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Old 11-21-2007   #1
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Default Helping Audiophile Dealers with the "Audio Room of the Future"

I was asked by some industry luminaries and good friends to speak to the Consumer Electronic Association's (CEA) Audio Board a few weeks ago at their meetings in San Diego. With the enthusiasm of Blake (Alec Baldwin’s character from Glengarry Glen Ross) I spoke about up four specific ways for specialty audio dealers and the AV manufacturers they do business with, to save themselves from Costco-inspired big-box doom. I spoke about the importance of commissioned salesmen and how a professional audio salesman should make no-less-than $100,000 per year in every market in America. I quoted an industry friend from Mark Levinson (HSG), Ed Stradlen, about how the iPod is to Generation Y what a 9-volt transistor radio was to young Baby Boomers noting that Boomers bought lot of audio gear over the years powered by great music from the late 1960s through the end of the 1980s. I made the not-so-subtle suggestion that perhaps the CEA's lobbying power should be pointed a little less at PC convergence and Hollywood movie studios and a little more towards the record labels with hopes of inspiring them to release 24 bit, high resolution music for downloads and on copy protected HD DVD and or Blu-ray players.

A lot of the people in the room just looked at me just waiting for me to say "Put that coffee down," but I continued to speak, working towards my big zinger - the concept of the Audio Room of the Future.

While discussing the importance of commissioned salesman, I brought up the point that while audiophile dealers shamelessly demand 50 points (or more) before they will sell an enthusiast AV product in their stores – that they should be looking at or inspired by the companies who they buy gear from to find ways to bring new and enthusiastic prospective clients into their stores. In fact, I challenged them that it might be reasonable to suggest that an audiophile dealer doesn’t deserve to actually be a dealer if they can't get 12 new prospective clients in the front door each week. When I sold high-end audio (fill in the line from Glengarry about "If I went out on your sits tonight – I would make $15,000") at Cello Music and Film Los Angeles in the mid-1990s, we didn’t have an ad budget nor did we even have a retail sales floor. I was expected by Mark Levinson himself, as well as my immediate boss, Joe Cali, to create my own leads and amazingly my boss expected me to close each and every person that walked through the door. I suggested to this group of select dealers and AV manufactures that there were some easy ways to pull this feat off like setting up the sleekest audiophile system in the Doctor's lounge at the local hospital or in the lobby of the best country club in the area. Another idea was to make fast-friends with Deans of the best colleges in the area. Invite business students to a 20 minute presentation about the audio and home theater business, show them what HD DVD, Blu-ray and high resolution music can do for you and then feed them a little something nice – perhaps offer a glass of wine. Repeat the same feat with the engineering school with a slightly different, more tech-savvy pitch. Do it again with music students perhaps recording a live performance and comparing the live event with a reproduction through an audiophile system.

The Audio Room of the Future
The idea of bringing in new students and well-heeled clients in the front door of specialty retailers got me to a question I asked of the group that I think they didn't seem to embrace. I asked them to compare the traffic on a Saturday afternoon at the local Guitar Center versus the local audiophile store. In any market in America, Guitar Center has dozens of people noodling away at God-awful renditions of "Stairway to Heaven" or "Over the Hills and Far Away" (if you are in the acoustic section) but taking home thousands of dollars of instruments, amplifiers and very profitable accessories. Does anyone want to compare how many Fender Stratocasters are sold compared to stereo preamps every week?

Considering the recent boom in the musical instruments business, I suggested audiophile dealers immediately merge the concept of an audiophile music playback system with today's best musical instruments and recording equipment. Unlike the days of burning a Bob Marley sized spliff and sitting in your living room all by yourself – how about the idea of showing a family a dedicated music room complete with room acoustics, speakers amps and the typical goodies but also loaded with an Apple MacBook Pro dialed in with some recording software like Pro Tools? How about doing a deal with the local MI retailer to floor a small but good sounding piano, a bass guitar and some vintage drums? How about the family or the neighborhood kids play music together instead of some Baby Boomer dad sitting in the basement trying to relive is freshman year in college or the kids continuing to needlessly hone their skills at Halo 3.

Some of the people in the room simply gazed at me like I was speaking in clicks and pops as part of some barely verbal African tongue. And who could blame them? I told them in no uncertain terms that they don't make as much money as they should, that their way of life that they have known for 30-plus years was nearly over and that they should be looking to make a total sea change for their business. Note: the audiophile industry is not historically very good at change. Show me one dealer who sees the trends of the marketplace and I will show you one that can cook up CAD drawings for a client's system that will impress their architect (and have more profit than some pair of speakers that are also being sold on audiogon at 40 percent below retail). Show me a dealer who can embrace change and I will show you one that understand he or she is, in today’s marketplace, a high-end subcontractor rather than just a "store". Show me a retailer who realizes the days of trash-talking Krell to sell a Mark Levinson amp are long over and that the person who brings them the majority of their business is a member of the AIA and I will show you a guy who drives his Mercedes SL 65 to the jobsite or the showroom everyday.

Despite a stereotypical fear of change in the specialty audio-video business, what has in fact changed radically is the consumer's ability to buy new and specifically quality used audio gear from Internet sites like eBay and Audiogon thus leaving the dealer operating with increasingly high overhead and decreasingly low margins especially when competing with used audio gear versus new gear. I am suggesting - at the top of my lungs - that there is a better way. I am suggesting that there is a way to add value to the consumer that far exceeds pushing the comatose-lure of a 25 year-old Compact Disc. I am suggesting to audiophile dealers a completely new way of life. I am suggesting to them with the Audio Room of the Future, a story that every newspaper in their area would write about if the dealers were to invest a mere $200 in a press release or perhaps a few more hundred dollars on a PR professional to make a few phone calls. Remember the college idea? How about creating a contest for PR students to see who can reach the most new clients and they will win from you an iPhone? Additionally, I am suggesting to them that every Vizio set sold at Costco is another client they could potentially sell a Runco to, someday in the future. I am suggesting that Apple selling 120,000,000 iPods means that more people love music more than ever before but the snobbery of pushing vinyl when CDs came out or pushing CDs when DVD-Audio and SACD roamed the planet needs to die off today as the dinosaurs did millions of years ago. I am suggesting things need to change for audio dealers and the manufacturers that sell them gear – sooner than later.

Time will tell if any of my advice will stick. Since my speech, I have pitched ads to two audiophile dealers (not in attendance at the meeting) and I couldn't separate them from their money with a crowbar…and they actually called me to buy ads – saying they need "co-op money" above the large margins they already get from their manufacturers. As I sat on the tiny plane from San Diego back to LAX, I challenged myself to humbly yet enthusiastically take the advice I dished out on Coronado Island. While AVRev.com's business has grown nicely in 2007 – we too know we need new clients for 2008 and beyond to remain viable and relevant. Five weeks ago, I set a goal to do whatever it takes to land 10 new "endemic" home theater or audiophile clients for the publication before the end of 2007 to replace some of the long-standing clients that have gone the way of the Betamax. To date, I have contracts from five new clients based simply out of humble cold-calls and overall hustle. And if I can harvest new clients for a business that sells a virtual product like online advertising – any AV dealer selling the world’s most sexy home theater and music playback systems should be able to bring well-heeled clients through the front door with even more ease.

by: Jerry Del Colliano
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