So a small home build DIY enthusiast market emerged using mainly gov surplus components sold out of scruffy shops in London Edgware Road and Lisle St. From these people a small industry emerged with magazines like Wireless World feeding in new projects, and they seeded new companies to produce product of higher musical standard than your radiogram of the day. These companies like Quad, Rogers, Leak etc have now become legendary. There was also a pro market feeding the BBC, the cinemas, the recording studios with product like Garrard and Tannoy who also began to supply the domestic market. Up market shops like Imhofs (who started the Tottenham Ct Rd Hi-Fi conurbation) appeared. Salesmen in suits and dem areas, with the benefit of the newly allowed hire purchase, or as generally called "the never never" on one side and the scruffy component shops on the other, who also started to sell finished goods - a market and a hobby was created.

The distribution chain in those days was very different to now. A manufacturer designed and made a product. He didn't try to sell it himself he appointed a wholesaler or more than one to do his retail distribution. The wholesaler appointed reps who took the product around to sell to the shops. So there was a three price structure 1 wholesale price 2 trade price 3 retail price. A manufacturer had control as he could fix or demand the price the retailer sold it to you for, it was called retail price maintenance. It created a stable market. The price structure was very stable with low profit margin relative to today. A wholesaler made 10 to 20%, a retailer made 20 to 30%.

The first shock to the system was the ending of retail price maintenance in 1964, and the appearance into the UK market of Japanese product at about the same time. Both these created shock waves and changes in the industry. The big winners to begin with were the wholesalers who were freed up to sell to anyone they wanted at any price they wanted and if a manufacturer refused to supply them they could be sued under the new law. The other main winners were the scruffy components shops who morphed into the big discount houses free now to set what ever prices they wanted. Small companies like Laskys, GW Smith, Comet expanded and to a large extent took over the retail side of the industry.

This process needed to be promoted and the new battle of prices needed to be advertised, so the specialist Hi-Fi magazine market expanded with the Haymarket type mags like What Hi-Fi, Hi-Fi Sound etc leading the process, doing everything they could on the cheap just to bring in the large full or double page listings of prices adverts. The *proper* magazines like Gramophone and Hi-Fi News had been employing design engineers and well known techies as editors and reviewers, So they were almost entirely judging product by specs and measurement, product often reviewed without even being listened to. This is now known as objective reviewing. These people though cost money and Haymarket wouldn't pay their rates so they employed young lads just out of college to do the reviews and edit the magazines. They had little to no technical background so the day of the subjective review arrived. Reviews became as we largely know them now, based on one persons opinion. These kids became what are now the industry gurus, and in some minds still worshiped.

At the same time the Japanese hi-fi industry invasion happened and threw our staid domestic manufacturers into a tiss, and they started to die as they couldn't compete. The *perceived* quality of these new Japanese products was great and prices were very good and the discount house jumped on them, which combined with the emergence of the *flavour of the month* product reviews in the new mags severely polluted the industry. This was not helped by the Japanese distributing via locally based UK distribution companies, instead of doing it themselves. These distributors had no interest but turnover and profit and led to it becoming a price led *hand over a cardboard box* type industry. This also meant that the better more expensive but lower turnover Japanese products were hardly ever imported here at all and are now becoming much sought after.

So now into this situation appears a very clever marketing man who could see what was going on and saw a way to take advantage of it - Ivor Tiefenbrun of Linn products (well originally Castle Engineering). The traditional high cost retailers were struggling in the face of the discount houses and needed high profit margin exclusive products that the discount houses could not buy. Linn provided this and a good story (marketing) to back it up. They needed amplifiers so until they could make their own they roped Naim in partnership into the process. The time was right, the marketing was right, the product was different sound so a line could be spun, and what is now known as the flat earth was created. The young lads reviewing at the magazines were very impressionable and open to being turned to a *way* and most were converted by visits to Glasgow and the silver voice and arguments of Ivor. Once he had the industry in his grasp it was very hard for other new manufacturers to find good and responsive retailers for their products and many fine companies and products were killed off, especially in the two recessions of the early 80's and early 90's.

Eventually, inevitably, a yin appeared to counter the yang. CD appeared to challenge the turntable, Linn tried to kill it in the UK but it was stronger than them so they had to bow to it and make their own. Some owners were getting fed up of the PA-ish in your face sound of the flat earth so there was a back lash against Naim which started a new retro market for valve amps. This was because the flat earth brainwash had stated that no transistor amp could ever be better than a Naim so valves provided an excuse to change. Also another very good marketing man I call the Wimbledon Womble (Absolute Sounds) appeared to almost single handedly create the so called High End market in the UK starting with big American muscle amps. But the Linn Naim axis control on the industry was very strong, very few new UK companies were able to emerge and find a market for their products. A side line appeared at the end of this period that looked as if it could take over but has become in time just a separate market, home cinema.

This takes us up to the end of the 90's. During the late 90's growth in the industry stopped and a slow decline set in which has accelerated since. Since then youth has turned its back on hi-fi and especially the hi-fi enthusiast who became almost as maligned as the train spotter. The new way is personal and of course on line based, so the rump of the hi-fi market is left to customers largely getting older and older, but because of property values mostly also richer and richer.

So what do we have now and what is wrong with it and why do we have to change it again. Obviously the Elephant in the room is the home computer, at last hi-fi enthusiast can find and talk to other hi-fi enthusiast, they don't have to rely on what was often corrupted information from retailers and magazines. And forget the so called experts THE best information comes from someone who owns one.

As explained in part 1 the industry is declining but the buying power has increased, so the so called High End market has expanded and the like of Linn and Naim have adopted it as have many other larger British manufacturers. Quality reasonably priced products, especially British made, have largely disappeared. The companies that made them have been bought out by Korean, Malaysian, Japanese, but mostly Chinese companies, that now either just use the name to sell poor replacements, or in some cases they really do try to supply a good product. The pretense being they are British, but they are not, but they do employ British designers sometimes.

Prices of the High End products is the real problem at the moment, in reality you are all being subject to a giant piss-take. There is absolutely no justification for the price increases of hi-fi products over the last 10 to 15 years and it is accelerating. The reason is the aforesaid decrease in customers but increase in customer wealth. Well known manufacturers coming to the end of their days with aging owners and retiring staff are just trying to build a massive pension pot for their old age. New manufacturers are also jumping on the band wagon spending all their costs on external bling. Just look at the likes of the Hamburg show, it is hilarious, the ridiculously overpriced concept products that they believe they can foist on you. Well in some cases one Russian Oligarch customer is enough profit for the year. What doesn't help is also the amount of middlemen who are taking a cut. The present industry is getting like jewelry for the margins involved. Distributors 30%, retailers 50%, (of the retail price), as they have to be compensated for less sales as well. Manufacturers only 20%.

Promotion, well the magazines are dying, there is not the numbers of readers or available advertising to keep them going or the number of them as was the case in the good old days. Some seem to have become like super car mags, just for people to look at the pictures and read about things they can never own. What Hi-Fi is still What Hi-Fi and to avoid libel charges that is enough said. Dave Rosam tried an on-line mag in the mid 90's (Cyberfi) much too early. Hi-Fi Critic on line magazine is trying to hold it together but even that is an expensive and difficult job.

So the future, what has to happen when the present OAP Hi-Fi market finally dies out and a small rump of enthusiast are left. Well the obvious first call will be all the Hi-Fi in circulation from the good times and available now second hand. The second hand market is now far bigger than the new market, and though prices are going up bargains can still be found. Some retailer try to use this market but again largely price themselves out of it. The king in this market is eBay, and though they can be a pain the service they give to us enthusiasts I think is mostly very good.

The next bonus is the DIY market, just like the 1950's this is getting prominent again. This is a good thing and should be encouraged, as from these people new product and new companies will emerge, but how do they sell and find customers. Well this is where what I call the underground market is emerging, and it is emerging from the hi-fi forums, Sadly some of them are owned by egotists and idiots and suffer from conflict, but even they are providing a service. New product is emerging that is offered for loan and trying on the forums and sales are coming and new small enthusiast companies emerging. AND what should be obvious is that by direct selling to the customer most of the overpricing problem is solved, no distributor, no retailer, no advertising, just good product at good prices that you can try on loan in your own system. It would be very nice if this business could be linked or tied together in one place for the benefit of the customer, yes shock horror, the benefit of the customer not the benefit of the industry. Obviously vested interests are fighting it like Hitler defending Berlin they will try to hang on as long as they can until the inevitable overtakes them. So there is much shilling and spamming on the forums (google the terms). So a bit of intelligence and nonce is required, but they can be great fun and a social outlet if the conflict is avoided. The other great thing about forums is the organisation of what most of them call Bake-Offs. Where enthusiast gather at a members house and compare what they own, people bring equipment to compare or just new music for everyone to listen to - great events to be encouraged, and again hated by the vested interests as they have no control over peoples choices. And the results are written up on the forums as a form of comparative review. Also members when they buy or try something new to them are encouraged to write their own review and opinion of it, good or bad. Again something the vested interests are scared stiff of.

So the future for us is - 1 second hand via the like of eBay. 2 direct selling via forums, eBay, amazon etc. 3 DIY enthusiast, everyone should learn how to use a soldering iron. 4 a social network of Bake-Offs and Bake-Off shows, like Wigwams Scalford and Art of Sounds NEBO and MiBO. 5 loan schemes to show off new product, or help people hear equipment they can't normally try without buying it.

The main independent non magazine or manufacturer based UK forums, in no particular order.

HiFi Wigwam
Pink Fish Media
The Art of Sound
Hi-Fi Subjectivist
The Audio Standard
and others.

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Re: The Hi-Fi Industry and Hobby

Unread post by Frasernash » Fri Dec 23, 2016 2:01 pm

Very interesting on the history of retailing I remember walking down Tottenham court road and looking at all the Hifi goodies in the 80s.
I still think the Japanese were way ahead in the 80s I particular Technics decks and JVC VCR etc. never rated British companies much apart from speakers.
Like the comment on defending Berlin and remember the British Hifi establishment trying to belittle CD Quality and failing as CD took over.

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Re: The Hi-Fi Industry and Hobby

Unread post by Geoff.R.G » Fri Dec 23, 2016 2:11 pm

A very good appreciation of the Hi-Fi market. I recall What Hi-Fi coming late to the party, 1970s I think but memory is fickle and it is quite possible that it appeared earlier under a different name.

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Re: The Hi-Fi Industry and Hobby

Unread post by SteveTheShadow » Fri Dec 23, 2016 3:27 pm

Interesting that, Doc.
The DIY enthusiast is going to make a decent contribution to the growth of artisan hi-fi.
The shedworking movement certainly has a future I believe if the products (amps phonos and DACs) made by Lurcher and the speakers made by Colin Topps are anything to go by.
Every time I look at a show report in the mainstream hi-fi press I either want to laugh out loud at the stupidity
of some of the exhibits, or throw up at sight of the bling.
A few months ago on AoS, I got into a right old row with a small electronics manufacturer over the reasons the hi-fi market is in terminal decline.
Basically the guy had a go at me for opining that "speaker in the middle of the room" syndrome is almost solely responsible for the virtual, complete lack of a decent system in the civilian domestic situation.
The outcome was that I should grow a pair and tell the wife where to go, that he thought I was a complete plonker whose ideas were the polar opposite of what is required for good sound, and the separate listening room was the only way to do things if I wanted any shred of credibility as a proper enthusiast.
That the small artisan manufacturer should at least pay some kind of attention to how his/her product was going to integrate into the domestic setting, was not a part of his thinking, in fact it was actively scorned. When it was pointed out that there is a substantial market there for the taking by artisans, if only hi-fi sound could be re-integrated into the living room, as it was during the 50s and 60s, he didn't want to know. Hell, even Marco agreed with me :lol:
But joking aside, the renaissance of artisan hi-fi and the reintegration of good sound into the domestic environment are IMO inextricably linked. How do I know this? wife's first words when I installed the NVA phono1 I bought in the summer, were "doesn't that look gorgeous; does all his stuff look like that? :guiness;
DIY NVA amplification ( roughly equivalent to NVA A60) BTE Designs passive preamp, BTE Designs Lenco L75 turntable, Rega R200 arm, Goldring E3 cartridge, NVA Phono 1
Musical Fidelity M1 DAC, AppleTV4 with Apple Music subscription, ripped CDs streamed via WD MyCloud Home Duo NAS, with PLEX media server.
Speakers - Sealed cabs with Fane 12-250-TC 12" full range drivers. Also, Winslow Burhoe/Roy Allison/Richard Dunn influenced semi-omnidirectional.

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Re: The Hi-Fi Industry and Hobby

Unread post by Dr Bunsen Honeydew » Fri Dec 23, 2016 6:30 pm

The industry / hobby is in transition and hopefully to a better place than you all had to put up with in the past. BUT it is up to you, still support the slurpers and they will survive to rip you off even more. If you all ignore them they die and we can move on.

The forums must come together in my opinion to help the new industry emerge from its embrionic state it is in, and both forums should cross reference and so should direct sellers. I try here by making rooms available to ANY direct seller even if in competition to nva, yet nva is subject to abuse and banning by other forums. Also some of the new direct sellers are taking the piss a bit in pricing as they see the ridiculous pricing in the retail market, this needs to be re-thought.

There are so many advantages to the new way, don't throw them away, I will work with anyone one who has the industry and the customers as their priority instead of their pockets or in forum owners case their ego's. Just because you own a forum doesn't make you some sort of god, to try and control and bully your congregation. If this is happening as at AoS and PFM then the members need to apply their power (a forum is *nothing* without its members) to turn it. If done individually you just get banned, there needs to be a consensus for change.

Remember the slurpers love us to be in conflict as it maintains their power for longer, and they can point at us as fringe and nutters, the truth in reality is far from that.

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Re: The Hi-Fi Industry and Hobby

Unread post by Firebug1 » Fri Dec 23, 2016 7:31 pm

First post is very intresting, nice to read from where hobby started in UK.
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Re: The Hi-Fi Industry and Hobby

Unread post by Dr Bunsen Honeydew » Fri Dec 23, 2016 10:26 pm

It was fun in the mid 60's I worked as a Saturday boy at G.W.Smith and Co (radio) ltd at 3 Lisle St run by George Smith and his dragon of a wife. In the cellar were old Lancaster bomber ground radars, round about 10 inch and green. It was a fairly simple process to convert them to 405 line TV, wireless world published the conversion, good if you like small round green TV image :lol: more fun if you dropped one on its cathode end and the vacuum drove the gun through the screen like a cannon shot, dangerous young stupidity.

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Re: The Hi-Fi Industry and Hobby

Unread post by Lindsayt » Sat Dec 24, 2016 9:12 am

I agree with everything the Doc's said.

The only thing I'd add is that the Loudness Wars have not helped the hi-fi hobby. When ALL (non re-release) mainstream recorded music suffers from excessive dynamic compression, that's not good for encouraging people to aspire to the highest levels of audio equipment to play it on.

To see how bad it's gotten, try finding a recording from 2016 that's dark green, an original release, features vocals and isn't jazz or classical from this list:

When the music industry starts selling mainstream audiophile recordings again, there MIGHT be a resurgence of interest in good hi-fi.

After all, hi-fi equipment is only a tool for getting the most enjoyment out of your music collection (as well as being furniture).

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Re: The Hi-Fi Industry and Hobby

Unread post by Classicrock » Sat Dec 24, 2016 10:43 am

I have to say that prominent members on hi-fi forums don't help by buying overpriced imports from the resident trade forum slurper and banging on about expensive mains cables and fuses. The most ridiculous was a member claiming a change of 13 amp socket transformed his system. I wonder if he had tried removing the old socket and checking the terminations as well as cleaning them?

Unfortunately meanwhile we have to contend with this nonsense which keeps the sellers of rip off priced kit going quite nicely. There are however far less of them but the remaining ones are mostly Linn Naim or exclusively purveying the most high priced (mostly US made) equipment. There is a huge gap between many of these dealers and Richer sounds, a whole main stream high quality market which is being ignored. Unfortunately Doc there don't appear to be many direct sell operations other than for cheap digital amps and passive pres. Many other direct sellers charge retail as they also supply product to dealers. I think LDA would do better to go direct and reduce prices rather than let their on-line seller (MCRU) pocket the profit. Another so called direct sell operation that is in essence the same model as a bricks and mortar dealer except there is probably a much bigger mark up on 'accessories' than any other hi-fi product.

I do think the move to direct sell and a workable network of places that could dem this product is a long way off unless a post Brexit recession causes a sudden collapse of the remaining dealers which would likely see only Richer Sounds and maybe Audio T surviving. A market selling a handful of pretty obscure boutique brands to the relatively small number of rich people interested in audio cannot be sustainable. Most property rich / cash poor people aren't likely to be gambling their house value by using it as collateral against a high end audio system. If there isn't a revival in value for money quality hi-fi the hobby will indeed die out. The only encouraging thing is the numbers attending shows such as Bristol which suggests there is an interest that well exceeds the numbers actually buying the overpriced and under performing products being exhibited.

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Re: The Hi-Fi Industry and Hobby

Unread post by _D_S_J_R_ » Sat Dec 24, 2016 12:05 pm

Darn sarf in Brighton (I think), over the last twenty years, Richer Sounds has often been very busy indeed, where the Audio T up the road has been empty. Sevenoaks and Audio T were going to merge a few years ago, but I don't think the latter were doing well enough and frankly, I'm amazed they still keep going, what with the 'attitude' in a few of their shops, a real left over from the dark days of the 80's. I suspect it's the expensive Linn/Naim lifestyle-streaming gear that keeps them going.
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