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Guitar Center/NAMM Accused of Price Fixing


Will Chen

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Quote Originally Posted by Anderton

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And how do you fix prices anyway? If they're broken, do you use Elmer's Glue-All or do you need something stronger, like epoxy? Can duct tape provide a temporary fix?

 

rimshot.gif


Actually, the preferred term these days is "resale price maintenance."

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Quote Originally Posted by Hard Truth

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I recently discussed the stocking of Fender Squier branded guitars with a local independent merchant that carries other bargain brands. They said they don't carry Squier/Fender because they would have to pay a large upfront fee to carry them.

 

They may have to commit to buying a minimum amount of stock, or maybe they have to dedicate a certain amount to marketing. But I really doubt they have to pay a fee in order to carry the product line.
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Quote Originally Posted by Zooey

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They may have to commit to buying a minimum amount of stock, or maybe they have to dedicate a certain amount to marketing. But I really doubt they have to pay a fee in order to carry the product line.

 

You're most likely right - I've never heard of a store having to pay a fee, although being required to purchase a minimum amount of initial stock isn't uncommon.
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Quote Originally Posted by Phil O'Keefe View Post
You're most likely right - I've never heard of a store having to pay a fee, although being required to purchase a minimum amount of initial stock isn't uncommon.
There was a time, and I'm talking about audio equipment in the 1980s, not guitars, where dealers had to have a certain level of cocompetence and experience in the field as well as a few factory-trained sales people before they could carry certain lines.

Oh, if only that was the case today!
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Quote Originally Posted by Zooey

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They may have to commit to buying a minimum amount of stock, or maybe they have to dedicate a certain amount to marketing. But I really doubt they have to pay a fee in order to carry the product line.

 

That may be what they meant, the bottom line is that they felt that they had to commit a large sum of money to carry the product.
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Quote Originally Posted by Jon Gnash

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Tell us more about their 'leverage'.


Tell us more about this 'advantage'.

 

The leverage is that their buyers know about future product introductions before anyone else, even the press. This is so they can make purchasing decisions in advance, figure out how to market the stuff, how many to order, etc.


The way we take advantage of it is that (remember, we all have extensive NDAs) we can get units from early production runs that go to key buyers. It goes something like this...manufacturer does first production run, sends units to key dealers (e.g., GC, MF, Sweetwater, Sam Ash, etc.). We bug GC/MF mercilessly to send us one of the units after they've checked it out. This gives us plenty of time to review the unit before it starts hitting the streets and fills the pipeline, which can take several weeks and sometimes longer. Then as soon as the unit hits the streets, we publish the review. Sometimes we don't even have to bug MF, we can get our own unit the same time MF does. This is becoming more common as more manufacturers recognize that the 5,000,000+ page views a month on our "content" side means good exposure, regardless of whatever is going on elsewhere.


Even better, we aren't under pressure to write favorable reviews because a company like GC or MF is in the business of selling stuff. If people don't like Thing A, then GC/MF will sell Thing B instead. That said, one of the advantages of this gig is we get to choose what we want to cover, so we pick gear for review that looks promising or is of personal interest. It's a pretty sweet situation smile.gif Even when I write a hands-on review for the MF catalog, I get to choose whether I want to write it or not. They make requests, not demands.


So compared to (for example) print or other web sites, we can get the units before others, have more time to review them because we have a considerable amount of time before the product "goes public," and have the review ready to go as soon as the product becomes available.


I have five reviews sitting on my hard drive right now of products most people don't even know exist smile.gif We'll be the first to get a review online, and it will be more in-depth as well. As you may have noticed if you've been following the "content" side of the site, most of our reviews are now loaded with pictures, have audio examples, sometimes brief videos to accompany them, etc.


Probably more than you wanted to know, but you did ask...

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Quote Originally Posted by Jon Gnash

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Right.


I know.


And how do they acquire that knowledge?

 

Is that a trick question? Sometimes at NAMM, like a showing in a hotel room. Sometimes a phone call. Sometimes it's not definite, then it ends up being definite ("hey, we're thinking about...").
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Quote Originally Posted by Anderton

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Is that a trick question? Sometimes at NAMM, like a showing in a hotel room. Sometimes a phone call. Sometimes it's not definite, then it ends up being definite ("hey, we're thinking about...").

 

Yea, I know. But why would a manufacturer disclose secret information about new products in development to GC?


What are the benefits?


Do they do it to procure a sales order?


Is it part of a

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Quote Originally Posted by Anderton

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... here's the way it works.

 

Certainly not always.


I design gear. (In fact you have written the user manual for some of my products.) Once upon a time a small manufacturer approached me and asked me to help them draft a product specification. They said that they would take the spec to GC and

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I don't think GC is normally in the business of financing product development. It could be that the company got the funding for your project from a different source, and all GC did was give the company a way to prove to the investors or to management that there would be an eventual market for the product.


I believe that GC has some "house brands," but it's hard to tell what they are. I think DeltaLabs is one example (GC bought the trademark and sells guitar pedals under that brand).

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Quote Originally Posted by Zooey

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I don't think GC is normally in the business of financing product development. It could be that the company got the funding for your project from a different source, and all GC did was give the company a way to prove to the investors or to management that there would be an eventual market for the product.


I believe that GC has some "house brands," but it's hard to tell what they are. I think DeltaLabs is one example (GC bought the trademark and sells guitar pedals under that brand).

 

I think that's pretty much it. Lots of companies go to trade shows to get pre-orders, then go to a bank and get a loan for production based on those orders. That's how the first round of Funk Machines was financed. It wouldn't matter if the pre-orders came from GC or anyone else, but obviously, if a company like GC or Sweetwater commits to buying X amount of widgets, that's pretty convincing to a lender.


GC does have some house brands, and DeltaLab is one of them. Rogue is an MF house brand.

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