Hi-fi market: always richer, always more miserly.

I have been hearing about the "hi-fi market crisis" for almost ten years now, ten years during which this market has, in fact, become poorer, dealers have cried their tears around (an exercise dealers were keen to even at the time when Italy was high-end most flourishing market), distributors threatened mass suicide by throwing themselves all together from a peak dancing the rumba, manufacturers have decided many times to throw the towel, almost every time thinking it over and creating a new brand name. In a general sense, it's undeniable that there is a market - in a wide sense, meaning the community place where goods are exchanged for money - crisis, and it's a structural one, so wide and complex, and tied to so many macro-mechanisms, that the effort to analyse it is overwhelming. It's an irreversible crisis; countermeasures would imply the failure of the underlying structure of the so-called "free market", which isn't able to rule itself anymore and therefore is at the mercy of each and every, even low-profile, speculation. A market which is only able to take advantage of the same, over-saturated, part of the world, which doesn't care about the poverty and the backwardness of that other three quarters of inhabited lands, of the destitution of that other four fifths of world population, is not only an egoist and rather wicked one: most of all, it's a suicidal one. This kind of foreword is here only to state that we cannot deal with the hi-fi market as if the larger picture did not exist.

Is there one market in a non crisis situation? Which one? The car market? The telecommunications market? The information technology one? No - temporary booms don't create a structured, reliable market, so the fortunes of high fidelity aren't different from those of cell-phones, of personal computers, of cars and so on. But it must be said that the reasons of the crisis aren't the structural ones alone: there are, necessarily, internal ones. The hi-fi market doesn't work anymore: this is the tenet we are constantly repeated by those operators who should really promote their products and their sector. The numbers, though, are telling a different story: the hi-fi market, which includes both the low-end and the high-end, the selected manufacturers of the most desirable products and the common purveyors of home-theatre systems and boom-boxes, has been constantly and, seemingly, unstoppably growing from the Seventies up to now, in a scary percentage trend. It keeps on growing, in numbers, in turnover, in the range of manufacturers and available models, in every sector: the high-end is growing, and so are low-fi, home theatre and, paradoxically, the record market. What isn't growing, but keeps duplicating, each time equal to itself, is the operators' attitude towards their public (I know, it's not a good idea to proceed with gross generalisations, but it would be an even worse one to try and make tortuous, black/white hair-splitting).

In 1975 in Italy there were four Hi Fi magazines, two of which were really powerful. They sold ads space at prices that would be amazing today (in absolute terms, even without compensating for inflation). The good dealers made a great living, the bad ones closed their doors, manufacturers and distributors tried hard to improve products and service, left no stone unturned to let the public know about them, reinvested the revenues in their companies. In 2002, there are about eight magazines in Italy (but there are two more market sectors). Ads space prices are laughably low but ads spaces aren't selling, and readership has fallen to minimal numbers. Good dealers have trouble in keeping their stores open, bad ones aren't closing even if you try and force them. In the meanwhile, the number of sold products has multiplied by the hundred, prices have dramatically reduced, the number of actual and potential purchasers has grown out of proportion. So, where's the crisis? It's in many of those wonderful improvements we have just listed, chiefly in the downsizing of prices (it looks like a provocation but it's true: in 1975 a decent system would cost you 300.000 Italian lira, which, revalued to today's currency, would be about 1500 Euro, and with this kind of money you can buy a much more than decent system).

The hyper-competition among manufacturers, distributors, dealers, has led to a harsh profit cutting on downmarket items - which are often sold below their cost - and to a disproportionate increase of profits on more upmarket products, so dealers (the number of which has skyrocketed in the meanwhile) have two alternatives: competing bitterly on the 5% they are left with, or discounting the 40/60% they have on upmarket products until they depreciate what they sell. Manufacturers and distributors have almost no budget dedicated to advertisement and customer service. Expenses for shows are considered avoidable. They gave up on those hundreds thousand people who visited the SIM (Milan's Music Show), those thousands who queued to visit the Suono show in Rome, those few hundreds who attended the regional shows, which were small, but which were fundamental for the promotion of hi-fi. The outcome is evident. Add up to that the fact that an abundance of offering doesn't make a product more desirable (if it does, it's for a short time, and that's what happened with cell-phones). The levelling of performances (unavoidable with the technological progress) has transformed the competition among brands in a simple matter of market image in the best case, in a fight to the ultimate discount in most. In this situation, the hi-fi market (talking about the Italian case) hasn't certainly been helped by the miserly cultural policies which were put into place during these years, nor by the mean, arrogant record market, always pleading poverty, always retreating into comfortable, bankrupt-leading positions, obstinately sinking money in useless, colossal productions, and going on with paranoid price policies.

What's strange is that this is a potentially alive market, kept going by millions and millions of enthusiasts, whose passion is seemingly unlimited and whose patience seems to have no end. Millions of enthusiasts who are ready to spend inordinate amounts in order to listen to (and recently to watch to) their favourite software in the best condition. Actual and potential enthusiasts, who discover almost by chance, browsing a magazine at a friend's house or finding themselves involved by chance in a overheated Internet forum discussion, that what they love the most - movies, music - can be watched and listened to in much better conditions than they thought it was possible. Yes, by chance, because the funds which should have been used for promotion and customer service have been invested (and often lost) at the stock exchange. Creating in this way the most dangerous market killer: the disillusioned enthusiast or customer. If I were an operator, I would ask myself why the "vintage" is so successful, why one and a half million products are sold in one auction site alone - and, mind you, they are not given away. As I am a vintage enthusiast, I know that most of these products are fascinating only for their age - the exceptions are not many. The overwhelming majority of them isn't any better than current products.

So what? I have just said the word: "fascination". An expensive product, an expensive market, devoid of any appeal, make no sense. How can they think that I withdraw an amount from my bank account, to give it to a dealer who seems to be making a favour to me, to take the money from my hand, or to a distributor who is unable to repair the silliest of products or to amend the silliest of defects in a reasonable time? Why should the average Joe raise from his chair, get into his car and go writing down a check for something he even doesn't know the existence of? The sad truth is that the Eighties have ended a while ago, but only purchasers took notice of that. The only thing that's left is crocodile tears, but those have always been plenty.