Re: N.A.M.M show, GEAR prices !!!

[Kim Flint <kflint@chromatic.com>]

At 11:21 AM 12/12/97 -0500, Andre Cholmodeley wrote:

having had the the mind jarring experience of designing products for the
music industry and then switching to designing products for the PC 
industry,
I guess I can answer this one.....

>here's my .02cents....regar0ding the issue of gear prices...
>
>How come in the last, say 20 years (or 30, etc) computer chips, electronic
>components, micro-wiring and soldering technology and technique, plastic,
>have all been greatly improved in quality and been slashed in price.
>
>Every consumer iterm that involves these components has become 
>drastically,
>amazingly cheaper, yet vasly higher in quality, than 20 or 30 years back -
>clock radios, cassette decks, walkmans, VCRs, computers like the ones 
>we're
>all on right now, etc.

The key difference between the products you've listed and music industry
products is volume. As an example, Compaq computer sells well over 1 
million
PCs a month. In 8 hours they will sell more PCs than than the total 
combined
looper sales of Lexicon and Oberheim ever. Before the end of the week they
will have eclipsed the yearly sales of the entire effects processor segment
of the music industry. By the end of the month their sales would have
exceeded the yearly sales of the entire music industry.

There is a very dramatic difference in pricing at every single production
step when you are dealing with million piece pricing, as the PC and 
consumer
electronics industry does, and 100-1000 piece pricing like you would in the
music industry. Your manufacturing costs alone can easily change by a 
factor
of 5 or more. And for a lot of the manufacturing techniques you've listed,
the vendors won't even talk to you unless you're doing very large volumes.
They have huge capital investments in the manufacturing equipment and are
not interested in dealing with small players. When you do use those
technologies at low volumes, they are not at all cheap because the up-front
charge will be quite high. 

With large volumes, you have access to manufacturing capacity anywhere in
the world. Products I design now are being built and sold by a number of
large south-east Asian computer and peripheral companies. They get 
amazingly
low manufacturing costs, presumably by using manufacturing vendors in the
asian backwaters, using prison labor or slaves or whatever they do. Vendors
like that don't work with you unless you can guarantee huge volumes, which
the music industry can't come close to. 

There is also a huge difference in quality. Music Industry manufacturers
will generally try to use good quality components, and circuit designs that
emphasize quality over cost. The PC and consumer electronics industries are
the other way around. They don't care if the sound quality sucks. They use
the cheapest jacks, the cheapest capacitors, the cheapest opamps, cheapes
ADC/DAC's, cheapest everything. Cost is *ALL* that matters. This is usually
appalling to the audio engineer in me, but the reality is that they get 
away
with selling poor quality garbage to people because at the right price
people can be convinced to buy it. Those of us who do care just try to do
the best designs we can within those constraints, and lobby Microsoft to
make the audio requirements for windows logoing more strict. Regardless, 
the
directive in high volume consumer products is always to achieve the minimum
quality you can get away with at the lowest cost. That's usually not the
point with music gear!

And then there's the overhead of running a manufacturing company. If you 
are
only going to sell a few thousand units a year, you need to make quite a 
bit
of money on each one just to pay phone bills, rent, salaries, etc. You 
can't
exist on 5% margins like companies selling 20 million units a year. So the
price is going to be higher.

Basically, it's not appropriate to compare products oriented towards a 
small
niche market with products mass marketed to general consumers. Music
industry products are basically professional/industrial equipment, more
closely related to professional video or camera gear, or medical
instruments, or factory control systems or whatever. The relationship to
things like walkmans and clock radios pretty much ends after "they both 
make
sound."


>Yet musical gear, effects processors, many synths, tuners, etc all cost AS
>MUCH, sometimes MORE than they did years ago. Of course - many exceptions
>to the rule.... but in general, c'mon!!!! why do the people that support ,
>yes, a smaller industry, hav to keep paying while the production costs go
>down for all these manufacturers??? is it just supply & demand ?? why does
>a BOSS TU12 tuner cost like $60-80 , just the same that it did 10 years
>ago??? Or most rackmount effects???again, there are lots of bargains out
>there, but, as anyone who has looked thru a blue book can see, musicians,
>who can sometimes least afford it, shoulder an odd set of pricing
>structures/strictures.

That's not really true, actually. Pricing in the music industry works the
same as pricing in every other industry. You have well defined price points
where products will be introduced. Those prices remain the same from year 
to
year and will not change. What changes is the feature set and quality
available at a given price. In the case of rack mount effects, you can
easily chart huge changes in any given price point over the past 10-15
years. Try $450. 10 years ago you might have been able to get a unit that
just did delay, or just reverb, at fairly low quality, limited features, 
and
very poor digital audio if it had it. 5 years ago you would have gotten
something like a quadraverb, with a DSP processor, multiple effects with
so-so quality, and better digital audio than before. The same price today
gets you a much more powerful DSP processor, many more effects with much
better routing capability and better parameter control, and much better
quality digital audio. Shit, compare a 1987-era sampler from emu or akai
with one produced now. the differences are staggering! 

As far as your $80 tuner, there are two possibilities. One is that it
probably does cost the same to make it as it did 10 years ago. Same old
parts, same old price. It's quite likely that their 10 year old design is
still cheaper than anything possible with any newer technology for the same
level of performance. And secondly, as long as there are people buying it
for $80 then that is what it is worth, regardless of the cost to make it.
When people stop buying it for that price, or someone makes one just as 
good
for less that takes the market share, Boss will find a way to lower their
price. Until then you pay $80. It looks like we'll be stuck with capitalism
for the forseeable future, so that's how it works....

And having worked in the industry, I have to laugh at the notion of
musicians being poor and starving. Your typical buyer of music gear is
either a professional musician, who will be doing just fine if he/she is 
any
good, a hobbyist who has another job paying for his/her hobby, or a kid 
with
well-off parents. The fact of the matter is that all that expensive gear
does sell, and it usually sells very well. Nothing made that more clear to
me than working at Gibson. People are always moaning about Gibson guitars
being overpriced and not worth it, yet somehow Gibson manages to sell a 
hell
of a lot of guitars! They can price custom shop guitar models at $25,000 
and
sell the entire run before they even start making them! So keep in mind 
that
while a piece of gear might be out of your price range, it's not out of
everbody's. Manufacturers are quite aware of that and target products
towards buyers with differing quanites of disposable income. Starving
musicians usually don't buy gear at any price, so nobody bothers making 
much
for them.

hmmm, maybe I should try doing some work today.....:-)

kim



________________________________________________________
Kim Flint                      408-752-9284
Mpact System Engineering       kflint@chromatic.com
Chromatic Research             http://www.chromatic.com