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The industry gathered in Anaheim for the biggest NAMM Show yet.

Booming Economy Boosts NAMM

Sales weren’t an issue at NAMM, as buoyant consumer demand swelled exhibitor order books. Staying profitable, however, was another matter as mail order competition and the proliferation of brands continue to pressure margins.

AS THE PREEMINENT SHOWCASE for everything from fine violins to advanced stage lighting systems, the NAMM Show doesn’t lend itself to easy generalities. How do you go about summarizing a four-day blowout that features 2,000 companies and 7,000 brands all packed into the 1.8 million-square-foot Anaheim Convention Center? A few unifying themes did emerge from the boisterous gathering, which depending on your perspective were either a source of encouragement or cause for serious concern. As for the encouragement, the rising tide of the strong U.S. economy seems to be lifting the fortunes of virtually all NAMM exhibitors. With few exceptions, companies interviewed across all product categories reported improved sales in the fourth quarter and offered rosy forecasts for the coming year. The 115,000 attendees who packed the convention center provided another source of encouragement, indicating that interest in all facets of music making remains robust. As for the concerns, let’s just say that rising sales have been accompanied by intensified competition and compressed margins. Retailers—even the online ones—complain about relentless price competition eroding their profits, while suppliers lament the proliferation of brands. In short, keeping an enterprise in the black is tough.

The NAMM show lived up to its billing as the “Crossroads,” bringing together interested parties from every contingent of the music world—performers, audio professionals, educators, retailers, and enthusiastic consumers. No longer just an m.i. event, the show now includes professional audio and lighting products that were once the exclusive preserve of the Audio Engineering Society (AES) and the National Association of Broadcasters (NAB) shows. Although there is little crossover between the main convention center housing m.i. products and the audio exhibitors in the ACC North hall, the expanded format has received positive reviews. Summing up NAMM’s expanding scope, CEO Joe Lamond said, “The NAMM Show campus served as a living, breathing snapshot of the current global marketplace. Attendees who made the commitment and investment to be there have increased their competitive advantage for success in the year ahead.”

The Anaheim Convention Center was packed for the four days of the NAMM show as 115,000 visitors from all over the world crowded in to see the latest in music and audio gear.

Numerous exhibitors offered similar assessments. “NAMM is a major show for Shure,” said Abby Kaplan, Shure v.p. of global sales for musician and consumer audio. “It allows us to connect with the community and its musicians, and year after year, we leave reenergized and inspired.” Markus Theinert, Conn-Selmer vice president of marketing and international sales, added, “Meeting the people is still important in our relationship industry, and the NAMM show provides an ideal platform for that purpose.”

With swelling attendance, the function of the show continues to evolve. Exhibitors still see it as a prime opportunity to influence retail stocking decisions. However, of near equal importance is its role in “content creation.” That is, generating catchy video and audio clips of people and performers to place on websites, Instagram, YouTube, or other platforms. The larger exhibitors approach content generation systematically, with slick video stages staffed by a professional team that conducts interviews non-stop for the duration of the show. The smaller players take a more improvised approach, sticking a camera in the face of any enthusiastic player trying their product. However, both share the conviction that clips created at NAMM are an important component of any marketing plan.

The biggest single “trend” at NAMM was the multitude of “little trends” shaping the various product categories represented at the show. Just as popular music continues to splinter into new genres—as of this writing, Spotify listed 1,263 of them—the music products industry is segmenting into ever narrower niches. A generation raised on having everything tailored to their preferences, coupled with small batch manufacturing technology that allows companies to profitably produce products in small quantities, has led to an explosion in the number of products available. Whatever your musical goal—mastering an instrument, performing on stage, amplifying a church ensemble, recording—there are more potential solutions available today than ever before. This helps explain why the ranks of NAMM exhibitors has expanded over the past decade.

Joni Mitchell received the Les Paul Award for Innovation at the annual TEC Awards. Herbie Hancock (left), who presented the award, said, “She is an artist of unparalleled vision and courage. She never repeated herself, always exploring new musical ground.”

The numbers tell the story. By our count, there were approximately 375 guitar brands represented in Anaheim. The tally includes one-off custom builders, entry level Asian-produced instruments, as well as higher-priced U.S.-produced products. Alongside the familiar names—Fender, Gibson, Martin, Taylor—show goers could sample the instruments of countless newcomers such as Relish, offering a unique aluminum-bodied instrument with interchangeable pickups, and Paoletti, with guitars handcrafted from Italian wine barrels. What these boutique builders lack in brand name recognition or luster they compensate for with the one feature their larger competitors can’t match, namely exclusivity. Products have also proliferated within individual brands. When Leo Fender introduced the Stratocater guitar in 1954, there was only one model. At this year’s sprawling Fender booth, counting all the price points, finishes, and configuration options, there were close to 800 variants of the iconic design. The vast display also seems to put to rest the notion that the guitar is somehow dead.

Similar product proliferation could be found in every other product category. Need a powered 15" loudspeaker? There were more than 120 variants on display at NAMM. How about a saxophone? In addition to well-known brands like Selmer, Yamaha, and Cannonball, there were another 40-plus exhibitors, most from China, offering saxes. Suppliers of mundane items like cables, stands, and cases numbered in the hundreds, and the range of effects pedals at NAMM bordered on unquantifiable.

For lack of a better term, this “SKU explosion” has been a benefit to the buying public, although some would counter that scores of barely distinguishable products is mainly a source of confusion. However, it unquestionably complicates stocking decisions for retailers. Since no one can stock everything, the challenge becomes how best to curate the optimal selection. And what to do about the customers who come in asking for the obscure item you don’t stock? The situation also tilts things in favor of the large online merchants that are better positioned to offer a wider selection. The “SKU explosion” and the confusion it creates open the door for new retail formats, according to Ralph Goldheim, president of Arturia U.S. He noted that there are online retailers offering vast selection, and others providing low pricing, but few genuine “product experts” capable of helping customers navigate all their choices. “We’ll see another wave in retail evolution,” he added.

Earth, Wind & Fire was the headlining act at Yamaha’s appropriately named “All-Star Concert” held in the outdoor plaza in front of the Convention Center. Other performers included Kenny Loggins, Sheléa, Avery*Sunshine, and Mr. Talkbox.

In most industries, as technologies advance, old products get discarded. Flip phones gave way to smartphones, and the CD has largely been abandoned in favor of streaming services. This dynamic doesn’t seem to apply to the music industry. The current crop of digital synths and keyboards offer remarkable versatility and performance at a compelling price. Yet the interest in archaic analog technology remains strong. A Korg reissue of the ARP 2600, first introduced in 1971, sold out almost instantaneously. Similarly, exhibit space devoted to boutique analog synths—the ones that have no presets and are programmed with patch cords—was packed for the duration of the show. Digital modeling amplifiers offer a cost-effective alternative to traditional tubes, yet there was an abundance of tube amps on display at NAMM. Digital pianos are scattered throughout the NAMM show, yet they have yet to replace fine acoustic instruments.

A recurrent theme at NAMM was the shifts in the retail distribution network. Online competition, led by Sweetwater and Amazon, continues to push weaker stores out of business and prompt the survivors to rethink their business model. However, while U.S. brick-and-mortar retailers face a challenging climate, things are significantly more difficult in Europe. Perhaps the only gloom at an otherwise upbeat show was to be found among European visitors. The absence of any form of MAP policy has led to retail price competition that “is a bloodbath where no one is making money and we see several stores a week close,” according to one leading distributor. Another added, “A few years ago, we counted about 6,000 dealer customers across the European Union. Today it’s closer to 3,000, and very few are healthy.”

Fender’s Master Builder Ron Thorn shows off a hand-built graphite-bodied Stratocaster. Inspired by the Saleen S1 Supercar, the unique instrument was priced at $33,000.

Punitive tariffs and their potential impact on the sale of music products has been a major topic of discussion throughout the industry for the past two years. How would suppliers cope with a 25% tariff on Chinese-made musical instruments and audio gear? And, would the subsequent increase in prices have an adverse impact on sales? Surprisingly, at NAMM, the topic was greeted with a shrug. While suppliers juggled inventory to avoid, say, bringing in products at a 25% duty just before the levy is reduced to 10%, retailers seemed largely oblivious. One guitar maker’s solution to the duty on his Chinese-made guitars was to hold the price and stop including a gig bag. “We didn’t get any pushback,” he related. An audio firm simply passed along the price increase with little adverse impact. The takeaway is that perhaps music and audio gear isn’t as price-sensitive as most seem to think.

Building the equivalent of a small city that lasts for just four days inevitably prompts exhibitors to ask, “Is it worth it?” A rational case could be made for repurposing trade show expenditures to R&D, customer outreach, or a number of other worthy goals. And music industry tradeshow expenditures as a percentage of sales are unquestionably on the high side. But in a business that deals in intangibles like “tone” and “vibe,” rationality isn’t always the right course. Chris Martin, CEO of the Martin Guitar Company and current chairman of NAMM, says that a primary function of the show is to “hold each other up, cheer each other on, and strengthen the industry as a whole.” Boosting the morale of an industry at the start of the year is not something that can be measured or explained to a hard-nosed CFO, but it’s nonetheless important to thousands of industry professionals, and helps explain why the NAMM show remains so vibrant.

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