When Dollars Deceive: Rethinking Audio Value in an Era of Shrinking Buying Power

I saw a YouTube video that struck my financial “feelings” nerve. It was discussing the aspect of manufacturers “cutting corners” over time. So I reached out to my buddy, Cody at Harbottle and sent him the link.  Here is his reply, word for word:

“The reality of finance is that 500 bucks 15 years ago is worth approx. 747 dollars today,  USD. So a 500 dollar item today was 336 bucks 15 years ago. This means that your dollars today buy 38% less value compared to 15 years ago. This also applies to the manufacturer.

How are they expected to maintain quality control at the same price when they lose buying power by over 2.2% year over year? This means they not only need to make a profit, but they need to increase their own buying power in the absence of a set dollar value.

5% profit is a pretty solid business. But to remain in business they need to make 7.2%. I don’t think many consumers know how difficult that is in the audio industry. Why is JL owned by a company that is 14 years its junior and also was never established as an audio company? Probably because it makes more financial sense to be owned by a corporation that has more market teeth and deeper pockets.”

I thought it was a fantastic point.

If a person is married to the concept that a 'good' subwoofer for a purpose starts at $XXX at ABC month day and year, that number has to move with inflation the further you get away from that start date. Most of the market will lament rising prices, thinking of a product having a fixed dollar value ‘not being worth’ an increased selling price.  As a result, the economics of production and distribution mean that this pressures manufacturers to lower quality to keep the price acceptable to buyers.  Do you want That?

Some manufacturers may ‘eat’ the extra cost in the short-term, but it cannot continue to truly be the same product indefinitely.  But it seems that we actually demand that, because we feel entitled to what is, over time, a lower and lower real buying cost.  But economics, like physics, doesn’t care about your feelings, and realities should be disclosed and addressed.

I thought back to a relevant personal example.

The NHT 1259 driver, made available by Ken Kantor to the DIY community out of the goodness of his heart and love of the hobby, a 12" subwoofer with an honest 13 mm of generally usable travel from center over audio frequencies, was for a time the defacto 'value' driver back in the late 90’s among DIY hobbyists.  It was $150 each through Madisound and Just Speakers (now defunct).  At the time, being poor and working for what amounts to not enough, I thought buying 4 of them was really expensive, and if you think about it, for a guy making $8/hr. after a dreary sales commission working at a HiFi shop at the time, it was.  After payroll taxes, sales tax, all of that, it probably took me 30 hours of labor for each driver.  Inflation-adjusted, that $150, which coincidentally did not include shipping, would be $300 USD per unit today.  

Compared to today, there is the fictional 'MSRP' of a popular ‘DIY’ 12" driver, which is on sale for $245, Shipping Included, which means that even with their shipping bulk pricing advantage, if you factor in the no hassle return shipping that sometimes happens, RMA exchanges related to abuse that they will cover to best fit their buying demographic, puts the real comparable selling price at about $210.

The 'linear' excursion is also 9mm more, the cosmetics look way cooler.  What a bargain!  Better in every way, it would seem, for less real money. The perception of better value for the cheaper thing with the deceptive quality implications persists, I think, largely because of consumer wishful thinking.  

People, including me, want it to be just as good for less, maybe because of fear of paying too much and finding oneself the fool, maybe because the reality is that there are very few drivers that aren’t riding performance hyperbole, and in their experience, falling short is ‘normal’, maybe because it would be actually awesome to take advantage of a ‘diamond in the rough’. Regardless, we often don't want to look at the possibility critically, because I think deep down we know that under scrutiny the illusion fails.  Maybe the illusion, the pretense, is what we're often really chasing, even if we don’t realize it.  We are a species in love with ideas, often more so than objective reality. Maybe the important thing to understand is that nobody is immune to the 'value deception', particularly if they do not have greater than average expertise on a topic, and they want it too much.  Boy do we want it!

I wonder how some manufacturers could perform miracles in their engineering, and the short answer is, they can't.  I’ve bought two near relatives of that driver, an 8” and an 18” version, and I’d pick that old NHT 1259 over either, more than 20 years more ‘obsolete’ in terms of raw performance.  When I measured the prior ‘value wonderchild’ 18” version, I found it nowhere near published specifications, and a noise machine beyond 12-13 mm of excursion.  In use, even after I got it sounding relatively decent, it still sounded a little weird, a little thunky, like it made things sound heavy and ‘slow’, or ‘thick’. After being gas-lighted by technical support, I publicly called out the objectively verified short-comings of the driver and the ‘rolling’ unannounced TS parameter changes that made their way into the updated spec sheet a couple years later.  It turns out that the overseas manufacturer wasn’t even really building the driver that the vendor was selling with specified parts, nor any real assembly QC, but the vendor went ahead and sold it anyway, with zero notification that the product was not actually the original product. But change the manufacturing house, make it a different model designation, and it is amazing how quickly the skepticism earned from a hard-won lesson of ‘fool me once’ just evaporates.  Human beings are very good at closing our eyes when driving into a sleet storm.

Yes, that company can do good design.  Yes, large-scale manufacturing can give you, nominally, the 'same thing' cheaper, so long as you don't look too closely, too regularly.

But none of this is actually new, and none of the technology applied to these 'value' drivers is new, or previously unavailable.  Computer modeling has surely advanced, and that can shorten the development process, lower the cost of measurement equipment for evaluations.  So, yes, there is some cost savings that comes with technological advancement, but fundamentally, the basic construction of a woofer hasn't changed, and the economics around it haven’t either.

You get what you pay for.  We cannot escape that.  The salient question when it comes to value, then, is, “What exactly is that?”

When it comes to saving money, if a person wants more than the proposed idea of 'performance', but the actual reality, they should answer the question, very specifically, when you pay less, what are you giving up?  If that answer is “Nothing”, you simply have your eyes shut to the sleet storm.

If you don't actually know the answer, at least you have room in your head to learn what you can and make your best guess. 

If you’re shopping on the lower end of options, chances are you’re giving up quality.  And when I use that word, I mean it in the general pluralistic use of qualities, specific properties upon which objective performance depends.  You probably cannot see it, because the cut corners are designed to be hidden in the losses of inflation and market chicanery. The driver basket will look fantastic.  The motor will have shiny machine work, maybe a boot, maybe some bolted on shiny plates if it’s a ‘high-end’ or adjacent target market.  But if the product is sold to a market that puts the highest value on the ratio of performance-implying specifications and cosmetic features for the lowest dollar, that’s what you’re going to get, because whether they know it or not, that’s what real buying customers of that product demand.

Spend more, get more.  Sounds like an easy fix.  But get more what?  It depends on the product, and the value of it depends on the use context and user.  It could in fact be a massive chunk of marketing budget to increase brand recognition, exotic-looking materials that don’t actually do much if anything for performance, esoteric motor geometries with a nicely written fantasy pitch with lots of claims of high performance, but without meaningful qualifications.  If the real purpose is a show piece to impress with conspicuous excess, gather ‘clout’ among similarly minded, that does in fact have value.

There’s a lot of variation out there.  There are some truly great examples of superbly-performing audio products at different relative price levels.  There are also some real turd-worthy performance artists whose cost is mostly infused into making people believe that they are ‘the best’, that they look like it, and that the general media consensus supports that. 

Honestly, it’s kind of a scary world, if you really care what really happens.  But I think it is worth opening eyes to the sleet storm, because at least then you have a chance to choose the turns at forks in the road more likely to get you to your desired destination, turn around sooner when you realized you missed the better option, and just generally not fly off a cliff to self-destructive levels of frustration.

~ Colin Miller is a guest writer and certified representative for Harbottle Audio and Cassini. The views expressed are based on decades of experience in the audio and programming industries.~