The Boutique Amp Gamble - Music Inc. Magazine
The Boutique Amp Gamble - Music Inc. Magazine
The Boutique Amp Gamble - Music Inc. Magazine
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GEAR TREND | BY DAN DALEY<br />
<strong>The</strong> <strong>Boutique</strong> <strong>Amp</strong> <strong>Gamble</strong><br />
In the 1990s, a renaissance of<br />
sorts took place in the guitar<br />
amplifier business. Several<br />
dozen entrepreneurial, technical<br />
types began a cottage<br />
industry by building guitar<br />
amps in basements, garages and<br />
storefronts. Driven, self-admittedly,<br />
more by a passion for<br />
sound than sound economic<br />
principles, they came at a time<br />
when music instrument manufacturing<br />
and retail underwent<br />
a huge round of consolidation.<br />
Some suggest that the corporatization<br />
of the MI landscape<br />
helped instigate this grassroots<br />
capitalist tornado. To others, it<br />
reflected a music industry that<br />
itself was on the verge of becoming<br />
an independent-driven<br />
economy. For whatever reasons,<br />
companies with names<br />
like Matchless, Top Hat, Naylor,<br />
Bogner, Tone King, Guytron<br />
and Dr. Z began to vie for the<br />
attention of a fast-growing<br />
musician base.<br />
<strong>The</strong>se entities presented an<br />
opportunity to the community<br />
of independent music product<br />
dealers to carry unique, highmargin<br />
guitar products that set<br />
them apart from the retail<br />
behemoths filled with massproduced<br />
products selling at<br />
steep discounts. But it was an<br />
opportunity that also carried a<br />
level of risk.<br />
“We would buy these ‘bou-<br />
tique’ amplifiers based on the<br />
same sort of passion that the<br />
people building them have,” said<br />
Dan Tracey, a salesman at World<br />
<strong>Music</strong> in Nashville. “It’s not a<br />
product for the weekend-warrior<br />
musicians who are looking<br />
for lower-priced products.<br />
Established ‘name’ musicians<br />
will often get endorsement deals<br />
and products through them. So,<br />
it’s a pretty narrow niche of the<br />
customer base that this appeals<br />
to: experienced players who are<br />
willing to take a chance and can<br />
spend the $2,000-plus that boutique<br />
amplifiers cost.”<br />
A LABOR OF AMP LOVE<br />
On the other side of the<br />
fence, the economics are<br />
equally stark. Joe<br />
Naylor started his<br />
eponymously named<br />
brand of guitar amplifiers<br />
in 1994 using<br />
capital scoured from<br />
friends, family, credit<br />
cards, personal loans<br />
and the sale of a business<br />
whose site had<br />
been the manufacturing<br />
home for the 15 or<br />
so amplifiers he could<br />
build per month in Warren,<br />
Mich. (<strong>The</strong> boutique amp phenomenon<br />
is centered in the<br />
Midwest for reasons no one can<br />
explain, as opposed to the indie<br />
amp movement of the 1970s<br />
<strong>Boutique</strong> amps<br />
can mean profit<br />
and prestige for<br />
dealers, but<br />
require an<br />
investment. Is it<br />
worth the risk?<br />
which was heavily concentrated<br />
in California.) By 1997,<br />
he had sold his interest in the<br />
business and even his name to<br />
another entrepreneur whose<br />
fortunes were as dismal as his<br />
Greg Bayles of Make’n <strong>Music</strong><br />
with a Bogner amp stack<br />
had been.<br />
“You start out strong—there<br />
are people who like to jump on<br />
something new,” Naylor said.<br />
“<strong>The</strong> hard part is keeping the<br />
buzz going when you’re up<br />
against big brand names.”<br />
Joe Naylor now owns<br />
Reverend <strong>Music</strong>al Instruments,<br />
JULY 2005 | MUSIC INC. | 55
“It’s a pretty<br />
narrow niche of<br />
the customer base<br />
that this appeals to:<br />
experienced players<br />
who are willing<br />
to take a chance<br />
and can spend the<br />
$2,000-plus boutique<br />
amplifiers cost.”<br />
Dan Tracey,<br />
World <strong>Music</strong><br />
“You have to get the<br />
amps in the hands<br />
of the sales force on<br />
the floor. You need<br />
them to explain to<br />
the customer why<br />
they should be<br />
interested in a $2,000<br />
amplifier.”<br />
Brian Gerhard,<br />
Top Hat <strong>Amp</strong>lification<br />
“[Carrying boutique<br />
amps] sets us apart<br />
from the big<br />
retailers. On the<br />
independent level,<br />
we have more<br />
latitude.”<br />
Greg Bayles,<br />
Make’n <strong>Music</strong><br />
56 | MUSIC INC. | JULY 2005<br />
which started out in the boutique<br />
electric guitar market and<br />
branched out into amplifiers,<br />
turning out nearly 50 per<br />
month. He said the lessons<br />
learned from his first go-round<br />
are helping make this business<br />
successful.<br />
Most start-up amplifier<br />
companies fail, and of those<br />
that do persevere, the rewards<br />
are often minimal. <strong>Boutique</strong><br />
amps are rarely sold on a consignment<br />
basis; the sale of one<br />
amp often directly funds the<br />
manufacture of the next one.<br />
“‘It’s a living’ is the best I<br />
can say,” said Brian Gerhard,<br />
who recently moved his Top<br />
Hat <strong>Amp</strong>lification company<br />
from the high-overhead environs<br />
of Anaheim to the more<br />
cost-effective Raleigh, N.C.,<br />
area. “Any significant money<br />
came from the real estate I had<br />
the business on.”<br />
<strong>The</strong> exception many point<br />
to is Mesa Boogie, whose<br />
amplifiers became highly successful<br />
in the 1980s when<br />
many California rock artists<br />
began using them. <strong>The</strong> company’s<br />
dual-rectifier preamp<br />
design was also cited as being<br />
an element that helped the<br />
company stand out and gain<br />
acceptance among musicians<br />
and retailers.<br />
<strong>Boutique</strong> amps tend to be<br />
aimed at older vintage-sound<br />
aficionados rather than young<br />
“shredders.” Still, amp makers<br />
have developed a set of strategies<br />
to break out of the pack.<br />
“You have to get the amps in<br />
the hands of the sales force on<br />
the floor,” Gerhard said. “Often,<br />
the experienced store owners<br />
or managers will buy them to<br />
play themselves in clubs and on<br />
gigs. But the younger sales people<br />
tend to stick to the name<br />
brands. You need them to<br />
explain to the customer why<br />
they should be interested in a<br />
$2,000 amplifier.”<br />
Gerhard sends banners and<br />
other promotional materials to<br />
retailers to generate in-store<br />
buzz, adding that he rarely uses<br />
co-op advertising.<br />
Naylor said that making<br />
the rounds at trade and guitar<br />
shows, such as NAMM and<br />
the Dallas Guitar Show, is<br />
important. “NAMM’s expensive,<br />
but that’s where you get<br />
everyone in one place,” he<br />
said. “So it can be worth it.”<br />
Guy Headrick, co-owner of<br />
Guytron <strong>Amp</strong>lifiers, has been<br />
building between 15 and 25<br />
units a month, costing $2,900<br />
each, in his Troy, Mich., factory<br />
since 1997. He’s found<br />
some fairly reliable indicators<br />
to determine if a retail dealer<br />
is a good prospect. Those<br />
boasting a significant level of<br />
pro audio sales is one.<br />
“I like to see a dealer whose<br />
customers know the difference<br />
between a Shure and Neumann<br />
microphone,” he said. “Also, I<br />
look at the guitar lines they<br />
already carry. Is it Fender or is it<br />
Squier? <strong>The</strong>y’re good clues as to<br />
whether the customer base is<br />
open to our kinds of amplifiers.”<br />
RETAILERS TORN<br />
<strong>The</strong> start-up amplifier genius<br />
remains a sort of artist in<br />
solder-laden manufacturing,<br />
though retail often takes a less<br />
romantic view of them. Tracey,<br />
who once assembled guitar amp<br />
rigs for George Lynch and Ace<br />
Frehley, said he looks forward<br />
to trolling the shows for “cool<br />
new tones.” Still, when it comes<br />
to committing to a boutique<br />
amp, he said, “I sit down with a<br />
Peavey 30 and ask the guy,<br />
‘Why is your boutique amp so<br />
much better?’ It’s about being<br />
able to move the product.”<br />
<strong>The</strong> margins on boutique<br />
amps can make it worth the<br />
effort. Dean Moody, store manager<br />
at Rudy’s <strong>Music</strong> Stop on<br />
Manhattan’s famed MI retail<br />
strip along West 48th Street,<br />
pegs the profits on exotic handwired<br />
amps at between 25 and<br />
40 percent. Moody monitors the<br />
grapevine for names of boutique<br />
marquees, using buzz as the<br />
barometer to determine if he’ll<br />
commit to buying and setting it<br />
up in the rear room, the store’s<br />
exclusive space for guitar amps.<br />
“If we love it, we’ll buy it,”<br />
he said. “If we don’t love it,<br />
but if we think some musicians<br />
will like it, we’ll offer<br />
the manufacturer some floor<br />
space, which is a sort-of consignment,<br />
I guess.”<br />
Greg Bayles, founder of<br />
Make’n <strong>Music</strong>, has made boutique<br />
products a major part of<br />
his inventory for nearly 30<br />
years and considers their<br />
inventors to be artists. He<br />
mentored Rheinhold Bogner<br />
when the Eastern European<br />
immigrant was a newly arrived<br />
teenager in Los Angeles, selling<br />
the first Bogner amp to<br />
Eddie Van Halen and buying<br />
all of Bogner’s production for<br />
more than a year, providing<br />
the company with a foundation<br />
that helped give it a strong<br />
hold in the boutique market.<br />
However, Bayles said, there<br />
are parallels with the larger<br />
music business. “I’ve had dealings<br />
with boutique guys who<br />
also sell direct to the customer<br />
on the side, using your store as<br />
a showroom,” he said. “Some<br />
of them don’t realize that<br />
that’s wrong—they’re not as<br />
sophisticated about the business<br />
of selling as they are of<br />
electronics. But some of them<br />
do know. Not everyone is<br />
totally scrupulous.”<br />
WEB & ENDORSEMENT DYNAMICS<br />
<strong>The</strong> Internet has also become<br />
a double-edged sword, with<br />
positive “reviews” often posted<br />
by the amp’s own manufacturers.<br />
(A tactic much of American<br />
business has been accused of in
ecent years.) “<strong>The</strong>re’s a lot of<br />
ulterior motives in what you see<br />
on the Web,” Bayles said. “And<br />
the chat rooms devoted to guitar<br />
amps are populated with guys<br />
who type more than they play.”<br />
Endorsements are another<br />
issue. Bayles asserts that<br />
Matchless had a policy in its<br />
early days that impacted his Los<br />
Angeles store, which closed in<br />
1995. “If you were in a big band,<br />
you got a free amp. That positioned<br />
them to compete with me<br />
for the very customers that you<br />
sell these kinds of products to.”<br />
But the pluses are there.<br />
Aside from good margins when<br />
a new amp starts to sell as a<br />
result of positive word of mouth,<br />
the boutique guitar amp gives<br />
the independent store a unique<br />
product often not found at large<br />
chain retailers. <strong>Boutique</strong> amps<br />
are rarely discounted, they’re<br />
not subject to simulations by<br />
amp modeling software, and<br />
rival stores often can’t use them<br />
as the basis for price wars.<br />
“It sets us apart from the<br />
big retailers,” Bayles said.<br />
“<strong>The</strong>y’re like McDonald’s in<br />
that they need to know that a<br />
certain product is going to do<br />
a certain amount of volume<br />
before they can make the decision<br />
to commit to it. On the<br />
independent level, we have<br />
more latitude.”<br />
“<strong>The</strong> level of added value<br />
they can bring to a store is<br />
often significant,” Moody said.<br />
“At a time when we see a lot<br />
of conglomerations in this business,<br />
it’s accompanied by a lack<br />
of innovation,” Tracey said.<br />
“That’s what the boutique guys<br />
bring to the table.” MI<br />
<strong>The</strong> Empires Strike Back<br />
<strong>The</strong> boutique amp phenomenon has not escaped the notice<br />
of larger amp makers. Both Fender and Marshall now offer<br />
hand-assembled, limited-edition products. Fender’s ’57 Twin<br />
Reverb and ’65 Vibroverb reissues list at nearly $3,000.<br />
And in a move that underscores the current influence of<br />
boutique amp makers, Fender recently inked a deal with<br />
Victoria <strong>Amp</strong>lifier, whose eight employees in a small Chicago<br />
suburb will soon begin hand-making and -wiring a line of<br />
Gretsch-branded boutique amps.<br />
“Fender had been trying to pull off a credible boutique<br />
amp of its own for years through its Custom Shop, but I truly<br />
think that they were getting tired of seeing their efforts—<br />
which were often quite good—trashed on the Internet bulletin<br />
boards by people who assume that a large company can’t<br />
make a boutique amp,” said Mark Baier, president of Victoria.<br />
According to Baier, the deal gives Fender the authenticity<br />
of a genuine boutique crafting the amplifiers. He said they’ll<br />
use carbon-composition resistors instead of the cheaper<br />
Asian ones he alleges Fender often uses as part of its mass<br />
manufacturing process.<br />
“It validates the Gretsch amps and the whole concept of<br />
boutique amps, which will help everyone at retail,” he said.<br />
“And it’s a perfect opportunity to grow my company on<br />
Fender’s dime.” —D.D.<br />
JULY 2005 | MUSIC INC. | 57