Re: Supreme Court decision and guitar prices

Steve Hawkins29/06/2007 15:23

"Robert L. Abramowitz" <abramowitz@xxxxxxx> wrote in news:ka7hi.245086
$p47.12901@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx:

Yesterday in a 5-4 decision, the Supreme Court, brought to you by George
Bush, allowed retailers to set minimum selling prices on their goods in
some cases (it's going to be case-by-case as to whether this "stifles
competition", no doubt leading to a mess of conflicting court decisions).

I'm not talking about minimum ADVERTISED price. It's minimum SELLING
price. It'll be interesting to see what happens with CFM and other
makers in light of this decision.

hmmm....I'm not sure how this will play out in the music biz. Price fixing
is still very illegal, competition among the big three will still be
around, an SM-58 will still cost $99 no matter what store you go into, the
consumer can still say no, the manufacturer is not prohibited from lowering
prices....I don't see the crisis here.

The grey market may increase, the small, single stores might lose the big
three, but these scenarios were happening before the Court decision anyway.

Steve Hawkins

Interesting subject. Steve mentions an SM58 costing 99 USD. It's a
poignant example because I was discussing this very product last night.
Over here in the UK, they used to cost 99UKP or nearabouts, but Shure SM58s
are typically available now for around 70 or even as low as 59 UKP on-line.
Last night in fact I was talking to a recording engineer and he pulled out a
Shure 58 and a Chinese copy selling at 35UKP or less.

Which would be the better quality, he asked ? I said I thought the American
ones. Yes, he replies, but only about 60% of the time and that differential
is gradually reducing as they improve their QC. He continued... of these
two mics here, the Chinese one is far better than the Shure. Both are
handmade items and the quality varies with both. How they are constructed
matters 100% to the sounds they record. Is the American one made in America
or actually made wholly or partly in China ?

I'm no expert in this arena, but as this man owns nearly 100 different mics
from 20 USD up to 8,000 USD, I'll take his word for it on the difference in
that example.

This question of price-fixing or price-rigging is a complex mix of cash-cow
marketing; brand positioning; brand awareness; brand image-building; price
differentials; assumed quality price hikes; pricing history, competition
from low wage economies; competition from on-line marketeers with brand
image problems no/low overheads; and - let's face it - some good old
fashioned marketing bull***.

The current global maufacturing/selling economy sets some of the highest
paid nations directly against some of the lowest. Where there are no trade
barriers it can lead to drastic changes in the marketplace.

I think this court ruling is interesting, but it gives manufacturers the
choice to market how they see fit and retailers can choose to take up
product or not. Maybe some of those judges in the ruling have shares in
manufacturing companies being affected by competition?

When it comes to guitars however, it is all about brand snobbery. "He's got
a Martin, she's only got a cheap..." whatever - a Chinese guitar for
instance... etc. Brand names matter... at least they do now... As
consumers are becoming more aware of realities of quality v. price they make
their own educated changes in buying habits.

Nowhere is the reality of price fixing/branding/image more evident than in
perfumes. It is possible to copy any fragrance or create new very similar
ones at very low cost. It is evident that the big brand names also produce
perfume at very low cost but spend a great deal on marketing. People don't
so much buy a fragrance but a brand name/image like Dior or Channel etc etc
(s?) etc. The mark-up for these famous fragrance brand names is
extraordinary and says more about us than we'd care to admit.

The comparative cost of labour in China is a fraction of that in the USA or
other westernised nations. Some products branded in, or assumed to be made
in, the USA or the EC, are stretching the truth as much manufacturing of
anonymous components are manufactured in low wage economies and imported.

The USA in particular already has more trade barriers, surcharges, and
complex restrictions on imports than almost any nation on earth, but I can
see that increasing in the future. The EC are not sure how they are going
to handle this question of imports. Import duties and VAT charges on US
imports are part and parcel of restrictions and retaliations. For guitars
that isn't too helpful.

We could argue the morality of mixing beneficial global purchasing from
third world economies with restrictive trade barriers to suit -and we could
do it all night long.

CR



.

Quantcast