Data driven counterpoint to the proclaimed "Death of the electric guitar" - Jemsite
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post #1 of 153 (permalink) Old 04-17-2018, 06:09 PM Thread Starter
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Data driven counterpoint to the proclaimed "Death of the electric guitar"

I thought there was a thread but a search didn't find it.

I'm sure you're all aware of the Washington Post article.

Music and Sound Retailer.

MSR 04 2018 (April)
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post #2 of 153 (permalink) Old 04-18-2018, 12:35 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

I posted the Washington Post article as part of another thread simply because it had real numbers concerning the brands being discussed. This article has real numbers too.

The oboe could replace the electric guitar. Guitarists are always talking about “cutting through the mix” and “boosting the mids” on their amps, pickups, and pedals. Well, the oboe is the musical equivalent to a wounded goose; no drummer can play loud enough to cover up those piercing mids. Plus, the oboe is lightweight and portable. On the other hand, their is no shame in being a “bedroom oboist.” In fact, people would probably support the idea wholeheartedly along with letting you have a soundproof studio in which to practice.There are so many advantages to the oboe it seems silly that we still play an instrument that is dependent on electricity to work, thus destroying the planet every time it is played.

The absence of electricity will immediately kill the electric guitar, along with many other more important things. People’s appreciation of the electric guitar (or lack of it) has little to do with the name on the headstock. I do not play the guitar so that I can own an Ibanez/EBMM/insert brand of choice. (Perhaps other people do, making me the weird one. ) I get the sense some guitar companies believe otherwise.
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post #3 of 153 (permalink) Old 04-18-2018, 12:48 AM Thread Starter
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

I see a short term market opportunity for solar powered amps!

So it was in a thread, I wasn't finding that. There was another "industry response" months ago but it was short and just some numbers without a lot of corroborating interviews and whooey to drive home the point. The market is always in flux and sometimes you can't explain the numbers.

Thankfully the oboe is not going to dominate popular music in the foreseeable future, even when the power goes out the acoustic is still going to rule the roost.
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post #4 of 153 (permalink) Old 04-18-2018, 02:24 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

Quote:
Originally Posted by Formerly Given To Fly View Post
I posted the Washington Post article as part of another thread simply because it had real numbers concerning the brands being discussed. This article has real numbers too.

The oboe could replace the electric guitar. Guitarists are always talking about “cutting through the mix” and “boosting the mids” on their amps, pickups, and pedals. Well, the oboe is the musical equivalent to a wounded goose; no drummer can play loud enough to cover up those piercing mids. Plus, the oboe is lightweight and portable. On the other hand, their is no shame in being a “bedroom oboist.” In fact, people would probably support the idea wholeheartedly along with letting you have a soundproof studio in which to practice.There are so many advantages to the oboe it seems silly that we still play an instrument that is dependent on electricity to work, thus destroying the planet every time it is played.

The absence of electricity will immediately kill the electric guitar, along with many other more important things. People’s appreciation of the electric guitar (or lack of it) has little to do with the name on the headstock. I do not play the guitar so that I can own an Ibanez/EBMM/insert brand of choice. (Perhaps other people do, making me the weird one. ) I get the sense some guitar companies believe otherwise.
Don’t wanna argue with you about that, but oboes will NEVER substitute guitars; guitars were made fot catching girls attention; you can’t gesticulate blowing through that thing and you can’t pose like a 80’s guitar hero with that; maybe saxophone would had a chance, but not really sure about that.

Ah! And if the guitar has an RG body shape and Ibanez headstock it looks even sexier!
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post #5 of 153 (permalink) Old 04-18-2018, 03:24 AM Thread Starter
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

All respect to Kenny G, but any instrument player that's a good performer can rock their instrument, horns, oboes, Bill Clinton rocked a sax. But don't tell Miles, Byrd, or Armstrong they weren't the coolest guys in any room. They were rock stars
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post #6 of 153 (permalink) Old 04-18-2018, 05:06 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

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I see a short term market opportunity for solar powered amps!

So it was in a thread, I wasn't finding that. There was another "industry response" months ago but it was short and just some numbers without a lot of corroborating interviews and whooey to drive home the point. The market is always in flux and sometimes you can't explain the numbers.

Thankfully the oboe is not going to dominate popular music in the foreseeable future, even when the power goes out the acoustic is still going to rule the roost.
I try to inspire optimism.

The Washington Post provided a sense of scale between Gibson, Fender, and PRS based on revenue. The article also made some good points.

Music and Sound Retailer provided insight into, well, quite a few things:
- People can call me a millennial because I am a millennial. I think that is fair. Unfortunately, when people write about millennials they make us sound like animals living at the zoo. We don't like that.
- A "fingerstyle acoustic influencer" is an acoustic guitarist. If a guitarist does not want to be pigeonholed as a guitarist, do not play the guitar. There is no reason a "fingerstyle acoustic influencer" couldn't be referring to a banjo player.
- This "web-driven, instant-gratification culture..."

I realize this publication is going to use marketing jargon in their articles, but their ideas for reaching "younger people" sound like they need to visit us at the zoo.

I would like to ask, why are guitar companies stingy on the hardshell cases now? Ibanez, PRS, Suhr, Strandberg, and others I'm sure. I know they are not the most convenient things in the world but shipping is when a hardshell case really matters. Correct me if I'm wrong, if a guitar is shipped in a hardshell case it will be better protected, shipped in one box, and UPS only gets paid once. If a guitar is shipped in a box, and the case is shipped in another box, the guitar is not protected, hardshell cases are more expensive, and UPS gets paid twice. These extra costs are then passed onto the customer. If this is accurate, it is called taking advantage of musicians. We don't like that either.
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post #7 of 153 (permalink) Old 04-18-2018, 05:15 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

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Don’t wanna argue with you about that, but oboes will NEVER substitute guitars; guitars were made for catching girls attention; you can’t gesticulate blowing through that thing and you can’t pose like a 80’s guitar hero with that; maybe saxophone would had a chance, but not really sure about that.

Ah! And if the guitar has an RG body shape and Ibanez headstock it looks even sexier!
I was using sarcasm. The oboe is a double reed instrument which are the hardest instruments to learn. You sound like a wounded goose for 3-5 years before notes start to resemble music, vaguely.
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post #8 of 153 (permalink) Old 04-18-2018, 07:58 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

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I thought there was a thread but a search didn't find it.

I'm sure you're all aware of the Washington Post article.

Music and Sound Retailer.

MSR 04 2018 (April)
Where should we be looking in that? I scrolled a few pages in and found the editor's note where he talks about +2.2% YOY growth in 2017. I also found what I think is the WaPo article you're talking about (January 2017) that mentions a 33% decline in sales in the prior decade, from 1.5 to 1 million units sold.

A single year of growth obviously isn't a trend, so it's hard to take what he's saying as much more than positive spin from someone with a vested interest in spinning that positively.
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post #9 of 153 (permalink) Old 04-18-2018, 08:35 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

So I just read that WaPo article and two things stood out to me.

1. The first part reads as a bunch of old people crying that what they do isn't cool any longer. There is even the obligatory dig at electronic music.

2. The article centers around one main theme: the growth or decline of guitar sales.

Focusing entirely on growth and by extension shareholder value is not surprising for a publicly traded company. There is no shortage of ink spilled on the topic of shareholder value as the driving force of publicly traded companies, at the expense of everything else. If your goal is only to grow sales and profits every year and watch your stock price go up, maybe guitars really are dead? At the least they seem like a really questionable investment.

But does that matter? Maybe what happens is these companies simply go private and they no longer have to worry as much about that? They quote PRS in the article and Paul says his business fluctuates between $42-45M and he seems totally content with that. The article seems hung up on the concept of guitar heroes and whether or not hordes of kids see that and immediately want to play a guitar. Is that important? Was there ever a bass hero? Did that matter? People who made basses just went on about their business.

Music featuring virtuoso guitar playing just isn't popular anymore. But there is still plenty of music being made with guitars, so guitars will continue to sell. It doesn't mean that it will be the end if guitars become a more utilitarian thing, it might just mean that the industry and our expectations need some restructuring to move forward.
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post #10 of 153 (permalink) Old 04-18-2018, 10:16 AM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

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Originally Posted by Formerly Given To Fly View Post
I was using sarcasm. The oboe is a double reed instrument which are the hardest instruments to learn. You sound like a wounded goose for 3-5 years before notes start to resemble music, vaguely.
I was using sarcasm too!
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post #11 of 153 (permalink) Old 04-18-2018, 10:26 AM Thread Starter
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

That's what I came out of the WaPo with, ald old man grumbling about how the very wealthy people that bought all his vintage guitars are getting old and are thinking about divesting instead of continuing to buy, and there are not enough younger people willing to pay big money to buy all the Strats and Bursts that will start to hit the market. And walking around the zoo that is NAMM while doing it, with some number color to add basis for the way he argues the point.

But that set off a lot of discussion, the sky is always falling and the "industry" doesn't like that point of reference and want to present their own, that says, hey, sky is just fine, look, it's still blue. Somedays the weather isn't as nice, some days there are clouds, but the outlook is sunny with a chance of normalcy.

I find the age of the collectors of shred era guitars is 40's and 50's, not 60's and 70's, and even though there are the always going to be comparisons over what generation is doing what and how one affects the other, there have always been, it just used to be the Gen x, now it's the millennial, which I'm learning evidently don't like being classified

Of course there are bass hero's, not just rock stars that play bass. Although both will have their names on the models they endorse
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post #12 of 153 (permalink) Old 04-18-2018, 10:54 AM
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

Good article. The main point I got were pretty obvious but the data helps authenticate... while trends come and go... and electric guitar has peaked in certain ways (possibly overall yearly new quantity sold) ... it's quite viable and not going away except that companies need to adapt. This is true with many businesses.

Acoustic (with or without pickups) is just over half the market still.

The color sales are most interesting when contrasting with what Ibanez offered with the AZ, having omitted big sellers Black also Red and White.

Again no surprise but confirmation 1. that the "guitar god" is in it's own way a hindrance/obstacle and 2. companies might be a little out of touch with younger players especially in terms of social media, retail experience & their lack of brand loyalty.

These trends are good for the marketplace IMHO.
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post #13 of 153 (permalink) Old 04-18-2018, 11:50 AM
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

I usually don't read this kind of stuff because I don't care in the slightest. I did look at this article though, and confirmed I still don't care in the slightest
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post #14 of 153 (permalink) Old 04-18-2018, 12:02 PM Thread Starter
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

And in other news we can not care about

GC Buys Time With Debt Exchange

GUITAR CENTER HAS ALLAYED DEFAULT concerns with a recently completed bond exchange that adds three years to the maturity date on $325 million in debt. Under the exchange offer, bondholders were able to swap $325 million in senior unsecured bonds due in 2019 for a new series of bonds that mature in 2022.

Separately, Moody's Investment services reported that Guitar Center is planning to issue new $635 million senior secured notes with a 2021 maturity date, and extend the due date of $375 million in asset backed loans to 2022, from 2019.

A Moody's analyst described the bond swap as a "distressed exchange" and said it would add approximately $50 million to retailer's total debt burden. However, by extending the maturity date, he added that "it will alleviate concern regarding Guitar Center's significant and near-term debt maturities and provide some increased financial flexibility." Moody's remains concerned about Guitar Center's credit worthiness due what it terms the company's "limited revenue visibility."


Gibson Ends Negotiations With KKR

NEGOTIATIONS BETWEEN GIBSON BRANDS and leading private equity firm KKR regarding a potential debt for equity swap that would transfer control of the company to KKR in exchange for a significant reduction of Gibson debt have ended unsuccessfully, according to a statement from Gibson. Gibson's major shareholders Henry Juszkiewicz and Dave Berryman and representatives of KKR apparently could not come to an agreement on the value of the guitar maker and its various electronics divisions.

Juszkiewicz and Berryman value Gibson Brands at 10.7 times its $60 to $65 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) or between $642 and $695 million. Gibson also said that it was in discussions with other potential debt and equity investors about refinancing its $325 million in debt, which matures on August 1.
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post #15 of 153 (permalink) Old 04-18-2018, 12:36 PM
 
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Re: Data driven counterpoint to the proclaimed "Death of the electric guitar"

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Gibson Ends Negotiations With KKR

NEGOTIATIONS BETWEEN GIBSON BRANDS and leading private equity firm KKR regarding a potential debt for equity swap that would transfer control of the company to KKR in exchange for a significant reduction of Gibson debt have ended unsuccessfully, according to a statement from Gibson. Gibson's major shareholders Henry Juszkiewicz and Dave Berryman and representatives of KKR apparently could not come to an agreement on the value of the guitar maker and its various electronics divisions.

Juszkiewicz and Berryman value Gibson Brands at 10.7 times its $60 to $65 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) or between $642 and $695 million. Gibson also said that it was in discussions with other potential debt and equity investors about refinancing its $325 million in debt, which matures on August 1.
Shock and awe.

I'd be curious what KKR's multiple was - 10.7x EBITDA is not-totally-insane but does seem a bit aggressive for a firm possibly months removed from bankruptcy. I'm wondering if they came in at 11x and KKR came in at 10x and when KKR tried to get them to meet in the middle at 10.5x they wouldn't budge, or if it was more like 11x and 7x or something. I suppose if I had to guess the latter seems more plausible. Either way, I can't say I'm shocked they wouldn't agree to give up control.

EDIT - of course this could have also broken down over forward looking earnings estimates - even if both sides agreed, in theory, on a 10.7x multiple, if Gibson was optimistically projecting forward EBITDA of 60-65mm and KKR was more bearish at say 45-50mm, then thats (at the high end of each range) going to come out to a 160mm difference in valuation.
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