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Monthly Editorial by Marc Mickelson
March 2004

Gateway Products

Theories abound on how to expand the audience for high-end audio and thereby secure its fiscal health. Some are reasonable (encouraging friends and coworkers to listen to your audio system, exposing them to the beauty of hi-fi reproduction) and some are implausible (bringing your kids to CES). Most of the theories focus on audiophiles doing something to get others involved. While I understand this, I also wonder why audio companies don't try to shoulder some of the burden. They not only have short-term economic motivation to do so, they have a long-term stake as well, with their future affected by a static -- or shrinking -- customer base.

Some companies try. In his review of the Verity Audio Tamino X3 speakers, Doug Schneider rightly points out that the littlest Verity is a "gateway product" to the world of Verity speakers. But the Tamino X3 costs $5995 per pair -- a substantial entrance fee.

Then there's Magnepan, whose MMG speakers attempt to lure buyers with the high-quality sound and sheer coolness of planar-magnetic drivers as well as factory-direct pricing and a 60-day money-back guarantee. Magnepan has been offering the basic MMG for years, and late last year the company added the MMG W and MMG C to the lineup. Now two-channel, multichannel and home-theater enthusiasts can purchase an entire MMG speaker system for not much money. A pair of standard MMGs costs $550, while four MMG Ws and an MMG C are less than $1000. These are all physically smaller versions of the Magnepan speakers available from dealers worldwide, not close-enough knockoffs meant to turn a fast buck. "We're not getting rich from selling $299 speakers," Wendell Diller of Magnepan told me.

So why then does Magnepan offer the various MMGs? Even though these speakers are sold factory-direct, Magnepan created and has expanded the MMG line for one reason: to support its dealer network. Huh? How can factory-direct sales help dealers?

Magnepan has a 35-year history in high-end audio, and one of the things the company has learned is that its speakers sell themselves. When people hear Magnepans, they buy them, and when they buy them, they often upgrade to other Magnepans. So the various MMG models are priced low (I suspect that Magnepan's margin on the MMGs is lower than the margins for their other models) to entice people, especially novices, into buying them. From there, history has proven that owners upgrade in the line, which means a trip -- or many trips -- to a Magnepan dealer.

"Our dealers have lost foot traffic to the big-box stores and we do not want to go the route of regional chains or Tweeter-type stores," admits Wendell. "So we are going out and finding new customers for our dealers with the MMG, MMG W and MMG C." It works. Wendell relayed stories of people who started with MMGs and upgraded in some cases all the way to Magnepan's flagship, the MG20.1/R. Customer satisfaction for Magnepan speakers runs very high -- surveys have shown that Magnepan owners rarely switch to other brands. Once a Magnepan owner, always a Magnepan owner, even in the fickle world of high-end audio.

But self-interest, no matter how enlightened, will get a high-end-audio company only so far these days. In order for Magnepan to thrive, the high-end industry has to be healthy. Magnepan is certainly doing its part. A flat-panel speaker made in Minnesota may seem like an unlikely ambassador for high-end audio, but Magnepan has sold nearly a quarter of a million pairs of speakers since its inception, and I'm sure thousands of those are MMGs. Who knows how many audiophiles have been created from a brush with a pair of Maggies?

Wendell posited the idea of other manufacturers offering low-priced MMG-like products, perhaps in kit form. These could be sold direct as an introduction to a company's product line and act as the catalyst for a lifetime of musical enjoyment -- and the inevitable upgrades.

Makes more sense than dragging your kids to CES.

...Marc Mickelson

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