Thread: The Audio High-End Has a Cadillac Problem

The Audio High-End Has a Cadillac Problem
Over a decade ago, the folks at Cadillac realized that the average age of their customers kept rising. They soon determined that for many of their customers, that was the last new vehicle that they would purchase. They were doomed, the company figured, unless they changed their design to attract a younger group of buyers. Cadillac revamped their line and updated the design and sales improved for a few years (although they are heading downward again).

The audio high-end has a similar problem from the demographic point of view. The majority of the guys that you see at audio shows are older folks. Judging from the posts of participants on this site, I would guesstimate that that the average age is likely close to 60 years old. And I venture to say that many will likely be downsizing the size of their homes and may be looking to downsize or at least simplify their audio systems as well.

The good thing is that there is a much better understanding of digital audio and it is now possible to get high-end sound from a reasonably-priced digital system. And that is also a plus for the younger generation of audiophiles who feel perfectly happy getting all of their music via streaming and listening to it via headphones.

I am still surprised at the number of manufacturers in this niche market. With older folks retiring, downsizing, or abandoning the hobby, I am not sure how many small manufacturers will survive the trend. There will always be room for the likes of Magico and a few other players (brands that have gained name recognition or have become a status symbols).

I see it the other way, Cadillac wishes they had High End audio's audience. You are using one brand in a sea of brands to generalize about an entire industry. The upside for audio is people will always want music in their lives, what is constantly evolving is the means by which they get their music (streaming vs tangible media). Whether they spend $500, 5000 or 500,000 on hardware to playback it back on is academic, there will always be a market for audio hardware at all price points.

To use your car analogy, who would ever have dreamt 30 years ago we'd have multiple brands and models of hyper cars costing in the millions of dollars. To top that, their entire production run sells out before the first production car is delivered.

The Cadillac problem that I am referring to is demographics.

Originally Posted by mep

Rob’s comments are valid. Not all people that retire downsize their home. I lost count of how many people at work asked me if I was downsizing my house after I retired. My answer was always the same: If you downsize your house, you upsize your wife.

expensive upsize!

Downsizing the house is just one of the issues and quite frankly not the biggest one in my view. (In fact, I am not downsizing either).

The most ardent followers of this hobby are older folks. And when the older folks who are buying the product go away and the younger folks do not have the same inclination to the hobby, attrition takes place. (That was Cadillac’s dilemma: no young guys want to buy your product).

Nicoff, I agree with your observations.

I see the future of high end audio being more about "value driven" and "lifestyle" products.

Every generation faces a different set of circumstances in life and so The Millennials and Gen Z are/will be carving their own path in life which will be "a bit to a lot" different than baby boomers and even Gen X.

The generations behind us are very happy with their headphones. That's a lot of youngsters, much more than there were of us "audiophiles" at that age!

The Millenials and Gen Z are very much aware of high end audio. All the internet forums give exposure to not only headphones, headphone amps and DACs but inevitably spills out into 2 channel high end.

There is also a trend to start setting up the more modest but higher value, good sounding 2 channel when the budget allows.

So what's different?

I see the Millennials being very, very, technical. They are dissecting, examining, discussing, all that makes those music making boxes tick and produce music. The youtube platform has elevated and simply exploded the amount of information, reviews, scrutiny of brands and their products. A good product will quickly find its place among the consumers and a bad one will crash and burn.

How long do you think a Tice Clock would last with today's forums and youtube?

No doubt they have budget constraints at this point of their lives. Disposable income is quite different than baby boomers. Guess how much of the US wealth the Millenials hands? Only 3%.... Baby Boomers are holding over 80% of accumulated wealth.

So for the younger generations, making audio related purchases is a very much about "perceived value". That completely rules out cables, power conditioners, accessories in the thousands of dollars range.

I'm not talking about the handful of very successful entrepreneurs that have succeeded beyond the wildest dreams of what our generations could accomplish before the invention of internet and its potential.

Perhaps someday and I hope they are able to but for the majority, components breaking the $10k mark are a pipe dream for them at this point of their lives.

The best case scenario would be lifestyle products that offer good sound and solid value.

I see some manufacturers waking up to that reality and catering to the youngsters. The headphone industry and everything related to decoding the bits of the streaming platforms and amplifying the signal to the headphones from the desktop is simply booming.

I also see the active speakers doing really well for those catering to the high end client who is not a typical audiophile purist but wants good sound without the clutter and visible python sized cables on the floor trying to swallow the speakers as their wives would put it.

As baby boomers themselves are downsizing, many find the condo life is just much simpler with integrated components and smaller, elegant looking speakers.

It is impossible to predict the future very accurately but if one pays attention to the trends, at the very least, the direction becomes clearer.

I see the market being very much flooded by Chinese audio products. Hate to say it but the value and bang for the buck will once again be next to impossible to match. The bulk of the old school audiophiles may not go for it but the younger generation has no such loyalty baked into them. They could care less where a value product that turns them on comes from.

Originally Posted by mep

Serge, I don’t find much to agree with from your above post. The market is already flooded with Chinese audio products and products manufactured in China by global brands under their names.

I for one have zero plans to downsize and move into a condo which is really an apartment with a mortgage and no real freedom as an audiophile unless your wife has already regulated your listening to headphones.

I fail to see a connection about your own situation and decisions about your retirement residence with the reality of the younger generations who have decades of work ahead of them to get to the same point.

Originally Posted by mep

Serge, most people who weren’t born with a silver spoon in their mouth had to work hard to get to where we currently are. I don’t think I knew anyone in their twenties when I was in my twenties that had really expensive stereo systems. We all have to start somewhere and it won’t be any different for younger generations.

I do not believe I posted anything above saying to the contrary. It obviously takes time to get situated in life and until disposable income becomes more readily available. I did not have an expensive system in my 20s either but I did build one in my very early 30s, as soon as I was able to scrape up enough to do so and this was with two college grads working full time in the health industry. My two sons are both Millennials. I put them both on the path to earn more than 6 figures a year but... Their lives are not any easier. My first four bedroom, 2400 sq ft house cost $202,000. That SAME house is now $590,000.

My son who is earning over 6 figures a year had to settle for a high end townhouse instead. He is also into music and is an audiophile because he grew up around my own systems and music. Let's just say he is NOT buying $8K power conditioners and $2k USB cables. Most of his friends outside of college and work colleagues are making do with much less in life. It is not easy out there and chances are, it will get even harder.

Originally Posted by Mike

Old guys in the 70’s bought high end audio gear.

Old guys in the 80’s bought high end audio gear.

Old guys in the 90’s bought high end audio gear. This is when the “we are going to run out of old guys, find the kids!!!” began.

Old guys in the 2000’s bought high end audio gear.

Today, more people are purchasing high end audio gear perhaps more than ever and its spread out over a wider variety of manufacturers and a wider world wide audience. That’s why you’re seeing so many more brands.

Unless 40 somethings fail to become 50 somethings and 50 somethings fail to become 60 somethings, the pending decline of high end audio is greatly exaggerated.

There are many challenges facing high end audio which warrant discussion, but we constantly see 30 somethings and 40 somethings entering the world of high end. We are also seeing 60 and 70 something buying their first dream system too.


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Mike, you are also geographically in a very unique place. I found your story of a client who wanted to plunk $100K on a system and then called you the next day to make it $200k very entertaining. While it represents the place where many of the wealthy baby boomers congregate and the attitude of trying to spend their money before their last sunset, it is hardly a reality for the rest of the country.

Originally Posted by Mike

Old guys in the 70’s bought high end audio gear.

Old guys in the 80’s bought high end audio gear.

Old guys in the 90’s bought high end audio gear. This is when the “we are going to run out of old guys, find the kids!!!” began.

Old guys in the 2000’s bought high end audio gear.

Today, more people are purchasing high end audio gear perhaps more than ever and its spread out over a wider variety of manufacturers and a wider world wide audience. That’s why you’re seeing so many more brands.

Unless 40 somethings fail to become 50 somethings and 50 somethings fail to become 60 somethings, the pending decline of high end audio is greatly exaggerated.

There are many challenges facing high end audio which warrant discussion, but we constantly see 30 somethings and 40 somethings entering the world of high end. We are also seeing 60 and 70 something buying their first dream system too.


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Good post. When there where audio shows before Covid, I would see a lot of young people attending. I know many young folks into music/gear but can not afford high end gear...yet. When they are old farts, they will be buying high end. There are so many manufactures that keep popping up there is clearly a market for economical gear and very expensive gear.

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Originally Posted by Mike

Except he lives in Washington.


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There will be outliers. Florida is still a very unique place. No? You are booming, many of the stores elsewhere have closed long ago.

Originally Posted by mep

Serge-If your son is making a six figure salary and he can’t afford a home, he is obviously living in a state with ridiculously priced real estate. That’s a choice many people make for a variety of reasons. It doesn’t mean that people don’t make other choices and choose to live in a state where you can buy a much nicer and larger house for far less money.

He wants to live in a good school district now that he has a son of his own. I did the same for my kids and paid for their 6 plus years of college which is a small fortune these days. The single greatest thing a parent can do for the future of their kids (other than buying $10k of Bitcoin when it was under a dollar and is now at $20K per. I missed that one.) Our state is no where near the nutty house prices of others but is more expensive than some, obviously. It is what it is for the time being.

By the way, to get anywhere in life, one either gets an education, succeeds at a business or wins the lottery. Well, good luck with the last one. Statistically, good luck with the 8 out 10 business models failing as well. So that almost always leaves us with the first. Education. I paid $12K a year in the 80's to attend a prestigious university in Philadelphia. My son's tuition cost me $60k a year some 25 years later. That similar/same education is now 500% more expensive.

That same house that I started out in is now 300% as much. Did salaries go up 300 or 500% since then? That's a big NO.

So when we talk about the future of high end audio, the numbers are not really adding up here. Then again high end audio was always a very small, niche market so it totally bypasses the reality and always has. I suppose even an RCA console to spin those new Living Stereo wonder records in living stereo was a significant investment for the average Joe in the 50s?

So how much is that new Cadillac in the window anyways? The first BMW M3 I bought slightly preowned cost me under $30k. Now they are upwards of nearly $100k.

Originally Posted by TheOctopus

Nicoff, I agree with your observations.

How long do you think a Tice Clock would last with today's forums and youtube?

Hey Octopussy, Easy on the rhetoric,mine got really offended !

and has refused to function----not that it ever did frankly

Bruce

Originally Posted by Bruce

Hey Octopussy, Easy on the rhetoric,mine got really offended !

and has refused to function----not that it ever did frankly

Bruce

Bruce, Octopussy was a great James Bond Flick. Never in my life, at any point, of any of the madness, of the green cd markers, the black light cd mats, the suspending speaker cables in the air by fishing line and using bicycle tubes with pressure gauges as a vibration isolation device, have I or any of my crazy audiophile friends even considered a Tice Clock. I want to congratulate you on your ownership of a true relic and THE definitive symbol of audiophile nervosa.

Originally Posted by TheOctopus

Bruce, Octopussy was a great James Bond Flick. Never in my life, at any point, of any of the madness, of the green cd markers, the black light cd mats, the suspending speaker cables in the air by fishing line and using bicycle tubes with pressure gauges as a vibration isolation device, have I or any of my crazy audiophile friends even considered a Tice Clock. I want to congratulate you on your ownership of a true relic and THE definitive symbol of audiophile nervosa.

Yoh Serge,

They don't know what they missed--when my third wife saw the Clock behind the Fridge--she said

Its that or me!

as you can see I chose the Clock

Bruce

Originally Posted by Bruce

Yoh Serge,

They don't know what they missed--when my third wife saw the Clock behind the Fridge--she said

Its that or me!

as you can see I chose the Clock

Bruce

Bruce I was serious. That thing has to be a collector item now. Why was it behind the fridge? Power factor correction or did the beer taste better that way?

Never heard of Tice Clock so I feel better.

Today the WSJ says that 17% of dealers are willing to quit the brand and stop selling Cadillacs since they announced that they are ditching the ICE and going electric.
And all it was going to cost the dealers was $200k.
Think about it: give up a dealership instead of spending $200k to keep it.

PS. I think that the issue is not electric cars, but rather that dealers don’t see themselves making money supporting that brand. I am sure they would sell Tesla cars if they could.

About 150 U.S. Cadillac Dealers to Exit Brand, Rather Than Sell Electric Cars - .pdf

And perhaps Cadillac should not have tried to change its image at all. It has come a long way since Elvis drove one and the days of when it was popular to have a feather in your hat and lots of gold around the neck. By trying to attract the younger buyers who are clearly not buying enough of them, they may have lost and alienated their loyal clientele base.

Also some brands inevitably met a dead end. No way to innovate and no way to keep going forward. Plymouth, Pontiac, Mercury, Oldsmobile and these are the more recent brands. I am surprised Buick has somehow survived to this day...

Originally Posted by gadawg

Not sure where $100k comes from ... the 2021 BMW M3 Competition starts at $72,800. More yes ... Not $100k by any means and BTW I upsized the house getting ready for retirement so I can have a room for everything I wanted! :-)

That all said ... I sold hi end audio in Atlanta in the late 80's and early 90's and they were predicting the demise of Hi End Audio back then too. Didn't believe it then and don't now either. Will it change? Sure ... everything does but 30 years later I can still go audition and buy tube equipment, turntables and huge mega dollar speakers and I can still bring home tons of very expensive speaker cable that people will argue about endlessly just like they did way back then ... some of the brands are still there, others went away and many newer ones have emerged. It will continue ...

Cheers!

George

George, I've dabbled in all kinds of cars. It was one of my hobbies. Let's just say I usually did not lose money on most of my toys. So we are not talking about Buicks here... Of course the BMW is not the car you can make money on but there were exceptions.


As far as M3's I've owned every generation except the first E30.

I had a deposit on the M3 GTS some years back. Decide to pass on it as the market was flaky on it and none of the secondary market dealers wanted to commit to my car.

The MSRP was over $150K and they were fetching $180-190k. Only 150 units were made. So that was quite a premium for an M3.

The 2021 M4 Competition, when loaded up with goodies such as carbon seats, carbon brakes, carbon interior and exterior packages, the MSRP is $103,000. You can build one yourself https://www.bmwusa.com/

Congratulations on upsizing for your "retirement" residence. Makes sense to be able to fit all the toys one ever wanted in there.

As I already mentioned above, the baby boomers hold over 80% of wealth and Millennials hold 3%. So unless the Boomers checking out for that high rise in sky leave a generous will to their kids and grandkids before they blow all their money on Margaritas and Viagra, it will be difficult to peddle $80k DACs and $100k speakers

As I already mentioned above, the baby boomers hold over 80% of wealth and Millennials hold 3%. So unless the Boomers checking out for that high rise in sky leave a generous will to their kids and grandkids before they blow all their money on Margaritas and Viagra, it will be difficult to peddle $80k DACs and $100k speakers[/QUOTE]

And maybe the future doesn't have $80k DACS in it and maybe it does ... when we are all gone by default today's younger generations will hold all of the wealth then we'll see what they do with it ... My guess is like all previous generations ... when they get older and are financially stable they will discover what a audio system can deliver compared to their headphones and jump in. This generation may get a late start and high end will certainly change ... but I have a feeling they will join the party at some point and in 30 more years they will still be arguing about cables! :-)

George[/QUOTE]




George, they are very much aware of high end audio already. I've spent quite a bit of time participating in forums what were brimming with Millennials and younger headphone enthusiasts. Let's just say in todays world of youtube, instagram and other internet forums, they are very much in the know. Guess what that one little problem is that stands between them and high end audio that we like to discuss here...

Just like I don't see any discussions about $50 Million+ dollar yachts on this forum, it is no different for the youngsters and $100k speakers. We may as well talk about SpaceX rockets as they are just as unobtainable to the youngsters as they are to us.

Originally Posted by mep

Too much doom and gloom. High End Audio has always been around in different forms and guises and so it will remain. The high end will adapt to changes in the market place and remain vibrant in spite of people predicting its demise.

It will evolve is all. Not overnight either. It has been evolving. Much more "value oriented" gear now than ever before and just as much "exotic stuff" We certainly didn't have a thousand speakers to choose from in the 80s.

In the mean time, I actually see much more of the pricey and exotic offerings. There has been quite a bit of wealth built up in the market over the last decade. The rich just keep getting richer... Gotta spend it somewhere. Let's hope the market doesn't implode.

Originally Posted by TheOctopus

Bruce I was serious. That thing has to be a collector item now. Why was it behind the fridge? Power factor correction or did the beer taste better that way?

Oh Sorry I was not so serious --the damn thing I've discarded twice over that last 35 years--and moved house about the same number --and the little bugger always seems

to pop up again!

Honestly the Fridge--cannot recall why-maybe desperation to render it a life of total damp darkness--my bad

Cannot seem to sell it or give it away-so I guess its with me now till my demise

Excellent thread by the way--carry on chaps!

Bruce

Originally Posted by mep

Too much doom and gloom. High End Audio has always been around in different forms and guises and so it will remain. The high end will adapt to changes in the market place and remain vibrant in spite of people predicting its demise.

I deal with the glass half empty crowd all day long, it becomes a self fulfilling prophecy you can see it in their lives. I have this quote on my office dry erase board that I point out to the new guys: "Opportunity is missed by most people because it is dressed in overalls and looks like work" - Thomas Edison