Newsletter #33, April 2010

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This is Part 6 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 4: Fads (including Stratmania)
Part 5: Market dynamics
Part 7: Instrument sales and musical styles

The Vintage Instrument Market, Part 6: The vintage dealer as trendspotter

Dealers of vintage instruments, ironically, have a much better view of sales trends of new instruments than most dealers and manufacturers of new instruments. When there's a demand the vintage dealer sees it instantaneously. Prices go up, and supply goes down. Some things come and go in a period of as little as three months.

It's harder for a manufacturer to feel or see changes so quickly. A manufacturer, even if he's carefully watching monthly sales printouts, even doing market analysis to the hilt, only sees a demand in terms of what dealers are ordering or not ordering. He's not selling to public directly and he's only making his own line. Fender makes only Fender, and Gibson makes only Gibson. From Gibson's point of view, if there's a sudden demand for Fender Stratocasters, how does Gibson determine that from its own sales figures? If all of a sudden the public wants an electric guitar with three pickups and a whammy bar, and a manufacturer only makes a two-pickup model without a whammy bar, they may see a gradual decline. They won't see customers switching from model to model since they have nothing like that in their catalog. From Fender's point of view, a big demand for vintage Strats may trickle over into new Strats a bit. But if the public wants a Floyd Rose tremolo, split-coil wiring, or some other kind of state of the art feature, they don't see that because it's not something they make. Their perspective is too narrow.

Retailers deal directly with public, but most dealers of new merchandise still don't have as good a grasp of what's going on as one might expect. They order from various companies and get stock models. If the public wants something that is none of the above, they often don't know it.

Many vintage dealers also do custom guitar work on non-collectibles. When people come in wanting a Strat with non-standard pickups or a non-catalog bridge, that is a leading-edge indication of a demand that many new instrument manufacturers are not easily able to see.

The information manufacturers get from dealer orders may not truly reflect trends until it's too late. Dealers can make mistakes in guessing what the market is going to be. The important figure is not what dealers order but what they re-order to replace sold merchandise. I've seen frequently dealers misinterpreting the market and continuing to order items that are dead. I've seen them be too slow to recognize and jump on a fad and too slow to jump off it when it's dying. For the manufacturer, relying on dealer orders to determine market changes is like trying to drive a vehicle that has a six-month response delay. To some extent it's like trying to drive forward with only the view through the rear view mirror. We know where we have been and perhaps where we are, but the future is a guess.

In the case of Gibson Les Pauls, the delayed response time was 10 years or more. Gibson quit making them at the end of 1960, and then Mike Bloomfield's playing created a demand for them starting around 1964. At the June 1968 trade show, Gibson announced a reissue of the late 1955- mid 57 goldtop model with single-coil pickups, stop tailpiece and tune-o-matic bridge. It was a response to a demand, but it was the wrong response. If Gibson had consulted any vintage dealer, they would have found that Bloomfield had indeed played a goldtop Les Paul in 1964, but since then he had switched to a later model, a 1959 sunburst with humbucking pickups and tune-o-matic bridge. That - not the gold top - was the model that Bloomfield's considerable legion of followers were buying at premium prices from vintage dealers. Gibson switched the pickups and finish by 1970, but it was 1980 before they made a true reissue of the guitar Bloomfield played. Gibson was responding to what they saw as a demand for Les Pauls without carefully researching what the buyers truly wanted. By 1968 Bloomfield was not as influential as he had been earlier, and many buyers of Les Paul guitars were not even very familiar with Bloomfield. The fact remains that he was the trendsetter and whether the buyers knew who he was, the demand was definitely for a mid 58-60 sunburst Les Paul Standard.

The same thing happened with Gibson's Flying V and Explorer, two models that did not sell well at all when they were introduced in 1958. By the early 1970s, however, they were bringing big bucks for vintage dealers. In 1976, Gibson came out with an Explorer "reissue," but it was made of mahogany rather than Korina as were the originals. Not until the '80s, with the Heritage series of reissues, did Gibson finally respond to a demand that had been clear, at least to vintage dealers, for a decade.

Gibson was not alone. Fender Stratocasters of the '70s, with the "bullet" truss rods adjustable at the peghead and three-bolt neck fastening system, were not what players wanted, as vintage dealers could clearly see. There was a demand for the earlier styles, but Fender didn't respond with vintage reissues of Strats and Teles until the '80s. Then they sold like crazy.

Martin, the most venerable of instrument manufacturers, has always been the slowest to respond to obvious demands. Where Gibson responded to the growing number of steel-string players by installing adjustable truss rods as early as 1922 (and Epiphone did the same in the '40s, as soon as Gibson's patent ran out), Martin held off until the '80s. Since 1959, there has been a clearcut demand for vintage pre-World War II Martins, but Martin did not reissue its famous herringbone D-28 (now called the HD-28) until 1976. Now Martin's custom shop is enjoying great business on instruments ordered with vintage characteristics.

Blindly copying vintage guitars is not the answer for the future. There are new innovations not available on vintage guitars, but most vintage dealers do repairs and custom work and thus see those demands, too. For example, the current demands among acoustic players include: good intonation and in some cases compensating saddles; fast action necks; wider necks than those on '60s and early-'70s models; truss rods that really work; and synthetic materials for better stability. They want the best of all worlds when it comes to sound. They want their guitars to ring and sustain as well as go boom. Those who play in the studio as well as onstage want balance and accurate intonation plus a sound that records well. In general, today's buyers are concerned with quality of workmanship. Unlike the '70s, when the market was more youth-oriented, many of today's buyers are older, more sophisticated, better educated, wealthier and more demanding.

On the electric side, Stratmania is dead and gone, which means there's once again a diverse demand. People still want Strats (just not Strats only, and not at the prices of a few months back) but there has been a considerable increase in popularity of hollowbody and semi-hollow electrics. There has been a real revival of interest in the market niche that used to be occupied by Gretsch's thin-body electrics and is now vacant. I see it not only as a jazz market, but a rockabilly-type market as well. Gretsch was a significant force in the '50s and '60s with a sound different from the two main schools of electric guitar thought, Gibson and Fender. Today there are demands for Gibson, Fender and a lot of newer guitar sounds, and those demands are being filled by manufacturers.

There is also a clear demand for Gretsches, but that demand is being filled only by vintage dealers. One market trend evidenced by the very presence of vintage dealers is the continuing popularity of the guitar. Looking only at the recent history of dealers of new instruments, it would appear that the guitar, especially the acoustic guitar is dead. The guitar boom of the '60s brought in a new era of music stores. A higher music consciousness in our society resulted in more stores in general, and the type of music resulted in stores whose inventory was, for the first time, primarily guitars and other fretted instruments. Up until then, a music store was either piano-organ or "full-line," which included pianos, organs, band instruments and maybe a few guitars. A guitar store was thought to be too specialized to succeed.

That changed in the '60s and '70s however, as evidenced by the record production years Gibson and Martin had during that time. Gibson's output peaked with 102,000 instruments sold in 1966. Martin sold 22,000 acoustics in 1971. Vintage instrument stores appeared, handling used fretted instruments, which was unheard of in past. In early '80s, trends changed back to keyboards, and dealers, hoping to keep up with the music of the day, switched back to full-line stores, the new version of which has a heavy inventory of synthesizers, "sound reinforcement" equipment (amps, PA systems, outboard effects units) and lighting systems.

In the early '80s, guitars appeared to be a dying breed in the face of rapidly improving keyboard technology. While keyboards have gained a sizeable percentage of instrument sales and thus changed the face of the full-line music store, the guitar, as any vintage dealer can tell you, is coming back strong. You don't have to be a vintage dealer to see the reasons. One, musical tastes are tired of everything sounding like a Yamaha DX-7 and the pendulum is swinging back toward more traditional sounds. And two, while the elecronic keyboard's musical versatility may rival that of a guitar, the keyboard has not been made yet that looks as sexy as a guitar, is as portable as a guitar or can synthesize the sound of a strummed guitar.

Ironically, it is the vintage dealer and not the manufacturer or new instrument dealer who is in the best position to see demands that can be filled. Manufacturers and dealers of new merchandise don't recognize this demand, but they could hardly be expected to. They don't see their sales fall or rise because they don't make any models in that niche. The vintage dealer, however, does see that market.

The Gretsch-type ornamentation is a case in point. Nobody currently makes it so they don't know if it sells or not. I see it, though. That's not to say that everybody wants an exact copy of an old Gretsch. The neck-set angle was not good, the bridge was unsuited for the light-gauge strings preferred by most players today, and the switch system was less versatile than Gibson's. Nevertheless, there is a definite demand for the Gretsch sound and the Gretsch look that no manufacturer is currently filling.

Most manufacturers are not in a good position to recognize such a market void. They see only sales and market trends of their own product, and they see it after a six-month delay reflected by their dealers' orders, which may or may not be right. It can take manufacturers years - 10 years in the case of Gibson and the Les Pauls - to figure things out. A dealer can tell which Martins are selling, but if none of the current ones are selling, the only thing a dealer can report is that there's no demand for Martins, at least not for the Martins currently marketed by Martin. A vintage dealership has a much more diversified "line." His line includes (though he won't have them all in stock) any instrument anybody ever made - ever. Therefore the vintage dealership is a much more sensitive instrument for measuring market trends than a new instrument dealership.

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 7: Instrument sales and musical styles