Newsletter #33, April 2010

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This is Part 4 of a seven-part series on the vintage guitar market, written in 1991. Prices and other references specific to that time period have not been changed. Please feel free to email me with any comments.

George Gruhn

To view the rest of the series...
Introduction
Part 1: The utility market
Part 2: How instruments are priced
Part 3: The role of the collector
Part 5: Market dynamics
Part 6: The vintage dealer as trendspotter
Part 7: Instrument sales and musical styles

The Vintage Instrument Market, Part 4: Fads

No market - vintage fretted instruments, art, gold, pork bellies, or any other - is any more stable than its clientele. And the vintage instrument market, being made up in a large part by musicians, has experienced some tremendous fluctuations due to the fact that musicians, in spite of all they say to the contrary, tend to be idol worshippers.

Certain players tend to be very influential on what other musicians play, and the most influential are not necessarily those with hit records. Chet Atkins is the most notable exception, having sold millions of records as well as thousands of Gretsch guitars bearing his name in the 1950s. Les Paul also had hit records and a strong influence on guitar sales in the '50s, but in the '70s and '80s, while Les Paul models still sell, I question whether many of the kids who buy them today have any idea who Les Paul is, much less how he plays.

One of the most influential of all musicians in the early phases of the vintage electric guitar market was not Atkins or Paul or anyone else with a hit record. He was Mike Bloomfield, best known for his work with the Butterfield Blues Band. Ironically, the continued popularity of the Les Paul model owes as much to Bloomfield (and later to Eric Clapton and Duane Allman, among many others) as it does to Les Paul.

When I first started dealing vintage instruments in 1963, there was an acoustic market in place, thanks to the folk boom, but there was no vintage electric market. In fact, there were hardly any vintage electrics, period. Guitars that are considered vintage today - a '58 Les Paul Standard sunburst model with humbucking pickups, for example - were only a few years old. A '58 "vintage" model is 33 years old today, but in 1963 there were no 33-year-old electrics in existence. The oldest would have been a Rickenbacker "Frying Pan" lap steel, and in 1963 the earliest Frying Pan would have been 31 years old. The first professional-quality electric Spanish-style guitar - the Gibson ES-150 - was introduced in 1936, and it would have been 27 years old in 1963. The solidbody models of Fender and Gibson were relative babies, having been introduced in 1950 and 1952, respectively. Electrics were relatively new and were evolving rapidly through the '50s.

In 1963, a used electric instrument with a good brand name brought a top price of about $100. I have very clear memories of going down to the pawn shops on 63rd Street in Chicago or looking through ads in the papers and seeing Les Pauls, Telecasters and Stratocasters for $50 to $75. Those were not bargain prices because those instruments weren't bringing anything. In fact, some musicians believed that the Les Paul had a faulty design. They had heard about Paul's auto accident, after which he had his broken arm set at an angle so he could play his guitar while wearing a cast. The rumor going around was that Paul's right arm ended up shorter than his left and thus the Les Paul guitar had been designed for a man with one arm shorter than the other. Not only that, it was also thought to be too heavy.

About this time, I first met Bloomfield. He had just graduated from the University of Chicago High School and he used to sit on the steps of Big Joe Willliams' music store on Wells St. playing old time blues. He played acoustic only. He didn't even own an electric. He wasn't the only one whose interest stopped at traditional acoustic ethnic music. At the time, I was a member of the University of Chicago Folklore Society, which sponsored concerts and a yearly folk festival, and the membership considered electric music an abomination. For many of them, their interest started with old time music and graduated to bluegrass, then to blues. From there, they eventually got into rhythm & blues, which was in their own backyard, and finally into acid rock.

Bloomfield followed the same progression up to the R&B stage. Around 1964, he joined the Butterfield Blues Band and, needing an electric guitar, he bought a '52 Telecaster with the black pickguard. Within months, those went from $75 to $600. By late '64 or early '65, he switched to a '54 Les Paul goldtop with a stud bridge and P-90 pickups. Right away the Teles went down-not to $75 but to $400 or less-and Les Pauls went from $75 to $600. I was as busy as I could be scarfing those things up on the south side of Chicago and taking them up to the north side where I could sell them. I found out soon after that I could send them to New York, to Dan Armstrong's store on 48th Street (later in Greenwich Village), and get even more.

Keep in mind that Gibson had changed the pickups in 1957 from the single-coil P-90s to the double-coil humbuckers, and musicians in the mid-'60s marveled that Gibson could be so stupid. The P-90s had a bite, they said, and the humbuckers sounded sweet and sickly by comparison. Also, they said, Gibson's new tune-o-matic bridge sucked up all the tone and sustain that were the old model's calling card. Then Bloomfield switched to a sunburst Les Paul model, with humbuckers and a tune-o-matic. Right away goldtops went down and sunbursts went up to $800. A year before, when I was looking for goldtops, I'd come across these yellow and red things with humbuckers and tune-o-matics and I'd send them to Armstrong. He'd say, "I can only get $250 for it. It's the wrong color." But once Bloomfield switched, within a matter of weeks, nobody could remember having criticized that model before.

There are those who will argue that Eric Clapton rather than Mike Bloomfield popularized the sunburst Les Paul, but before Bloomfield played electric guitar, there was no vintage electric guitar market. When he picked up the black-guard Tele, everybody wanted one. When he switched to the goldtop Les Paul, everybody switched. When he switched to the sunburst, that's what everybody wanted. Clapton was playing a sunburst at that time, but the demand shifted to sunbursts when Bloomfield shifted.

Bloomfield's influence was powerful but somewhat short-lived. Beginning in mid 1967, the driving force behind the Les Paul market switched from Bloomfield to Clapton and, shortly thereafter, to Jimmy Page. Although Clapton's guitar was a sunburst model, the demand he created was so great that, according to Dan Armstrong, Clapton devotees wanted any Les Paul Standard with humbucking pickups, regardless of whether the top was gold, sunburst or even if the guitar had been refinished.

Clapton later switched to an SG/Les Paul with a psychedelic finish, and he influenced that market, although SG/Les Pauls never achieved the popularity of sunburst Les Paul Standards. When he switched to a Stratocaster, he would do to the Strat market what Bloomfield had earlier done to the markets for Teles and Les Pauls.

The strongest influence of all - affecting not just a particular model but the entire vintage market - came in the early '70s from the group Crosby, Stills, Nash and Young. They brought acoustic sounds into the rock mainstream, which brought electric players into the acoustic market. Because they used vintage instruments - prewar acoustics and '50s electrics - the entire range of the vintage market got a boost like it hasn't experienced before or since. "Stratmania," the boom-and-bust market for vintage Stratocasters, has many of the same characteristics as the earlier Les Paul boom, but with Clapton instead of Bloomfield leading the charge. Strats had done quite well from their introduction in 1954 through the '50s, but in the '60s, they were being outshone by the Jazzmaster and Jaguar, which were Fender's high-end models at the time. Although most players today don't think of Jazzmasters and Jaguars as that great, they were the perfect instrument for the Ventures/Beach Boys surfing sounds of the '60s. I have a letter from the early '70s from Clapton asking me to find him a Jazzmaster.

To illustrate further the lack of respect given the Strat, in the mid-'60s, I paid $75 at a pawn shop on 63rd Street in Chicago for a 1958 Strat in immaculate condition, with not a scratch on it (of course it wasn't that old then). It was black, with a maple neck, of course, and gold-plated parts. No one wanted it. Strats were not in demand. They were not considered to be a good guitar. Everybody said Telecasters were better - Teles had better tone and better sustain, the Strat tremelo caused tuning problems and the Strat's three pickups made it harder to adjust the tone. Finally I found a guy who played in a rock and roll band in Chicago who had an early-'61 Les Paul Custom with triple humbuckers, one of the last before Gibson switched to the SG bodies. I finally talked him into trading even. Everybody I knew told me I had made a great deal. Today the Strat is worth at least twice as much as the Paul, so I'm a skeptic sometimes when musicians tell me an electric instrument is bad. Next year it may be good.

Clapton changed the status of the Strat. It started around 1970, when he appeared on Johnny Cash's network TV show, which was taped at the Ryman Auditorium (then the home of the Grand Ole Opry). I had just gone into business at 111 Fourth Avenue North, directly behind the Ryman. I met Clapton backstage and sold him several early Strats, possibly the first ones he owned. The Strat boom started within weeks of when Clapton started to play Strats and it finally peaked in early 1988. Although Jimi Hendrix was also famous for playing a Strat, he did not have the influence on the vintage market that Clapton did. Hendrix played new instruments that were custom-wired, and he played them upside down and in a musical style that very few players could imitate. Generally, the players who influence guitar trends play in a style that might be described as reachable or accessible to other players.

The rise of the Strat took several turns before reaching Stratmania. First the maple-neck strats brought more than the newer models with a rosewood fingerboard. Then in the early '80s, players began saying they liked the look, feel and sound of rosewood boards better than the '50s Strats. Then it switched back to maple board Strats. As Strats were growing in popularity through the '70s, Les Pauls were still bringing more money, thanks to the Paul-playing Duane Allman, Dicky Betts, Billy Gibbons and many other rock musicians.

The steady rise suddenly became a feeding frenzy. An article in Guitar Player warned that the market was out of hand, that no white Strat was worth the $4,500 someone had just paid for one, but rather than deter the frenzy, the article helped feed it. By January of 1988, reasonably nice but not mint Strats from the '50s were bringing $8,000. A really nice '54 (the first year of the Strat) was bringing as much as $12,000. Custom color models from the '60s were bringing $4,000-5,000.

Younger vintage dealers, like the younger stockbrokers caught up in the stock market crash of 1987, had not been around long enough to see the market fall as well as rise. By the time Guitar Player's Stratmania issue hit the stands in early 1988, there were already signs of a crash. The Strat market peaked at the Dallas guitar show in March 1988, and suddenly there was panic. Prices went through the floor and stabilized at about where they were before the mania.

In the first half of 1991, it appeared that Stratmania had returned. Strat prices took off like a rocket, reaching levels as high as those during the 1988 period. The 1991 fad, however, was not really a mania because the desire for Strats never reached the point where buyers wanted nothing else but a Strat. The market remained diversified, and in the past few months the demand for Strats seems to have stabilized. Interestingly, the feeding frenzy syndrome works in reverse when a fad like Stratmania peaks out. The same way people blindly buy, no matter what the price, they blindly dump when the fad is over.

A lot of dealers made a lot of money off Stratmania, enough profit to offset any losses they may have taken if they had found themselves with a surplus of Strats. Personally I was delighted to see the end of Stratmania because despite the chance to make a quick killing, this kind of fad is ultimately not good for a vintage dealer's business.

The vintage dealer is in an entirely different position from a manufacturer or dealer of new instruments. If there is a fad for a new instrument, the manufacturer turns them out in greater quantities and thus increases both his gross sales and his profit margin. The dealer of new instruments orders in higher quantities, thus getting a better discount and a better payment schedule, and on the sales end he doesn't have to mark the retail price down as much for an instrument that is in demand.

The vintage dealer is not so lucky, however. When a Stratmania hits, there's a limited supply of old Strats, and unlike the suppliers of new instruments, the suppliers of old Strats-the owners-want more money per unit, if they want to sell them at all. The effect of a fad on a vintage dealer is the opposite of that on a new dealer. The supply shrinks rather than expands, and the cost goes up rather than down.

That explains why prices skyrocket and it also indicates that vintage dealers can still make a nice profit out of a fad. The real problem with a fad like Stratmania is that it implements this philosophy: It is not enough that I win; you must lose. In other words, we want Strats and we don't want anything else. Granted, Strats sell like crazy, but they hurt the market for everything else in a dealer's inventory. Dealers have taken a lot of criticism for Stratmania. However, it should be noted that price is determined by supply, demand and prior precedent - not by the whims of dealers. While vintage dealers, like stock market investors, don't turn down the opportunity to make a quick killing, most would rather have their investments diversified in a steady healthy market than tied up in a volatile market like Stratmania.

Introduction
Part 1: The utility market
Part 2: How instruments are priced
Part 3: The role of the collector
Part 4: Fads (including Stratmania)
Part 5: Market dynamics
Part 6: The vintage dealer as trendspotter
Part 7: Instrument sales and musical styles