Dear sir...a 50% margin...in today's video world? I think you have been tippling at the wrong well.
Most of the "Direct" vendors make product that, while affordable, doesn't REALLY compete with performance and/or support(lets see them support something that is 20 years old, like Audio Research). What they do is make it good enough so that people won't take the time to actually compare the product in a store that offers better, plus service. And THAT is the dumbing down of audio that happens when everyone raves about a product without doing a direct comparison with a known high performer. Everything is reasonable now days, and some things truly exceptional, and because of the huge amount of product available, people read rather than listen or look.. With the help of the magazines and online reviewers, the brick and mortar stores that DO the demos are being given short shrift, because the demo is "dead" according to them, and that is an increasingly popular statement. So why should people even bother to search out professionals, when everything they need to know can be found on the Internet. Do you really believe someone who sells the OPPO is going to compare it against something significantly better, or is he just going to take the sale and go on to the next guy? Because the OPPO is "good enough" and doing a comparison is too much like work.
So, we who care will continue to demo and compare, educate and illuminate and the people who buy the stuff online because of lots of reviews, will NEVER get to hear exceptional...just good enough.

Ivan,

I think you missed two key points.

1. There is NO video line offering 50 points but salespeople PUSH video because customers buy it and it doesn't take the passion, education and emotion to sell like say a product like Audio Research.

2. Companies like Audio Research are NOT who I am talking about in this article. They have good national and international distribution. I am thinking more like Naim, Pass Labs, Linn, Sutherland. This isn't for the biggies like Krell, Meridian, Lexicon, Mark Levinson etc..

I TOTALLY agree with you that Audio Research has THE BEST long term support for their clients. They bench test and actually PLAY every component that comes back to them for service. Right here in America. THIS is something I am willing to pay more for. Its just great value.

I take plenty of offense to the tone of this article due to the fact that I have been in this industry for 29 years and have yet to achieve those 50% margins that us fat, lazy brick and mortars scream for! I got home at 11
pm last night due to my unwillingness to leave a customers home until their system sounded as good as I knew it should. How would these folks even have any chance of good sound without the service I provided?
Which direct to customer companies offer any in-home service? Oh, I forgot, none that I have ever heard about. Before dismissing the whole industry you should stop to think about the myriad of people who do want service and expert advice. They are willing to pay for the results they want to achieve that they would otherwise never take to time to get. They value their time above other considerations and are willing to pay the difference to get the improved results provided by skilled design and installation.
There are plenty of brick and mortar stores going away, but not just in our industry. Poor business practices are a problem in all areas of specialty retail. This just leaves more room for those that do have a set of high values and offer honest advice, professional service, great demos and the comfort of knowing that there will be someone to help them with any future concerns or wants.
The industry is evolving, as it always has, and there are people who are perfectly suited to a lower priced, mail order model, but there are very many who are not. Part of our growth has been due to our success with the elderly population. Most we have interacted with would be very unlikely to do research and make a purchase online. They are far more comfortable coming in to tell us what they want, then asking for our help to see that they get what they really need.
I would never have stayed in this industry for this long if greed were my primary motivation. I worry about every bill due, the mortgage bill, tax bills etc, just like every business person. I have never seen
a company in this industry make any where near 50% profit over even a single fiscal quarter. I drive my 12 year old SUV to deliver gear and am happy to make a modest living doing something I love!

Find me 100 specialty AV dealers out of the 3000 in North America that spend on marketing and creation of new clients.

Cello didn't do it when I was there. Chris Hansen didn't do it when I was there yet I spent upwards of $10 to find a qualified subscriber to HTR's email name. That's not even a client or somebody with an ROI.

Dealers are stereotypically cheap, lazy and entitled. Are the ones who aren't - ABSOLUTELY and you might be one of them.

Conversely - go try to call on dealers with a hot new product and see what response you get from dealers nationally. "I am not this" "I can't that".... And in terms of consumer demand - they DEMAND the manufacturer pays for it. Very few dealers do things like Definitive Audio's June event for their consumers. There's a reason why Mark Ormiston's dealer is the best in the nation. He invests.

The issue with specialty A/V or straight audio manufacturers is the same one that faces all other manufacturers of durable goods. You spent a lot of money finding one customer but now you have to find another because that customer is only going to buy an expensive stereo or widget only once every five to tens years. This is evident by the advertising on this on-line magazine. How does a manufacturer get the attention of a new customer? By getting reviews of sites like this that tells them they made a mistake and need to upgrade to the latest and greatest. This only works until the upgrader realizes that the incremental improvements did not justify the extra expense.

Hold on there big boy.....

I think you have HomeTheaterReview.com confused with the audiophile print mags when you say that we make people feel bad about the gear they have and then force them to upgrade. That's not us. That's the print books that are still trying to make a living selling to a Boomer clientele who is increasingly on Social Security.

We are about creating NEW customer demand. Our power is from the "long tail". If somebody looking for a Blu-ray player or a new HDTV - finds us and learns what Meridian or Audio Research is - then we've something VERY VERY VERY different than the audiophile books.

I want to be VERY clear about this point.

I cant agree more with Robert.

I want to clear up an issue that some AV companies have called me about today....

Selling direct isn't for EVERY AV company - its just a new way companies are finding niche opportunites in today's market. Many top AV companies have VERY GOOD and highly established dealer and rep networks. I wouldn't bail on these systems if I were them yet for every company that has this kind of network (think Stewart, Runco, Kalidescape and others) there are 20x that don't have many dealers at all and reps that don't push the product very hard. The main reason for this is the lack of consumer demand. Trust me if every dealer in an area was calling for XYZ product - the rep would be taking orders one after another.

Another key point is that somehow people think I am suggesting that I am NOT in support of brick and mortar stores. NOTHING could be more off of the truth. I am telling consumers CLEARLY that while buying direct has its advantages (and I do it with the likes of Amazon personally) I also STRONGLY support my local vendors for many things that I buy in my life. Consumers who like having an active demo at their local AV store should consider the cost of having that before they simply shop for price on the Internet. You have to pay more for the demo.

I want to go on record and say without the hard working reps out there, this business would be much worse off. Otherwise we all would be shopping for A/V at Wal-Mart. The key is finding customers that care about sound and quality. If you want cheap - go for it! But after many failures and no allowance to Upgrade, the customer would feel cheated. There will ALWAYS be a spot for "better" items.

Not all reps are bad.

Many are TRUE professionals and help grow the business.

There are quite a few who suck. I am sure Matt would agree.

As a relative newby to the industry I took great interest in your post, and the ensuing comments. I will chalk this one up to sensationalism in challenging the existing paradigm of AV integrators. I will codicil my comments through the lens of my current experience. I would venture so far to say that the majority of AV integration companies are lifestyle business'. The comments regarding lazy, order takers may have been a bit harsh, as I have met many dedicated, effective, professionals. Now I do applaud the contribution in forcing organizations to explore marketing opportunities. What I have found is that many companies are not marketing their true "value proposition" to their target audience. I am not sure if these same organizations have drilled down far enough to know if their audience has changed. Economic downturn or not. As a self professed divergent thinker, marketing is a component of filling the sales pipeline instead of attempting to upsell a big box store client.

I look forward to more sabre rattling.

As a relative newby to the industry I took great interest in your post, and the ensuing comments. I will chalk this one up to sensationalism in challenging the existing paradigm of AV integrators. I will codicil my comments through the lens of my current experience. I would venture so far to say that the majority of AV integration companies are lifestyle business'. The comments regarding lazy, order takers may have been a bit harsh, as I have met many dedicated, effective, professionals. Now I do applaud the contribution in forcing organizations to explore marketing opportunities. What I have found is that many companies are not marketing their true "value proposition" to their target audience. I am not sure if these same organizations have drilled down far enough to know if their audience has changed. Economic downturn or not. As a self professed divergent thinker, marketing is a component of filling the sales pipeline instead of attempting to upsell a big box store client.

I look forward to more sabre rattling.

As a relative newby to the industry I took great interest in your post, and the ensuing comments. I will chalk this one up to sensationalism in challenging the existing paradigm of AV integrators. I will codicil my comments through the lens of my current experience. I would venture so far to say that the majority of AV integration companies are lifestyle business'. The comments regarding lazy, order takers may have been a bit harsh, as I have met many dedicated, effective, professionals. Now I do applaud the contribution in forcing organizations to explore marketing opportunities. What I have found is that many companies are not marketing their true "value proposition" to their target audience. I am not sure if these same organizations have drilled down far enough to know if their audience has changed. Economic downturn or not. As a self professed divergent thinker, marketing is a component of filling the sales pipeline instead of attempting to upsell a big box store client.

I look forward to more sabre rattling.

As a relative newby to the industry I took great interest in your post, and the ensuing comments. I will chalk this one up to sensationalism in challenging the existing paradigm of AV integrators. I will codicil my comments through the lens of my current experience. I would venture so far to say that the majority of AV integration companies are lifestyle businesses. The comments regarding lazy, order takers may have been a bit harsh, as I have met many dedicated, effective, professionals. Now I do applaud the contribution in forcing organizations to explore alternative marketing opportunities. What I have found is that many companies are not marketing their true "value proposition" to their target audience. I am not sure if these same organizations have drilled down far enough to know if their audience has changed. Economic downturn or not. As a self professed divergent thinker, marketing is a component of filling the sales pipeline instead of attempting to upsell a big box store client.

I look forward to more sabre rattling.

As a relative newby to the industry I took great interest in your post, and the ensuing comments. I will chalk this one up to sensationalism in challenging the existing paradigm of AV integrators. I will codicil my comments through the lens of my current experience. I would venture so far to say that the majority of AV integration companies are lifestyle businesses. The comments regarding lazy, order takers may have been a bit harsh, as I have met many dedicated, effective, professionals. Now I do applaud the contribution in forcing organizations to explore alternative marketing opportunities. What I have found is that many companies are not marketing their true "value proposition" to their target audience. I am not sure if these same organizations have drilled down far enough to know if their audience has changed. Economic downturn or not. As a self professed divergent thinker, marketing is a component of filling the sales pipeline instead of attempting to upsell a big box store client.

I look forward to more sabre rattling.

Great article . . . Right on dude. The future has already changed.