Newsletter #33, April 2010

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This is Part 7 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 6: The vintage dealer as trendspotter

The Vintage Instrument Market, Part 7: Instrument sales and musical trends

The success of any instrument dealer or manufacturer depends to a considerable extent on his ability to recognize and react quickly to new musical trends. As many dealers have found out the hard way, a palm reader or a ouija board may be as accurate in predicting long-term future trends as record sales and concert attendance figures. But whether they realize it or not, dealers of both new and vintage instruments do, in fact, have a highly accurate, leading-edge indicator available to them. Figures are readily available to dealers both from examining their own sales and talking to other dealers and suppliers. Sales figures - particularly taking into account the grade of instruments - can be used to determine whether a musical style is currently in good health or whether hard times are ahead.

The key to this sales-health connection is the fact that for a style of music to truly thrive, it must be accessible not only to the average listener but to the average player as well. One can judge the health of a particular market segment by breaking instrument sales down into four basic categories:

1. Student grade, introductory instruments that a non-player buys because he wants to learn how to play.
2. Intermediate grade, for amateurs who enjoy playing but are not super serious, better than beginner category, but not professional.
3. Utility grade, stage-worthy professional instruments, such as new Gibson and Martin guitars, Stelling and Deering banjos, not cheap but not necessarily collectible.
4. Collectibles, instruments that may be played but that have value and appeal beyond utility.

As a style of music rises and then falls in popularity, sales of instruments tend to go step-by-step through these categories. The most important market indicator of the four categories is the student grade. If they're selling well and products like audio tape lessons, songbooks and video lessons are also selling, then the market is healthy and in rather good shape. Regardless of concert attendance, record sales and radio airplay, if student-model instruments are selling, the market is healthy and growing. If sales of instruments at the intermediate level are healthy, I also feel good.

Sales of professional-grade instruments reflect a more mature market, and there obviously must be sales of those for the market to be healthy. But if there is a market, for example, in which categories 3 and 4 are selling but the others have slacked off, this is a sign of a real problem. If student sales drop, I see a leading-edge indicator of trouble. If intermediate sales also start slowing, then there is deeper-seated problem. If only category 4 is selling, I'd say that the market has already died. The style of music may still be selling records, but I'd classify it with the walking dead. There are several reasons why sales trends come and go, among which are: the state of the musical art and musical imprinting and re-entry patterns.

These patterns appear to be constant through many musical styles. Although rock and roll in general has remained consistently strong, its sub-styles are constantly changing. The trend toward acoustic instruments in the early '70s, the move to synthesizers and drum machines in the early '80s, the current interest in the "Big Chill" soul music of the late '60s and the folk music of the early '60s all follow similar patterns. Clearly-defined styles, such as bluegrass or old-time music, in which the audience doesn't overlap so much with other forms, provide the clearest examples.

This method of analysis indicates that bluegrass music may be encountering some difficulties. While professional-grade instruments, such as Gibson RB-3 and Granada banjos and F-5 mandolins, are still selling, sales have slowed on student- and intermediate-grade banjos, mandolins, fiddles and resonator guitars. Further evidence, in this case, can be found in the parking lots of concerts and festivals. In years past, there was as much or more picking in the parking and camping areas than there was on stage. In Union Grove, NC, and Galax, VA, there wasn't even any paid entertainment, only contests, and people came from a thousand-mile radius not just to watch an event but to be a part of it, not just to listen but to play. Crowds reached as high as 30,000, and the music was certainly thriving and healthy. From my standpoint - a dealer's standpoint - it was wonderfully healthy in the parking lot. Everybody had an instrument in the trunk of his car, and I could buy, sell and trade like crazy. There was a lot of real action and interaction going on.

Over the years the trend I've seen at some of these is that there's been more onstage and less offstage action-music as well as dealing - which I see as a sign of ill health. There is a great deal of truth in the words of longtime Opry manager, George D. Hay, the "Solemn Old Judge," who constantly admonished the performers to "Keep it down to earth, boys." He was right. One of the reasons fewer people are buying bluegrass instruments is, ironically, that the style has become so sophisticated in the hands of some musicians that the music is less and less accessible-melodically and rhythmically-to the average listener or amateur player. For bluegrass to thrive, there may well have to be a backlash movement, a sort of back-to-basics trend similar to the one country music has been through in the past few years.

Bluegrass is still popular enough that it's hard to imagine it dying out, but styles can die. An example is the Fretted Instrument Guild of America and the sales of tenor and plectrum banjos in the U.S. Fifteen years ago I used to sell all categories of tenor and plectrum banjos. Then I started seeing a drop-off where the student instruments disappeared, followed by a drop-off at the intermediate level, followed later by the professional models. The collectibles are now the only category that sells, but I feel fears of what's going to happen.

The U.S. market for tenor and plectrum banjos seems pretty dead (interestingly enough in Switzerland and Germany we're still selling in all four categories). The basic reason for that is well-illustrated by FIGA. Twenty-five years ago FIGA was almost exclusively devoted to mandolin orchestra music. Then about 15 years ago it switched, and became dominated by plectrum and tenor banjo players.

FIGA also illustrates the phenomenon of musical imprinting. "Imprinting" is a psychological term first introduced in the '30s by the noted German animal behavior specialist Konrad Lorenz. He found that in newly hatched geese, the first moving object that they saw was "imprinted" as a mother image. Normally this would be a mother goose. If, however, the first animal they saw in the first few hours of life was a person, they'd follow people and identify with people for the rest of their lives. Similar phenomena held true for other species. The concept is that there are formative stages in which a lasting imprint is made. Animals can learn at many stages in life, but this learned behavior differs from imprinting, which produces permanent patterns of preference.

We tend to become imprinted with the music that was popular when we were of dating age, from age 14 up through our early 20s. Then many tend to drop out of the music scene. They acquire an expensive wife, expensive children, an expensive house and car, upward mobility and lack of free time. They can re-enter the music scene in two phases of their life. One is the phase that the postwar baby boomers are in now, where their upward mobility and their job has stabilized and they have money and leisure time to once again pursue their hobbies. We're seeing a folk music resurgence. I now have numerous requests on file for Pete Seeger-style, longneck banjos, whereas five years this was a dead item. Seeger was never all that great a banjo player but he reached out and touched a lot of people. He and Earl Scruggs are the two men who, more than any other, got people to play banjo. While Pete's musical style hasn't gone on to be as influential as Earl's, his influence in getting people to play banjo was every bit as strong as Earl's.

We're now seeing yuppie musicians, baby boom folk players. That's the music they liked when they were growing up, and they're taking it back up with a vengeance now. This doesn't mean that they're taking it up in exactly the same format as when they were kids. They're older, more mature, more educated, and they have more money and more stability. They're able to buy more expensive instruments and stereo systems, and they're more sophisticated. Instead of playing folk music and protest songs, they may be listening to Windham Hill recording acts or Tony Rice, but it is still acoustic music and it's a direct offshoot of something that was happening when they were dating age.

There is a second wave of yuppie musicians about four years behind the first. They are rockers - the people who listened to the folk in the early '60s and the Beatles and Rolling Stones in the mid- to late-'60s and then dropped out of the scene. I expect them to follow the same re-entry pattern as the folkies. The baby boomers are a good example of musical imprinting and the first phase of re-entry into the music scene. FIGA members illustrate the second re-entry phase, and that is at retirement. At retirement they no longer have upward mobility, they have plenty of leisure time, and the hobbies they drift to are often the ones they had back at dating age.

Twenty to twenty-five years ago, FIGA was made up of people who played mandolin when they were of dating age, between 1905 and 1921. As the mandolin players passed on, the FIGA membership moved gradually into a group who were of dating age in the '20s, when banjo was the instrument to play. Not surprisingly, FIGA became a banjo-oriented group. They don't like to hear this, but the next group is the crooners and the big bands, and while you can have 100 banjo players playing "Yes Sir, That's My Baby," you can't do it with archtop guitars.

What happens to people when they retire? First, they all of a sudden have a lot of leisure time, and if they've provided well for themselves they have a goodly amount of money. So one of the first things they do is to start getting into their hobbies, which are often strongly influenced by their earlier imprinting, musical or otherwise. If these hobbies have been neglected, then they have a sudden outburst of buying, taking music lessons and getting involved in these hobbies. Five to ten years after they retire, they become less acquisitive. They already have their collections. They no longer need student instruments. Then it gets to a point where they realize they're not getting any younger, and they're getting physically weaker, they can't get around as well, they're children and grandchildren aren't interested in their instruments, they are either too feeble to participate or dead and buried.

We are now faced with an interesting phenomenon in the wealthy industrialized countries in which for the first time in human history the teenage population is outnumbered by the 65-and-over population, and in which the 40-year-old or baby boom age bracket is the majority of the population. The birth rate is down and the death rate is down. People live longer and reproduce slower in the same countries where guitar sales are a strong factor. The youth-oriented market is no longer the biggest segment either in numbers or in buying power.

That will be good for the market in the long run. Now that we have an aging population, while the initial phases in musical trends may not last any longer than they used to, the re-emergent markets-the results of imprinting-are not only big, but they last a long time. The original folk boom, for example, only lasted from 1959 through 1963, but its impact via the baby boomers is likely to be profound in size and duration.

One of the things that we see in the market today and in the foreseeable future is that often enough it will be the second and third phases that will sustain music manufacturers and concert promoters through the long run. These people re-entering the market will buy instruments in categories two and three (intermediate and professional grades), whereas young people usually buy from category one (beginner grade) or two, or occasionally, if their parents have the money, category three. Older people - people at the second re-entry phase - tend to enter the market with instruments from categories two or three. The people at both re-entry phases are the ones who sustain the biggest part of category four instruments and a good part of category three.

In addition to recognizing trends before they hit (or leave), we can also do things to keep music healthy and vibrantly alive, to prolong the life of a form we appreciate. Not only does music have styles or trends that come and go, but the popularity of music per se goes up and down. In the period of the folk boom, music was enormously important as a social phenomenon as well as an art form. Everybody was listening, more so than before. This continued on through the rock boom of 1963-70 and the folk rock boom of 1970-75. After that and continuing on through the 80s, music was less important. That was a period when for the younger generation, the idea of a good time was to go to the video arcade. For the older folks, it was propping up in front of the tube with a six-pack. Music was not as much a part of everybody's leisure time from about 1976 to 1983. Music now is coming back, and we need to encourage anything that encourages music per se. That means instruction and contests.

We can start in the schools. Manufacturers of brass instruments have been aggressively promoting band music since before the turn of the century, and they are still at it. They don't wait passively for musical trends to popularize instruments. The fretted instrument business had its strongest parallel in Gibson's mandolin orchestra promotions during the first two decades of the century and during the banjo boom of the 1920s. Up until World War II, Gibson's catalogs and promotional literature offered instructional materials as well as instruments. However, since World War II there has been virtually no educational and instructional effort on the part of fretted instrument manufacturers. Certainly there is not currently any shortage of teaching materials, in terms of audio tapes, video tapes and books. Past experience shows us the greatest amount of teaching material was available toward the end of any particular boom. Trends never died because of any lack of instructional books. On the other hand, what we see today is that there's not nearly enough money available for teachers. The public school systems are cramped for funds and many have eliminated music teaching programs. Private schools often enough have shortages of funds and skilled teachers. Teachers who are available are classical or band/orchestra only in their orientation, as opposed to pop, rock, folk or other styles that may motivate children. Music stores in the past devoted a large part of their business to lessons, rather than the supermarket approach of stores with discounting and mass marketing rather than service. Therefore anything we can do to promote teaching, in schools or in stores, will be most beneficial-not just to any one particular style, but to the concept of playing music in general.

Promoters of events can plan them so that impromptu jam sessions are encouraged. The parking lot picking was for many festival goers as big an attraction as the scheduled performers. At weekend or weeklong festivals, where name acts would be booked to perform for several days, those performers could usually be found between shows out in the parking/camping areas jamming. Lately, however, it seems that the venues hardly allow for that kind of activity. One-night shows at auditoriums, or acts which are booked for one show and then are back on the road, discourage the picking which is at the basis of the music's appeal. People should be encouraged to bring their instruments and pick and jam and have a good time. The performers should be encouraged to get out in the audience and get out and pick and jam with these people. And the events should be planned so that there is time and space for everyone to pick.

Promoters can also encourage jam sessions onstage, putting people together in interesting combinations. It used to be done at many festivals and it resulted in spontaneous live music that was not what you hear on the record. It was something that was really exciting to the audience. That's the kind of thing that makes people want to play and listen as well.

Another valuable promotional tool is a contest. Contests tend to get people fired up. In Japan, Yamaha sponsors successful contests in all sorts of music. Needless to say, it would be good to involve media promoters and manufacturers of musical products in the sponsorship of those events. All too often organizations like NAMM opt for a slogan campaign, like "The fun is in the playing." While that is certainly a true statement, it is hardly as strong an enticement to learn to play an instrument as a contest would be. In addition, a contest would probably be less expensive to produce and more likely to attract media attention. We need to focus media and public attention to playing, not just seeing.

One does not have to be an industry giant like Yamaha to promote a successful contest. On the retail store level, Skip's Music in California has been running regular contests for quite a few years which have been very successful in building up store business. All too often, kids who like to play don't have any outlet. When contests come out they bring enormous numbers of folks out of the woodwork. Look at Union Grove, Galax or any of the other old-time and bluegrass festival-type events based around contests.

Contests pay off for the promoters as well as the winning contestants. If they're run well they're not just a money drain, but they can actually generate income. In addition, if done right, they can be newsworthy media events that the media will cover without necessitating large advertising expenditures. Media advertising is expensive, and the average guitar manufacturer grossing five, ten or twenty million dollars a year can't afford a national promotional campaign. We're in an industry that's small enough that we have to rely to a considerable extent on staging media-worthy events. We can't possibly do like Ford or IBM and buy media space. We have to rely on our wits. Contests are something that we really can do and absolutely are known to work. They bring a lot of result per dollar spent. We need to promote a variety of different types of music, not just rock or bluegrass or country.

It's virtually impossible to promote something that's truly a dying art form, nor do we want to put our eggs all in that basket. We don't want to have the sort of image of being overly conservative or so rooted in the past that we reject new movements. We need to recognize that trends come and go and certainly there is change. To prosper we need to endorse change. We can realize that any one type of instrument can be used in numerous forms of music. The guitar has been versatile enough over the years. Banjo and mandolin have been less versatile in this regard, although we can see evidence in the new acoustic music that they are quite capable of holding their own in forms that are far afield from bluegrass. One of the challenges for banjo and mandolin manufacturers will be to break this image and to actively promote new music and a new image for their product. We need to recognize and utilize the enormous influence of MTV and other cable type media. In the past, music has basically been spread about by live performance, radio or records and some TV coverage, but not anywhere near the kind of extensive coverage we see on MTV. MTV emphasizes the visual aspect of music in a manner more intense than has ever been done before. With radio and records you could hear, but not see, the musician, and those media didn't always influence instrument sales (or clothing sales, for that matter). On MTV the performers are often lip syncing or play-syncing, or even using instruments that may have no relationship at all to the ones they recorded with. A prime example is ZZ Top sawing the heads off some cheap guitars and gluing fuzz on them. The instruments weren't playable. Nevertheless, people see these things and want to buy them. MTV obviously has had a profound impact. At present, MTV is having a disproportional impact because it pushes a certain type of music. Other types are not getting anywhere near the play that hard rock gets on MTV. Other cable networks have recently been formed - VC-1 (MTV's adult contemporary spin-off) and a country cable network. It will be important for NAMM members and manufacturers to take advantage of the impact that these networks will have.

I have felt the impact of cable music channels in my business as it involves European markets in the past few years. Up until quite recently, Spain and Italy were not good markets. The Spanish played Spanish music, and the Italians played Italian music. They weren't into the international rock scene, or jazz or blues. The good markets were the ones influenced by Armed Force Radio. However, in the last couple of years, there have been European super cable network systems that have hooked up into Spain and Italy, and soon after these cable networks hit, there was a major impact on the people wanting to buy guitars. It behooves NAMM and the manufacturers to do as much as they can to take advantage of these new marketing tools.

Manufacturers can also take an active role in shaping their markets by carefully choosing musicians whom they wish to sponsor or obtain endorsements from. They should look for musicians who are reaching out and grabbing the public - not necessarily those that sell records, but those whose music is at a down-to-earth level melodically and rhythmically, a level that inspires others to go out and buy an instrument. Virtuosity is not the issue here. Popularity is. A great example is my own father. Back in the '60s he used to like to listen to Perry Como. I would say, "Perry's not all that good." He'd say, "I know that, but he sings tunes I know and identify with, and I can sing along. I'm comfortable with him, but when they get into opera and sing over a four-octave range in languages I don't know, it makes me uncomfortable."

In bluegrass, for example, Bill Monroe, Earl Scruggs and Josh Graves, even though highly innovative, nevertheless played styles that technically were within the comprehension of the average amateur listener. Their special touch-the finer points of their styles-is the part that's so difficult to master, not just the notes.

Even with musicians playing inspiring melodies, promoters encouraging parking lot jam sessions and manufacturers sponsoring contests, we still can't really fully control musical trends. We can't erase musical imprinting. We can't keep older players from dying, taking their favorite musical styles with them to the grave. On the other we hand, we don't have to take a fatalistic attitude. We've seen that Gibson and other manufacturers in the past have taken very active roles in shaping trends and in doing so, shaped their own destiny. We can help prolong trends by active promotion and musical education. And with the best leading-edge indicators already at hand, we can recognize and take advantage of new trends.

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