A Bull Market in Nashville

George Gruhn
"The Vintage Catalogue"
Frets Magazine, February 1984

The fretted instrument market is affected by musical trends, the economy, and changing social trends. In recent years these factors have combined to produce an erratic, unstable, and highly unpredictable market. Major manufacturers and dealers of fretted instruments experienced a sharp downturn of sales and profitability. Record sales were down, and public interest in music in general seemed to be at a low. In the `60s and `70s, people's idea of a good time usually included music. More recently it appeared that the younger generation was more interested in learning to play video games than guitar; while for those over 25 years of age, a good time consisted of opening a six pack of beer and watching sports on the tube.

The economy and musical trends both affect guitar sales; however, economic and musical trends tend to be independent of each other. During the recession of 1974, for example, the economy was in trouble, but the music market was strong. The period of 1980-82 was quite poor for the music market in general and for guitar sales in particular. The economy -- particularly high interest rates and the high value of the dollar on the international market -- acted to depress sales and profitability. Economic and musical trends converged to deliver a double blow to the fretted-instrument market. Many music dealers found that PA systems and electronic keyboard instruments were more profitable than guitars.

Historically, musical trends have developed extremely quickly, leveled off for a period of five to fifteen years, and then have been replaced by a new musical form. From 1880 through 1905 there was a five-string banjo boom; while from 1905 through 1921 mandolin orchestras accounted for the bulk of fretted-instrument sales. Four-string dixieland banjos were popular from 1921 through 1928, while the crooners popularized guitar from 1929 through 1933. Arch-top f-hole guitars were dominant during the big band era of the `30s and `40s. Electric guitar became popular for the combo music of the `SOs. Acoustic guitar sales skyrocketed during the folk boom of 1959 to 1963, while the Beatles and Rolling Stones popularized rock and roll and electric guitars from 1964-1970. The folk-rock boom of 1970 through 1975 created great interest in vintage acoustic as well as electric guitars. Instrument sales were very strong during this period. Major manufacturers increased their production and many new music stores opened. At this same time the international market opened up. American manufacturers and retailers were becoming increasingly dependent upon the worldwide market for their products. The music market and fretted-instrument market were exceedingly strong from 1960 through 1975 -- probably more than ever before.

The period of 1976 through 1982 has been one great instability in the economy and in the music market. In all probability, the problems with the economy have not directly caused the music market to falter, but there is no doubt that the current high price of the dollar makes it extremely difficult to sell American musical instruments overseas. Much of the new music since 1976 was fad-oriented and did not have the impact of the music boom of 1959-1975. The market seemed ready for something new, but it was not at all clear what this something might be. For a while, it looked as though video games and synthesizer-dominated music might well be the wave of the future; however, video game arcades now seem to be losing their appeal after the newness has worn off and synthesizers are not selling nearly as well now in Japan or Europe as they did a couple of years ago. Guitar sales have started to pick up again. Although it is a bit early to say that we are experiencing a new musical revival, there are many indications that we are now on the brink of major changes in the music market -- perhaps to be fully as profound in their impact as the folk boom and the subsequent rock-and-roll explosion. Although my greatest experience is with acoustic instruments, from 1976 until a few months ago, most of the dollar volume of my shop's business centered around electric guitars -- particularly solid-body instruments. In the past few months this has changed dramatically. Sales of solid-body guitars have fallen drastically while hollow-body guitars, and acoustic guitars, banjos and mandolins are in much greater demand. In the past 10 months, overall business has picked up and the nature of the demand has altered. Rockabilly and country music are prospering and a new, highly sophisticated style of acoustic music seems to be evolving.

No market can be any more stable or sophisticated than its clientele. Classical music, for example, appeals to educated and moneyed clients, resulting in a relatively stable and high-priced market for violins, violas, cellos, and other classical instruments. Punk, on the other hand, is fad-oriented and results in a fad-oriented and much lower-priced market for the instruments involved. Classical instruments tend to be good long term investments, while punk and heavy-metal markets are at best highly volatile.

The market for acoustic guitars, banjos, and mandolins has been more stable than the electric market. Fine vintage acoustic fretted instruments have excellent investment potential, since they have extremely fine craftsmanship, and an excellent sound, and most models are still priced higher than a modern replica. While a few models such as pre-World War II D-series Martin guitars, pre-war Gibson flat-head Mastertone banjos, and 1920s F-5 Gibson mandolins are quite expensive, these instruments are exceedingly scarce, but still do not command nearly as high prices as many classical instruments, which are neither more rare nor of greater intrinsic merit.

Just as the demand for quality vintage instruments appears to be increasing, manufacturers of new instruments are striving to improve their quality. Although Martin's sales are considerably off from the height of the folk-rock boom, the quality of their new guitars is probably the best since World War II. Gibson has greatly improved the quality of their electric guitars since the early `70s and is now seriously pursuing improvements in their acoustic guitars and banjos. Whereas most major manufacturers during the `60s and early `70s concentrated on flashy appearance and durability rather than sound, they are now turning their attention toward making fine musical instruments. In addition to the large manufacturers, there are now many independent luthiers producing fine-quality hand-made instruments. Competition and consumer demand have resulted in a renaissance of fretted-instrument building.

I am especially encouraged by the new acoustic music, since it is technically sophisticated and appeals to a very broad spectrum of different types of people. Nashville clubs such as The Station Inn now attract bluegrass fans, jazz lovers, and even classical listeners. The audience runs the complete spectrum, from factory workers, truck drivers, and office workers to doctors and lawyers. Judging from the changes I have observed in the nationwide and international demand for instruments, the market is poised on the brink of dramatic change. The new acoustic music is likely to be much less fad-oriented than rock or pop -- the music is technically as difficult as classical, so musicians must be serious in order to pursue it. The new audience is musically sophisticated and relatively stable.

The music may not generate the surge of dollars that was created by the folk-rock boom of the early 70's, but it looks highly encouraging and should appeal to lovers of fine acoustic music.

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