The HiFi Five Episode 35: Dynaudio Withdrawal and Distributor Life Today

The HiFi Five Episode 35:  Dynaudio Withdrawal and Distributor Life Today

Guests:

Brian Ackerman -- Founder of Aaudio Imports

Bill Leebens -- CEO of Leebens Marketing and Management

Doug Schneider -- Founder of SoundStage!

Hiram Toro -- Founder of Supreme Acoustic Systems and of Decibel+

Topics:

Is this an isolated case, or the first major warning sign that the economics of importing high-end audio into North America have changed fundamentally?

What role did tariffs really play in Dynaudio’s decision to leave the U.S. market

Are U.S. distributors facing the toughest business environment they’ve seen in decades?

Who really pays the tariffs on imported high-end audio—the manufacturer, the importer, the dealer, or ultimately the consumer

How today can foreign imported brands compete against domestic brands?

Transcript

SPEAKER_03 0:03

Welcome to the 35th episode of the High Five Five. Please like this video and subscribe to the channel. A lot of you are watching, which is wonderful, but ain't a lot of you subscribing. So please hit subscribe now. Our guest tonight, Brian Ackerman, is the founder of A Audio Imports, a distributor and dealer in Dana Point, California. Bill Leibans is the CEO of Leibman's Marketing and Management. Hiram Toro is the founder of Supreme Acoustic Systems, a distributor and a dealer, as well as Decibel Plus, a dealer, a distributor, both based in Las Vegas. Doug Schneider is the founder of TownStates, the world's largest group of audio and music websites. Good evening, everybody.

SPEAKER_01 0:40

Hello.

SPEAKER_03 0:41

Thanks for having me. Last week, Dinadio of Denmark announced it will permanently shut down its U.S. subsidiary and exit North America in the fall of this year. The press release said that Dynadio wants to, quote, focus its future market development efforts on Europe and Asia as part of its long-term investment strategy, unquote. Even though the company said in this press release that it has achieved sales growth in North America in recent years, quote, ongoing economic challenges and market uncertainty have led Dynaudio to prioritize investments and resources in markets that offer the strongest strategic opportunities for future development. Topic one.

SPEAKER_05 1:30

I wasn't shocked by somebody exiting. I was shocked by them exiting because I know they've done very well through the years. They've got dozens of dealers in the U.S. And I was perplexed by the fact that if they didn't want to run the U.S. show anymore, why not go through a distributor? Pulling out completely seems a little extreme to me. Doug.

SPEAKER_02 1:56

Like Bill, I wasn't surprised somebody pulled out because I've been predicting we're gonna have a tsunami in the hi-fi world over the next couple years of companies being wiped out. But I was surprised Dynaudio pulled out of the US.

SPEAKER_01 2:10

Hiram, what was your reaction? Ditto, nothing to add. Yeah, I was uh I was a little surprising, but uh that said there's gonna be uh uh a lot more of that uh coming in the next couple of years. That's a fact.

SPEAKER_03 2:29

Just because you feel the market is too many companies and oversaturated?

SPEAKER_01 2:35

Part of it, uh, you know, uh European companies are just trying to entrench, you know, go back to uh the European markets, uh, but part of it uh is the um all the economic uh issues going on, particularly the uh tariffs.

SPEAKER_03 2:52

Topic two is this an isolated case or the first major warning sign that the economics of importing high-end audio into North America have fundamentally changed? Brian, what do you think?

SPEAKER_00 3:04

Yeah, I don't think it's an isolated case. Um, like like you said there, I I think that more companies are gonna have issues. Uh I guess the strong survive, you know. Uh you have to have a good business plan and you have to kind of read what's happening so that you can adjust your business model. Doug?

SPEAKER_02 3:28

Yeah, yeah, I don't think it's an isolated case. Like I said, I've been predicting that uh we're gonna have a tsunami. Um I don't think things have fundamentally changed. I think they've been heading this way, but now we're hitting a bunch of issues that are cracking the ice, do you know what I mean? And might break through. So not fundamentally changed, but certain things have changed to cause an impact.

SPEAKER_05 3:50

Bill shipping is another factor that has just gone insane in recent years. And uh, especially from Asia or Europe to the US, the costs are extortionant. Um, I know a couple companies that have attempted to deal directly with dealers in the US, but the dealers ended up pulling out simply because the shipping they had to pay was just a sizable percentage of the products cost.

SPEAKER_03 4:20

Now, by shipping, you mean freight shipping on pallets or do you mean FedEx and UPS?

SPEAKER_05 4:24

Either. All it's all gotten extraordinarily expensive.

SPEAKER_03 4:30

Hiram, do you think dyne audio is a one-off or the beginning of a trend?

SPEAKER_01 4:34

Uh like I said, yeah, it's it's a trend. It's uh obviously a trend. Uh this, you know, something like this go back four or five years was unthinkable. And just the fact that's happening, it it's it's proved that there's uh I don't know about a tsunami, but uh something's coming.

SPEAKER_03 4:59

All I see from where I sit is the industry just has too many companies, it's just as simple as that. They're just too many companies. I don't understand how all these companies can stay in business.

SPEAKER_02 5:09

And um shrinking demand, and that is true in the North American market. Uh, many companies have told me that, um, particularly those who do hi-fi and custom install. Custom install is big business for a lot of the big companies, very big business. So you got too many companies. I've said if we have half the amount of speaker companies, we'd still have four times too many. And a shrinking demand.

SPEAKER_03 5:32

Now, when you say shrinking demand, is that report to us based on anecdotal evidence of speaking with various manufacturers, or is that some industry-wide statistical analysis we can all look at?

SPEAKER_02 5:44

I don't think we can all look at, but I'll tell you this if you go to the company's CI, they'll say we're in business because of CI in in North America, particularly the United States.

SPEAKER_03 5:53

What's CI?

SPEAKER_02 5:54

Custom install. So in-the-house, you know, that type of all-in-the-house type thing.

SPEAKER_01 5:58

Okay, I think that's right on point, uh, and the fact that these companies are going back uh home and re-entrenching is uh finding where they have uh uh a cost advantage uh uh uh versus uh you know having to export at a lower margins and uh having to compete like with a saturated uh saturated market like uh uh I mean it's clear. I mean, if you look back 20 years, the amount of products and the amount of offerings out there is just uh astounding. Uh how it has multiplied.

SPEAKER_00 6:40

I think I think the bigger companies have are gonna have more trouble than the smaller companies because small companies can withstand you know the a turn down in the market. The bigger companies, you know, they have to move more product to stay in business, you know. And I think the dealer relationship with the distributor is really important. You know, you can't just have a lot of dealers that aren't that aren't you know doing anything. You have to make sure that your dealers are active.

SPEAKER_01 7:10

You know, whether they're big or or or small companies, and I'm applying to myself as a small company, is whether you have the capital to weather uh you know the ups and downs of market. And the fact is, is a lot of us don't have the deep pockets, don't have the uh capital backing to withstand uh a big swing on and on on the audio market.

SPEAKER_05 7:37

Briefly going back to what Doug said about custom install, um I've through the years I've talked with a couple major dealers who counterintuitively um had record years during the pandemic. They were sending out people and doing custom jobs in their houses, and uh generally CI has been a fairly small percentage of their business, but record years.

SPEAKER_03 8:07

Topic three. Dynadio cited quote, economic challenges and market uncertainty. What do you think they were referring to, Bill, exactly?

SPEAKER_05 8:20

What? Yeah. Oh sorry. Wake up, Bill. Um well tariffs are certainly part of it. Um, and again, I hate to keep banging on this drum, but uh in the last five years, shipping costs have just really skyrocketed. And uh if you're doing onesies, twosies to the United States, um, it's almost prohibitive. Somebody's doing pallet loads, if they're doing seafreight, that's another story, but it's still very expensive.

SPEAKER_01 8:54

Three companies, I mean, we we're we're we're at their mercy. We just have uh UPS FedEx and uh DHL. There is no no options, no competition.

SPEAKER_03 9:10

So uh uh Hiram, you think that's what they mean by economic challenges and market uncertainty? Are you agreeing with Bill that is uh shipping is a big shipping in tariffs, basically?

SPEAKER_01 9:18

Well, well, certainly, as Bill says, you know, that that that's part of it, but uh certainly is when you're faced with uh uh uh you know to place your products outside your country, you're you're faced with these uh climbing costs. Not to mention when when something gets damaged or it uh it's it shows up late, uh everything else that comes with that. So I think that companies are just moving to uh to a space where they can operate more effectively, they can uh uh keep down uh their costs, uh protect their margins, and uh coming to the United States is not uh probably the best thing that they can do or the best deployment of their uh uh capabilities.

SPEAKER_03 10:09

Doug, what do you think um Diana do you meant by economic challenges and market uncertainty?

SPEAKER_02 10:14

I think I can only guess. I mean, I I don't know, but uh market uncertainties. Um, I would say that could mean the declining hi-fi market, that sort of thing, too many companies. It's an uncertain market to go into and the economic challenges too. I mean, you've got everything from the tariffs to, like they said, the shipping. There's just a lot of uncertainties. And and um, you know, we've had podcasts where people have talked about uh manufacturers have talked about the tariffs and the whole changing of the tariffs and stuff. We can deal with one thing, but when it changes by the week or by the day or by the hour, this becomes very uncertain. And I think most people agree uncertainty is not a good thing for business.

SPEAKER_00 10:56

Sure.

SPEAKER_03 10:57

Let's talk about let's talk about the go ahead.

SPEAKER_05 11:00

Sorry if I could interject just for a sec. Um also you've seen the the statistics that consumer confidence is uh plummeting day by day. That's not gonna help. People are hanging on to their money. Uh, and I'm I'm uh guessing, again, this is just a wild guess, that uh a Danish company owned by Chinese is not gonna be real happy about any political pressures.

SPEAKER_03 11:30

So let's talk about tariffs. Um, Brian, how have tariffs affected your business? You're bringing in German physics uh from Germany, you're bringing in ancient audio from uh Poland. How have tariffs affected your business?

SPEAKER_00 11:46

Yeah, quite a bit. I mean, it's it's not easy, you know. You uh the dealers are are wanting those nice margins, you know, they're wanting you know shipping included, they're they're you know, they're always wanting more and more. So, you know, someone has to take the hit, and it's usually me and the and the manufacturer. Uh so if they're willing to work with me, then I can you know I can work things out. Um, you know, and I try to keep my overhead down, that helps. But uh yeah, it's it's definitely affected, you know. Um I I can say that uh like like Doug said, it's it's changing every week, so you you never know what's gonna happen. We got tariffs this week, next week they're trying to get rid of them, and then they're back, you know. So you you have to you have to try to work with all these different obstacles.

SPEAKER_03 12:42

So yeah, not not great. How Hiram, how have you been dealing with the tariffs?

SPEAKER_01 12:49

Uh the only way I can, uh you just have to uh slowly but uh surely pass that cost over to over to the uh dealers. But uh the fact that they were talking about uh going back to the financial economic issues that uh the exporter have. On top of exporting, anybody that's been uh in the exporting business knows that it is a headache, it is, but then on top of your ad, all of a sudden your product is 20% more expensive. Uh abroad, that's gonna take a bike on the volume. You know, that's that's a fact. That's that that that's gonna happen. On top of dwindling your volume, you're gonna dwindling your your margin. Um I I know I've taken it, so of course. Uh it's very difficult to tell somebody now all of a sudden something that was uh something that was a hundred dollars, now it's $120.

SPEAKER_00 13:57

It's uh it's it is what it is, but uh we just have to deal with it and and and forge on uh I think I think one of the things is that everybody seems to be in the same boat. So, you know, if I'm raising my prices, you know, he's raising his, the other guy's raising his. And I think that the products that are made in the US, they're gonna raise their prices when they see everybody else raising them. You know what I mean? So it's kind of it kind of all boats rise, you know. With it, I I think that um it's like with a car market, you know, uh you're bringing in the BMWs and then the Cadillacs go up in price, you know, even though they don't have that that tariff.

SPEAKER_03 14:43

Uh Doug, why do you think uh Dynaudio wrote that so cryptically? I mean, it would have been perfectly easy for them to say tariffs are one of the reasons. Why didn't they just say it?

SPEAKER_02 14:52

You know, I've talked to a lot of people, nobody knows for sure. And I I know people at Dynaudio, and and they don't they don't say, but I think it wasn't as cryptic as it was broad, I think. And I think that when you ask anybody, it's like, yeah, it could be all those reasons combined. When you just look at the whole thing, um, I've got good knowledge of Dyne Audio. I I um been to the main factory a few times in Denmark. And last year I was in China. If you look up a video called um uh Visa Pan and Factory Robots, we were the first soundstage was to go to the factory that makes the Dyne Audio car drivers, 5 million a year. They're owned by GoreTech. Uh the subsidiary that runs Dyne Audio is called Gordina. It's a massive company, 65,000 people in state-of-the-art facilities. And the reason it's called robot factories is because the factory that makes the dyne audio drivers for cars 5 million a year, that has a lot of robots running around. They actually brought more people in to make sure everything was just good and we had people to film, but there were only 15 people in there in a giant factory making five million drivers a year. So it's a giant company, well funded, and they make uh Agore Tech makes a lot of other products, not Hi-Fi, but a lot of other uh consumer electronics for big companies. And so I think it could be broad. They look at, hey, look what's happening here. We can focus on Europe and um Asia, and those are growth markets. If we look at, I remember late Charles Hansen of Air said to me 10 years ago, I don't know if the shows build the companies, but the or the companies build the shows, but everything's happening in Europe. High-end Warsaw, right? Now you look at the Asian show, there was just a Singapore show. You look at the ones that are happening in China, you look at the ones that are happening in Thailand, and then Warsaw and now Vienna. All this stuff's happening in Europe and Asia, and many of the really high-end companies are banking on Asia. You know, many really high-end um American companies are banking on Asia. So there is good reason we focus on Europe more than anything.

SPEAKER_01 17:09

You know, you just explained uh you just explained why. You know, it's a big company, they have big uh uh uh uh mass production. United States is just getting smaller at at uh at a smaller margins, they just want to focus uh on on things that are uh that are growing and that uh give them a better margin. I mean that's what I would do if I was that big.

SPEAKER_02 17:39

I wouldn't be wasting my time in a yeah, and it's not like uh Dynadios having trouble. Right after Vienna, they brought a bunch of European um press to Copenhagen to show their new flagship store in Copenhagen, they opened one right there. So anyone's guess, but they could have looked at the United States, all this, we're not making up. And I and I'm from Canada, by the way, and Canada's not a market. Once I explained the geography of Canada, and we're under four under 40 million people spread in a bigger land mass than the United States, and there are three cities that really matter, and um, two of them are 4,000 kilometers apart, 2,800 miles. Um, Canada doesn't count.

SPEAKER_03 18:22

Bill, what do you think? What do you suspect was the role of tariffs in Dynadios decision?

SPEAKER_05 18:29

I don't have any numbers. I don't have any numbers about any of their business. Um, and of course, we're not gonna get numbers. I would suspect it's contributory, but not the only reason. And beyond that, I don't know what to say.

SPEAKER_03 18:45

Topic five, who actually pays the tariffs initially? Do you as a distributor pay the tariff initially when you import the products? And then do you pass that on to your dealers or and the consumer ultimately pays because the dealer passes on your higher cost to the dealer and the dealer pass that on to the consumer? What do you what's actually going on there? Help us help the consumer watching this understand who's getting hit with those tariffs exactly. Uh Brian?

SPEAKER_00 19:15

Yeah, I say it's a it's an individual thing, you know. I I am paying that myself. Um, I'm trying to make it as easy for the dealers as I can to obtain the products. So I'm I'm paying the shipping, I'm paying the tariffs, I'm paying everything. And um it just makes them feel more confident to buy, you know, when you say, Don't worry about it, I got it covered. Uh, you know, and then they it it's it makes it easy. If I try to pass it to them, they're gonna they're they're gonna buy something else. So that's kind of how I I do it.

SPEAKER_03 19:52

Bill, what are you seeing when you talk to people? Oh sorry? Yes, what are you seeing when what who when in your experience, who do you think where does the the cost of the tariff eventually fold? Is it is it distributed effectively among the distributor who passes a little along to the dealer who then passes a little on to the consumer? Who do you think pays it in the reality?

SPEAKER_05 20:15

Well, it's it's a domino effect, obviously. And uh um, you know, I've I've talked to uh distributors who have held the line um just like uh we heard a second ago. Um, and others immediately slapped it on, whether it was uh product that just came in or stuff they'd had sitting in the warehouse for a year. So it's gonna get passed on. That's that's obvious. If it doesn't, um I would worry about the guys not passing it on putting themselves at risk. Good point.

SPEAKER_03 20:55

Hiram, um, who do you absorb the tariff or do you pass it on to your dealers?

SPEAKER_01 21:00

No, no, but uh I do I I cover everything just like buying. Uh uh you gotta make that uh easy on on on the client. The last thing a dealer in Alabama wants to do is you know mess around with all this stuff, and uh also agree with with with uh bills. Uh you have to pass that on. I mean, you can eat up some of that difference some of the time, but you cannot eat all the difference all of the time. At one point you're gonna have to to uh recoup that cost. So uh what we've done, we just go set it up, change, and you know, we've had this balance back and forth, back and forth. So what we decided is that we price the uh product as is and then just itemize the uh tariff so so the uh dealer knows exactly. Exactly how much uh how much of the cost is uh or the additional cost is down.

SPEAKER_03 22:05

Doug, what do you hear from the dealers and distributors with whom you speak?

SPEAKER_02 22:09

Oh, from what I can tell, you know, it's the distributors and then ultimately the consumers paying a higher price somehow, you know. And um uh the the to get to bring up a company that really pisses me off outside of audio, Canon. Uh Canon likes to um retain uh global pricing. So when the tariffs came on in the US, they raised the Canadian prices as well. Okay, which really wasn't a great thing. And not all hi-fi companies, I should say something we did when the tariffs came on. We had a problem. We used to default to American pricing for our reviews. It was a good standard for around the world. Somebody could read the American price and gauge roughly the thing around the world. Um, last spring, when all this uh uh late last spring, we said we're gonna publish four prices: US price, Canadian price, euro price, and pounds. It gives a better indication, and some products are broadly similar around the world, but many are now more expensive in the US. And to give you an idea, I won't name the companies, but smaller companies, one in particular has a speaker that sells for $1,200 a pair, US roughly, around the world, but $1,800 in the US. And it makes it makes reviewing tough because it's not really competitive at $1,800, but it's quite competitive at $1,200. And that's happened a number of times where they said, okay, we're gonna raise just the American price. And so I would think that the American consumer is ultimately paying a higher price because even if the dealer is absorbing it like Bill, or the distributor is absorbing it, like Bill said, you got to worry if they're absorbing too much. Ultimately, you do have to pass it somewhere to stay in business.

SPEAKER_03 23:58

Uh let's take Fuzzy's question. Fuzzy asks, did anyone get refunds once these tax increases were held to be illegal? Uh Hiram, Brian, are you did you did you or anybody, did you get refunds? Uh aware of anybody getting refunds?

SPEAKER_00 24:15

It's really hard to get refunds because you have to, you know, you have to fill out all these forms and you have to you have to wait and wait and wait, and you don't know if you're ever gonna get them. I haven't gotten anything yet. Um, and I I don't know if I ever will. You know, it's uh it's kind of a crapshoot, really. Um and everybody's different, like uh with FedEx UPS or freight, it's everybody's got their own different way of trying to trying to do it. Um, but I haven't seen anything yet.

SPEAKER_01 24:51

Anybody else? I put my paperwork, but uh let's see what happens.

SPEAKER_03 24:59

Topic six about manufacturers. Just out of curiosity, quickly, have you have any of you heard a manufacturer say, I can't deal with these UF tariffs? I mean, other than Dynaudio, I can't deal with these UF tariffs. I I just want to pull out of the U.S. market. Has have manufacturers suggested that to you at all? anybody?

SPEAKER_01 25:18

No, but moving their manufacturing away from the United States has been has been in a conversation. Manufacturing in the United States? What you know move moving moving away from the United States because uh, you know, it's too expensive to bring up products in.

SPEAKER_03 25:37

Right, but does that suggest that well let me ask then have have any has any manufacturer suggested to you should I move my production to the United States to avoid the tariffs?

SPEAKER_02 25:47

I've heard that too. I've heard both what you're saying. I've heard manufacturers say maybe we should just pull out in the United States, maybe rethink that. And I have heard some say, well, maybe we should do something in the United States, and ultimately the ones, and there were several, did nothing that kind of wait and see.

SPEAKER_01 26:04

Or go to Canada because the tariffs are a little bit lower importing uh parts uh to Canada than importing it to the United States. So to the extent that you're doing assembly, uh it's very easy for somebody to pick up and and and and and go across the border.

SPEAKER_02 26:23

Yeah, and what uh I think Hiram's getting at too is um like aluminum, Canada is a huge aluminum producer, okay, and aluminum's used and stuff, and that's tariff going into the US, okay, which ultimately hurts the American um manufacturer because how do you manufacture when all this stuff went up in price, right? It's a big confusing thing.

SPEAKER_03 26:44

Bill, did you want to say something?

SPEAKER_05 26:48

I don't even know where to start. It's just a freaking mess all the way around. Like years ago, I I talked to a number of European manufacturers about whether or not they would consider having a facility in the US to produce products. That's just uh I don't see that happening at all now, given the political climate, given the financial climate. And it's just um, you know, the the market is, as we've all said, shrinking seemingly. Um, and uh it would be a marginal investment at best, I would think.

SPEAKER_00 27:26

Yeah, the market's so it's such a small market. I can't see uh any of these manufacturers wanting to spend the capital to to set up, you know, the cost of setup, unless it's a big enough company, they can they can make enough sales to cover that.

SPEAKER_02 27:43

And I think what's seen is the United States is obviously a huge market. Like I said, Canada is not a huge market. When I explain we're under 40 million people and we've got three cities that really matter, you know, that's we're we're under California, you know, uh alone. But I think what happens is a hi-fi is not a big market. So people see, oh, there's tremendous opportunity in the United States, but just like going uh American company going to Europe, that's not that easy either.

SPEAKER_04 28:09

Right.

SPEAKER_02 28:10

I used to see in the past many American speaker companies, wow, that costs a lot in Europe, you know, once you get through dis uh shipping and distributor and all that type of thing. So it's any which way it's not easy to export and now import, right? And you got all these costs involved, that sort of thing. And it's really come to the light in the United States now.

SPEAKER_05 28:32

Well, there's one other thing. The the dealers are largely saturated with product. Um, speaker manufacturers generally have a favored amp manufacturer, and vice versa. So that locks out a lot of products. Um, we're no longer in the days like we were back in the 70s and 80s, where somebody could uh start at their kitchen table and go to CES and come home with 50 dealers. Um, that's uh exactly how uh PS Audio started, how Spike started. Spica had been selling speakers by the side of the road, for God's sake. So those days are long gone.

SPEAKER_02 29:16

And I think the days are long gone too. I said, you know, back in the 90s, most companies, I hope we'll talk about this, are horrendous at marketing their products. Horrendous. Um, I deal with all a bunch of European companies, they think they're just gonna lob it to a distributor in the United States and oh, the world's gonna change. No, nothing's gonna happen. Nobody knows who you are. You haven't done anything to build your brand, and that's key. Okay, and you go, you're gonna go to the United States, there's four times too many speaker companies, well, eight times too many speaker companies right now. Nobody knows your brand, and that distributor is not gonna build your brand. You had to do that already. And and Hiram's nodding. Do you agree?

SPEAKER_01 29:56

Sure, yeah, absolutely.

SPEAKER_02 29:58

So I'm like, you might want to rethink this and completely give up. And believe me, I've had those conversations in the hallway at many shows. You might want to really rethink this before you get a really good foothold, uh, you know, until you have a really good foothold where you are.

SPEAKER_01 30:14

It's gotten better over the years, though, but uh there's still a lot of that uh thinking going on.

SPEAKER_02 30:21

Well, I would say that, you know, I think, and Bill can maybe go back. I think you know, marketing in the 90s meant going to CES and releasing a new product. That was their marketing, right? Oh, we got a new amp, and they sell a bazillion of them, right? Can't remember how many. John uh Dawson of uh RKAM told me they sold 60,000 between uh 74 and 77 or whenever RCAM of the of their first amplifier. 60,000.

SPEAKER_04 30:47

Wow.

SPEAKER_02 30:49

That that does not happen.

SPEAKER_05 30:52

Well, if you look at old pictures of uh acoustic research or uh Garrard, you see just thousands and thousands of uh units being pushed out, and that just to my knowledge, that doesn't happen. I think there are probably companies like Project or some Chinese companies that have the resources to do that, but whether or not it's it's worthwhile for them to do so, I don't have a clue. And this goes back to one of the problems we've always had in the high-end audio industry, which is there's no data, there's no cooperation, there's no sharing of information unless it's on a casual, don't tell anybody I told you basis.

SPEAKER_02 31:38

Like, I'll I'll be honest, I've been in this thing. I would love to know how many million-dollar pair of speakers, like speakers that are million dollars a pair or close to how many get sold globally in a year, right? You know, it depends on the company, but is it one pair? Is it zero pair, or is it 20 pairs? Certainly not 300 pairs, but nobody will tell you that.

SPEAKER_00 32:01

But it but it but it you don't have to sum any of those.

SPEAKER_02 32:04

No, that's that's what they all say, but that's kind of deceiving, you know. I I said this on a on a previous live stream. It was somebody from one of the companies said if you went to high-end in Munich or this year in Vienna, you would think this is one lucrative industry. Look at these booths, look at these companies, these are making millions of dollars a year because how else could they all be here?

SPEAKER_00 32:26

They're on the they're all on the verge of bankruptcy.

SPEAKER_02 32:29

And that's the truth, right? This is the deceiving thing. There's some smoke and beers going on.

SPEAKER_00 32:35

They got the guys come in with millions of dollars and and and then they go out broke.

SPEAKER_05 32:43

Well, and it's uh it's hard to understand the ROI on some of these things, um, especially if you're going halfway across the world and have to ship products that are the size of tombstones. Um it's gonna be horrifically expensive, and the margins and markets are gonna be small. It's uh it's hard to justify.

SPEAKER_03 33:09

Well, that brings us to uh especially for Hiram and Brian. What are the biggest financial pressures and operational pressures you face today? When you wake up in the morning, what are the what are the main one or two things you guys worry about? Hiram.

SPEAKER_01 33:33

My focus is always uh I I I never dwell on on the problems, I dwell on what I know I need to do. Uh so from time to time uh that changes, but uh for the most part just be on top of business and try to do do 110 uh every day, whatever is that that you're face. But there is not one thing that I wish it was that easy. One thing would be great, but uh there's always uh uh a plethora of things that you have to uh be you know uh keeping up in the air. But that said I retired and 69 now, just started this business a little bit over a year ago, uh and I do it because I love it. I I really like what I'm doing. I think that you know I'm trying to do things different, bring some things uh try to improve, you know, how we do business, but uh ultimately it just proves that uh H don't hear stupid.

SPEAKER_03 34:56

Brian, what is what are your biggest challenges as a distributor in a you know I I just try to keep everything positive and um I like to bring out new products, I think keep it fresh, you know, introduce new things.

SPEAKER_00 35:12

Um if you have a line that you've had for a long time and they're not changing anything, uh it gets old and you know you've already sold what you could sell. So I I you know, like this year I brought in a lot of new lines, and um it gets people excited when you have something new to show them that's innovative, you know. Uh but I don't really worry about anything. I'm pretty easy going, so I just go with the flow, whatever direction it takes me.

SPEAKER_03 35:43

Doug, Bill, any thoughts on what you hear from distributors at uh what are their biggest challenges?

SPEAKER_05 35:50

I'm baffled by the number of distributors who have popped up in the last few years. It's uh confusing to me that in many areas we're seeing the number of dealers decline, and at the same time, I can't tell you how many distributors have appeared in the last few years. Um, and I don't know how they do it. I don't know how they can cover shows, I don't know how they can um do all the advertising they do and sustain.

SPEAKER_00 36:22

I think I think some of those distributors are actually dealers, they're they're opposing distributors.

SPEAKER_05 36:27

That's what I was gonna say. There's yeah, there's a difference between an importer and a distributor, they're not all both, and I think you're right, there's always been a certain number of distributors who uh are really dealers, so right, whatever.

SPEAKER_01 36:47

Although distributors with all these brands popping left and right over Europe, well, uh, they're gonna need a distributor. So I think uh if from your perspective, being a distributor is just getting a brand uh uh thrown out in the uh in your web page in the internet and wait for an order, then you know, but uh the majority of those dealers are not really uh uh doing much other than uh loading a web page.

SPEAKER_02 37:21

Yeah, and I'll interject here. My wish list is so about 20 years ago, and this is no offense to Brian and Hiram, because I believe that many distributors, unless they're lying to the manufacturers, are under an impossible situation. We stop dealing with distributors, and the first thing I tell a company is, you want to deal with us, we're not dealing with your distributor. And I'll tell you why. Chances are you're gonna have a new distributor in two or three years, and we don't want to go on that rocky road. Distributors aren't gonna build the brand anymore. There isn't enough money to. And these companies that are dreaming in Technicolor, and I hope they're listening right now to all those manufacturers because they've heard this thing. Oh, that distributor is gonna make our name in the United States. No, they're not, and two years, three years, you're gonna have a new one. And this is why I don't want to talk to them. One is handle your own marketing, and there's a I'm not gonna name the name because they're doing really well, a good European company. They came into the United States and the distributor said, we're gonna handle every bit of press in the United States. And they said, No, you're not, because we do it really well and we do it globally, and we're consistent, and we brand around the world. What we're doing is making an easy sale for you. And so, what I think these manufacturers have to concentrate on first is building their brand. And guess what? There's this thing called the internet, it's pretty damn easy. Okay, you can get on every day, build a brand, build a desirable product, get a distributor who can then fulfill the other end. Don't rely on them to build your name, do not rely on them to get the word out. Yes, rely on them to get you to the dealer, but don't rely on them to build what you haven't built yet. And that's my biggest wish. And that's why honestly, we get most of our products from the manufacturers direct. I said, You got this thing called UPS or DHL, and yeah, I'll I'll pony out the taxes and duties when it gets here, ship it and get it to my door, and then we'll deal with it.

SPEAKER_05 39:15

You're making friends here, Doug.

SPEAKER_02 39:17

What's that?

SPEAKER_05 39:19

You're really making friends here.

SPEAKER_02 39:21

No, but it's it's a real reality. There are two companies, there are too many companies. Make a brand name.

SPEAKER_01 39:29

I have to give uh dog a uh uh I'm in agreement, and uh that that is that is a problem. In fact, when I started the business, I had a problem calling myself a distributor because there's a difference between a distributor, which is the performance of a very mechanical uh process, and somebody that's promoting a brand, somebody that's uh uh creating a a uh uh a brand name in the United States, and yes, that is a very costly uh process. One of the things that I face when I was uh looking for a brand in Europe is that first thing they're they're gonna ask you, how many uh pieces are you gonna buy? Uh how many uh uh trade you think you're gonna have in a year? And my answer is I don't know. This is just brand new, totally unknown. We have to spend a lot of money, and my answer, I will. The money that that you want in inventory, I'd rather use it and promote the brand because uh you gotta have demand before you have uh uh the inventory. Some are okay with that, some are not. But what I tell them, if you are gonna go and try to dump your product or not, try to sell your product, which is totally unknown uh to a distributor, uh, you run a risk because then when that product is not moving and you get a little bit of a cash crunch, guess what's gonna happen to that price? So uh yeah, I totally agree with you, and that is something that I was quite aware on uh trying to deal with it.

SPEAKER_03 41:22

Our last topic, uh which uh Doug kind of started with with his wish about uh that manufacturers building their name first before they get a distributor. If there if a genie was willing to grant you one wish for each of you for improving the outlook for imported high-end audio, what is there one change you'd like to see?

SPEAKER_05 41:44

I'd say the same thing that I'd say for anybody in the business anywhere, and that's uh you're you're trying to sell the wrong things to the wrong people, and that's uh over the last 30 years we've seen the decline of Hi-Fi as a normal thing. Uh, it's been turned into the uh uh the geeks and the golden ears, and it's it's not compelling to normal people. Um, besides which I don't know how people respond to seeing uh a million and a half dollar pair of speakers, but uh having been involved in manufacturing for quite a while, I find that damn hard to accept.

SPEAKER_03 42:31

So well, I I'm not hearing I'm not hearing a single wish. What's the wish you'd ask the genie to improve the outlook of yeah?

SPEAKER_05 42:38

Well, that's that's me emphasizing the negative here. Um yeah, just try to get in touch with with the market realities, the fact that we've got declining incomes, we've got smaller living spaces. Um, there are a number of choices that consumers have these days for home entertainment other than hi-fi. That was not the case in the 60s or 70s, perhaps. But there's a million things to do now, and how you address those is gonna really affect your level of acceptance.

SPEAKER_03 43:16

Hiram, if there's one thing uh you could uh make a wish for and have happen, what would make your business easier other than increasing demand? Uh well it could be increasing demand.

SPEAKER_01 43:28

I'm gonna go and maybe go out of the limb here and uh uh but as a new uh distributor, uh face uh with the shows that I'm unable to get uh adequate uh space to show my product. I'm uh focused on the high side of the high end. Uh so it's impossible for me to get in. And Those are the shows that are covered by the two big uh uh uh uh um uh big companies, the two big magazines. So I i it it's impossible for a new distributor to get decent or adequate uh uh options uh in the two big shows, which are the uh Washington and and Exponer. So I wish something could be done about that, and I wish it then I'm forced to go to the lesser shows, and then when you go to the lesser shows, uh you get no uh no media coverage. Um magazines don't come, so you know it's uh double double jeopardy. So but I'm confused. You had uh you had big rooms at Expona. No, not an Expona. This year I just had one of those little rooms. Uh two years ago, I had a room that was right across from the lobby from the counter. Yeah, it's super expensive and horrible acoustically. So and that's the only thing that they would give me. Uh none of the uh so then the next best thing is the worst room. I mean from from one phrase to another. So uh it's it's difficult to be able to, I'm not gonna get one of those little rooms, uh shot in uh $150,000, $200,000 total system, uh, or next door a $30,000 system is gonna sound just as good as mine.

SPEAKER_03 45:42

Uh while we've got two distributors, I want to take Lee Scoggin's question. If you as a distributor, Brian and Hiram, do a great job building up a brand, increasing sales for a non-US manufacturer, uh are you concerned that what will what happened to Philip O'Hanlon with Griffin, for example, will happen to you where you do a great job building the brand and then the non-U.S. manufacturer says, thanks so much, our contract's over, we're gonna do this directly now.

SPEAKER_00 46:12

It's happened to me many times. It's happened to me with uh a handful of brands over the years. I usually build a brand for 10 years, and then uh for one reason or another they think they're gonna do better somewhere else, and and they they make the move and and the line gets lost, and it you know they're gone. Um so I just you know I look at it as like one door closes, another one opens. So I just move on to something else that I like, which I've always done. You know, you have to I guess you have to reinvent yourself every so often to stay revel, you know, uh to stay current. And um yeah, I don't like when that happens, obviously. Uh but sometimes you you know you can't you can't avoid it.

SPEAKER_03 47:04

Hiram, does that is that a can you you're you're tending currently to work with somewhat smaller brands than like a griffin. Is that a concern of yours or not really at this stage in your evolution?

SPEAKER_01 47:12

Uh oh, of course, it is a concern. Uh uh the way I approached uh my uh business is number one, I keep my brands to the minimum. I have two turntables, I have uh two uh uh loudspeaker companies and and the like. Uh and reason being that as a brand promoter, as somebody that's uh uh trying to create a name for the brand, uh I I can't have six brands and and and and do the job. Uh first of all, resources. So I have brands that uh have become more than uh brand I represent, we're very close, we're uh almost like uh partners. And uh I gotta make sure I keep them by doing the right thing. And uh if if somebody doesn't want you to uh do their business, uh so be it. There's nothing you can do. I'd rather let them go than uh get into a lengthy uh legal battle. Any any final thoughts on these topics?

SPEAKER_05 48:30

Yeah, I would I would say in what the last topic here, um, it's a much more cutthroat environment than it was when I started in audio, which was a million years ago. Um, I still remember how outraged people were when Lynn dumped audiophile systems after they did such a great job of building the brand in the US. That doesn't happen anymore. People just think that's business, and it largely is, but it doesn't make for a happy environment.

SPEAKER_03 49:03

Doug.

SPEAKER_02 49:04

Yeah, and so I guess I get two wishes because I already had spot uh been off on my first one that manufacturers would build their damn brand names from a central location. Number two is something Bill touched on about people are doing other things for 30 years. And I was just talking to a very large company today about this because this is something we're trying to tackle. Education. Okay, we've got an environment where a generation and a half of people don't really know what a hi-fi system is. Think about that. They don't know, and we're always talking about oh, bring young people into hi-fi. Well, some 16-year-old isn't gonna buy a hi-fi system if he doesn't know, or he or she doesn't know what it is. But there are a lot of people out there today who simply have the money, but they have no clue what this is. And we've made it extremely difficult in the high end. Imagine you went and had to buy a car and they said, Okay, you got the body, you got to go find what seats you're gonna put in. Maybe we can help you with that. The wheels, the tires, the brakes. This is all different, right? Look at a hi-fi system, you know. Oh, that's an amazing pair of speakers. Can I have those? Yeah, but you know, you need all this other stuff to go with it. Right. And there's a guy in New York named Devin Turnbull, and he's gotten a thing going with clips. You know who I'm talking about, right? Yeah, and I can't say what he's playing has ever impressed me in terms of sound. Far from it. But he's presenting systems to people.

SPEAKER_03 50:30

You dropped out, Doug. Stay just repeat the last sentence.

SPEAKER_02 50:33

He's presenting systems to people as a whole. People are coming there, and I see he does this in some New York library, and he's got something else going on. And people are seeing this, and they're going, okay, there's a turntable, there's speakers, there's an amplifier. They're seeing the wholeness, they're getting an understanding, an education. And more of the hi-fi world, instead of just saying, Oh, everybody wants active speakers, or the educate them, bring back hi-fi. And guess what? This goes back to branding. Get the company that's gonna say, you know what, we got to bring up a whole bunch of new audio people again. So maybe we got to explain our product because a generation of and a half have grown up without knowing what this is.

SPEAKER_01 51:18

I think two channels ought to be taught in high school. What's that, I remember? I think two channels ought to be taught in high school.

SPEAKER_00 51:25

Yeah, right. Okay, I think go ahead. Yeah, I was gonna say I um I try to learn as much as I can from the manufacturer so that I can pass it on to the dealer. Uh, and I spend a lot of time talking to the dealers. You know, sometimes we talk every day uh for weeks and weeks and until I feel like they're up to speed on the products. I think that's really important, you know, uh that they know everything there is to know. So when they're talking to a customer, they don't have to keep you know calling me and saying, hey, what do I tell this guy? You know, they should know what they're selling, they should know everything about it, you know. Uh as far as the wish, I wanted to get in on that one. Um I think they should take the high-fi shows and put them in like a kind of like what Munich did, where they put them in like um, you know, uh, what do you call those places? Like a convention center, yeah. Or something that that's not in a hotel so that everybody can have the big rooms that they want. And it's not, it's not, they're not playing fair because some people get them and some people don't.

SPEAKER_02 52:40

So they can't think about the average hi-fi show that happens in a hotel. And if somebody is shown, like Bill said, you know, a million and a half dollar speakers, whatever. But some you throw this stuff in a little hotel room, no signage. And by the way, the Europeans tend to do it really well. When you go to the European shows, they tend to dress a room, okay? But you go in and they throw this and you say, Well, how much is that? Imagine somebody coming off the thing and they look at some app and you say, Well, that's eighty-five thousand dollars. You're in a two hundred dollar crappy hotel room where the bed's been pulled up, you're saying that's an eighty-five thousand dollar amp and you don't even have like a banner on the wall. Like, how is this possible? It's eighty-five thousand dollars. Like, to the average, how are you ever gonna educate based on that? You need a great display. What's that?

SPEAKER_00 53:32

Yeah, presentations, everything. It's the it's the the first time you see it, you know, you have to have to it has to be presented in a nice way. Like you said, not in in a in a hotel room that costs eighty-five dollars a night.

SPEAKER_02 53:48

The bed's been pulled out, the headboard's on there, maybe the dresser's still in there and it's got the turntable on it. It's it's yeah, it's kind of horrendous.

SPEAKER_03 53:56

Okay, moving on to the music segment. Anybody have any music recommendations for us tonight?

SPEAKER_02 54:01

I do.

SPEAKER_03 54:03

I've been talking a lot.

SPEAKER_02 54:04

Okay, so we started the soundstage recordings thing um months ago, and I announced it, and this isn't a soundstage recordings thing. I was in the record center in Ottawa, one of the best uh things, filming a Y vinyl. Okay, and I ran into this guy, his name is James LeClaire, and I said, Holy cow, that's a nice looking album. Okay, it's called The Deal, it's his third album. Precision pressing out of Toronto, pressed it on nice green, okay. Oh, cool, and it doesn't sound amazing, but it sounds very good. It was done by a local um uh producer named Phil Bova into tube and analog or tube uh gear analog stuff, gave it a good sound, that sort of thing. And I said, James, maybe we can do something audiophile killer for the soundstage recordings label. So I don't know, but maybe it is. But again, James LeClaire, the deal, not gonna be easy to find, but they have it at the record center. What genre Y vinyl? And James actually shows up.

SPEAKER_03 55:14

What genre of music does he do?

SPEAKER_02 55:15

Uh, yeah, I should have said that, shouldn't it? Basically, acoustic folk edging into rock. Okay, well recorded, that sort of thing, but uh kind of uh yeah, that kind of thing. Neil youngish.

SPEAKER_01 55:27

Anyone else? Well, I just got back from a little island in the Caribbean called Anguilla. Oh, yeah, and uh very, very small, rich in music. I mean, they have some very nice artists. Uh, I came upon this gentleman, this uh artist there, they call him the uh Anguillian uh Anguilla Dylan. Uh and he, if if you listen to him, you'll see both uh the Dylan and the uh uh reggae part of it, the Vardy part of it. But uh all I could find is one recording in in in entitled. Uh but the uh lyrics of his songs, uh the songs are either pretty unique interpreter, but the lyrics of the songs are are something to be heard. So uh his name is Banky B-A-N-K-I-E Banky Banks, ending with that X B-A-N-X. Three times uh uh a week he has he does like a show uh in his house in Aguilera, which is like a little beach uh uh by the sea, and you just sit there like uh it was your living room or whatever. It's that that that kind of thing. But check out the the music and the lyrics is is uh this guy's a genius. This guy's pretty good.

SPEAKER_03 57:04

Wow, terrific, Hiram. Thank you. Yeah, all righty. Normally we do the high five five the second and fourth Wednesday of every month. The fourth Wednesday of this month, I'm going to be at Southwest Audio Fest on July 22nd. So the next episode of the Hi Fi Five will be Wednesday, July 29th, and it will be a Southwest Audio Fest show report. Gentlemen, thanks very much for joining tonight. This is great. See you in Dallas. Bye bye. See you in Dallas.

unknown 57:35

Bye bye.

SPEAKER_00 57:36

Bye bye.