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Monthly Editorial by Marc Mickelson
June 1999

The New Face of High-End Audio

Two sailors, Joe and Moe, were cast away on a deserted island. Several years went by. One day Joe found a bottle that had washed ashore. It was one of those new king-size bottles of Coca-Cola. Joe turned pale.

"Hey, Moe!" he shouted. "We’ve shrunk!"

(from Relativity Simply Explained by Anthony Ravielli)

For almost the past year Marc Mickelson, our editor-in-chief, has been writing the monthly editorial. But this month I pleaded with Marc to allow me to write it. I have become fed up with certain attitudes about the future of high-end audio and the state of affairs in our industry. Namely, I keep hearing over and over that the high end is dying. Doom and gloom, shrinking sales and the obliteration of this hobby we love are what’s in store for us -- at least if you listen to the naysayers in our industry, some of them writers for other magazines.

But is high end really dying? Has there been a downturn at all? If there is a decrease in revenues, is it because people are losing interest or are there other reasons? Or perhaps, is there a giant shift in our industry that is resulting in decreased revenues for some, but increased revenues for others? Could high-end audio actually be growing?

Like Joe and Moe, some people take a simplistic view of the business environment and view the health of the entire industry by what they see in their own company -- a pretty short-sighted view if you ask me. For example, say an established speaker or electronics manufacturer reports a 25% loss in sales. With the myopic vision of some, he may think that the entire industry is taking this same sort of fall. But what if you find out another manufacturer of a similar size who makes very similar goods has a 25% increase in sales? Taken as a whole, there has not been a change. One company has simply scooped the sales of another -- perhaps because the first company has not remained competitive and has mistaken its own misfortune for something else.

What if a magazine goes out of business -- as we’ve seen happen not too long ago? Does this mean that there are not people interested in reading about audio? And what if a magazine sees a sharp decrease in advertising sales? Does this mean that other magazines are experiencing that same decrease? Hardly. Today, any downturn for the print-publishing portion of the industry shouldn’t be surprising. Look at the explosive growth of the Internet. Ask me if I think that high-end audio is shrinking and I’ll give you an answer -- hell no! SoundStage! is growing beyond our expectations, so it is not surprising that other businesses may not do as well as they once did. In the ‘80s and early ‘90s, print magazines enjoyed somewhat of a monopoly on dissemination of information. Today it is a different ballgame, one that magazines have to adapt to -- and some simply are not. Can you imagine how foolish we would look if our own revenues decreased and we blamed it on a lack of interest in the Internet? Things are, as Einstein proclaimed, relative.

I’m not saying that there has not been a decrease in sales that affected a large number of companies. Without a doubt, the past Asian financial crisis had a huge impact. However, that should not be misinterpreted as the death of the high end. Just because people don’t have the current means to purchase audio equipment does not mean they don’t want to. High-end audio, like other luxury goods in a recession, simply faced a setback.

There are many other things that have hurt this industry too. It certainly doesn’t help when overeager journalists scare prospective consumers from making current-day purchases. Look at what happened when the premature discussions of the new 24/96 audio format began over a year ago in some audio magazines. Consumers were lead to believe that they would be seeing a new audio format in a very short time that would render their CD collections obsolete. CD player and DAC sales plummeted, and this had nothing to do with the high end dying. Journalists simply took a haphazard approach to reporting their facts, and in the end confused everyone who read their articles. In fact, go to your local record store and ask a representative there if he’s heard of 24/96. You can bet he hasn’t and won’t for a long time. The fact is, today a CD player purchase is still a good one. Shifting the recording industry over to a new digital format is going to take many years.

And what about all those companies today that are experiencing phenomenal growth? Believe me, they are out there. The ones who are succeeding right now won’t be spilling their secrets or success stories -- they’d rather reap the profits. Furthermore, the nature of this business is one of private, not public, companies, meaning financial information will be scarce. I would guess that those who are succeeding today are those that are innovative in their business management, produce high-quality products that offer high value for consumers, and take advantage of new trends in business and new means of promotion. You can be sure they are investing heavily in the Internet as part of their strategy.

High-end audio is not dying, but certainly some companies are. The high end is simply going through a transformation that is weeding out some and growing others. There is as much enthusiasm as ever and market potential as vast as there ever was. If poor marketing is losing customers to other hobbies, then that is something that needs to be fixed. The people are out there; they just need to be reached, and to do so requires innovation and creativity. Those who do not adapt may go by the wayside, but those who survive will likely grow. In the end, these will become the new face of high-end audio that SoundStage! plans to be part of.

...Doug Schneider

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