A friend sent me a link to a fascinating story that was in the Washington Post last week entitled: The Death of the Electric Guitar. The gist of it is that the market for electric guitars has been tanking for quite some time with no end in sight. Some of the figures were eye-openers. Sales of electric guitars a decade ago where about 1.5 million. Today that figure is about 1 million, still a lot of guitars but the Big Boys in the game are suffering the most as inexpensive and in many cases, decent quality electrics flood the market from the Far East.
Some of the figures were downright scary. Guitar Center (and its sister company, Musician’s Friend) is – ready for this? – 1.6 BILLION dollars in debt. It has been common knowledge for a few years that GC was in trouble but I had no idea it was of such magnitude. And that debt has a trickle-down effect. Fender is $130 million in the red, due in no small part to GC not paying its invoices. According to an industry insider I know, it is a lose/lose situation. Fender cannot refuse to do business with GC, i.e., give them very favorable terms and keep sending guitars in spite of unpaid invoices, because if GC goes belly-up (which is a definite possibility, according to my friend) Fender will have no hope of recovering ANY of the money they are owed.
The situation is not much better with a couple of the other big on-line retailers, Sweetwater and American Musical Supply, again according to my friend, but they do not release their sales figures. But suffice to say, if those companies offer 12-month, no-interest payment plans for a huge array of electric guitars already selling at a discount something is definitely wrong.
So why is this happening? The conclusion of George Gruhn of Gruhn Guitars in Nashville, who knows as much as anyone about trends in the guitar business is that for the younger players the “guitar god” phenomenon that drove young players to want to play back in the 1960s, 70s, 80s and even the 90s no longer exists. The Guitar Gods if yore are either old or dead. How many teen age guitarists worship at the altar of Clapton, Hendrix, Vai, or Van Halen? Fewer and fewer. This seems to be a very valid argument. Sure, there are a few younger players like Bonamassa and John Mayer are legitimate monster players but they just don’t seem to inspire the rabid worship that was heaped upon their forebears.
But I think that there are other, equally important factors. Now, understand that I still play electric guitar from time to time and I fully intend to do so at least part of the time in any future group I form or join. At the end of the day though I am an acoustic guitarist, first and foremost. What I’m getting to – and I know there are many who would disagree with this – is that shredding on a distorted, loud electric may be fun in someone’s basement, but does anyone except other shredders really want to hear that? And does it sound good by itself? Because without a bass player and drummer (at least) that style of playing is not exactly pleasant to the vast majority of people, both youngers ones raised on electronica and hip-hop and oldsters who went through their blow-my-eardrums-out phase long ago and don’t care to repeat it.
Another huge factor in the dire straights (no pun intended!) those big retailers find themselves in is quite ironic. There was a time when the quality of lesser brands was variable at best and it was essential to try out a guitar before it was purchased. Now, with consistent and predictable manufacturing, plus very liberal return policies, the only thing that separates the big boys from one another is price. So they watch each other very, very carefully and cut their margins to the bone. MAP policies help, to a degree, but even those are stretched and tweaked with regular “special” sales and extremely liberal terms. My guess, and this in only a guess, is that if GC or those other big companies are lucky, they make at best a 10% margin at the end of the day on most electric guitars they sell. Even the cheapies. Yes, the margins are a bit better on the high end stuff, but getting back to the original point of the story, how many high end guitars are they selling?
There is a basic rule of successful sales that says the less expensive the item sold, the bigger the margin. That rule has been bent to the breaking point and if things keep going the way they seem to be there will be some significant attrition in the music equipment world. You cannot be solvent on 10% margins with hundreds of millions – or billions – of dollars of debt.
Which gets me back to my own observations and experience. I am so, so glad that I focus my playing and teaching on acoustic guitar. The resurgence of interest in acoustic guitar in the last 20 years both by younger players and older ones returning to the instrument after abandoning it in their youth is very heartening. Players have discovered (or remembered) how easy it is to just sit down with an acoustic and…. Play. In their bedroom, on the front porch, at a beach somewhere. No amplifier needed. Even the simplest chord pattern sounds pleasing not just to the player but to anyone listening. And it’s no accident that many of the hardest of hardcore rockers do most of their writing with an acoustic guitar. It brings things back to their most basic level. No noise, no pedal board, no beast of an amp to lug, and even the least expensive acoustic sounds good on some level, compared to the most expensive Strat or Les Paul played when NOT plugged in. The music becomes the thing, not the machine.
So God Bless, GC, Musician’s Friend, Sweetwater, American Musical and the other big guys who pushed so many small local music stores out of business in the last decade. Karma is a bitch.
Peace & good music,
Gene
Some of the figures were downright scary. Guitar Center (and its sister company, Musician’s Friend) is – ready for this? – 1.6 BILLION dollars in debt. It has been common knowledge for a few years that GC was in trouble but I had no idea it was of such magnitude. And that debt has a trickle-down effect. Fender is $130 million in the red, due in no small part to GC not paying its invoices. According to an industry insider I know, it is a lose/lose situation. Fender cannot refuse to do business with GC, i.e., give them very favorable terms and keep sending guitars in spite of unpaid invoices, because if GC goes belly-up (which is a definite possibility, according to my friend) Fender will have no hope of recovering ANY of the money they are owed.
The situation is not much better with a couple of the other big on-line retailers, Sweetwater and American Musical Supply, again according to my friend, but they do not release their sales figures. But suffice to say, if those companies offer 12-month, no-interest payment plans for a huge array of electric guitars already selling at a discount something is definitely wrong.
So why is this happening? The conclusion of George Gruhn of Gruhn Guitars in Nashville, who knows as much as anyone about trends in the guitar business is that for the younger players the “guitar god” phenomenon that drove young players to want to play back in the 1960s, 70s, 80s and even the 90s no longer exists. The Guitar Gods if yore are either old or dead. How many teen age guitarists worship at the altar of Clapton, Hendrix, Vai, or Van Halen? Fewer and fewer. This seems to be a very valid argument. Sure, there are a few younger players like Bonamassa and John Mayer are legitimate monster players but they just don’t seem to inspire the rabid worship that was heaped upon their forebears.
But I think that there are other, equally important factors. Now, understand that I still play electric guitar from time to time and I fully intend to do so at least part of the time in any future group I form or join. At the end of the day though I am an acoustic guitarist, first and foremost. What I’m getting to – and I know there are many who would disagree with this – is that shredding on a distorted, loud electric may be fun in someone’s basement, but does anyone except other shredders really want to hear that? And does it sound good by itself? Because without a bass player and drummer (at least) that style of playing is not exactly pleasant to the vast majority of people, both youngers ones raised on electronica and hip-hop and oldsters who went through their blow-my-eardrums-out phase long ago and don’t care to repeat it.
Another huge factor in the dire straights (no pun intended!) those big retailers find themselves in is quite ironic. There was a time when the quality of lesser brands was variable at best and it was essential to try out a guitar before it was purchased. Now, with consistent and predictable manufacturing, plus very liberal return policies, the only thing that separates the big boys from one another is price. So they watch each other very, very carefully and cut their margins to the bone. MAP policies help, to a degree, but even those are stretched and tweaked with regular “special” sales and extremely liberal terms. My guess, and this in only a guess, is that if GC or those other big companies are lucky, they make at best a 10% margin at the end of the day on most electric guitars they sell. Even the cheapies. Yes, the margins are a bit better on the high end stuff, but getting back to the original point of the story, how many high end guitars are they selling?
There is a basic rule of successful sales that says the less expensive the item sold, the bigger the margin. That rule has been bent to the breaking point and if things keep going the way they seem to be there will be some significant attrition in the music equipment world. You cannot be solvent on 10% margins with hundreds of millions – or billions – of dollars of debt.
Which gets me back to my own observations and experience. I am so, so glad that I focus my playing and teaching on acoustic guitar. The resurgence of interest in acoustic guitar in the last 20 years both by younger players and older ones returning to the instrument after abandoning it in their youth is very heartening. Players have discovered (or remembered) how easy it is to just sit down with an acoustic and…. Play. In their bedroom, on the front porch, at a beach somewhere. No amplifier needed. Even the simplest chord pattern sounds pleasing not just to the player but to anyone listening. And it’s no accident that many of the hardest of hardcore rockers do most of their writing with an acoustic guitar. It brings things back to their most basic level. No noise, no pedal board, no beast of an amp to lug, and even the least expensive acoustic sounds good on some level, compared to the most expensive Strat or Les Paul played when NOT plugged in. The music becomes the thing, not the machine.
So God Bless, GC, Musician’s Friend, Sweetwater, American Musical and the other big guys who pushed so many small local music stores out of business in the last decade. Karma is a bitch.
Peace & good music,
Gene
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