Preamp Reveals Audio Industry Dark Side

[watchnerd]

 

[svart-hvitt]

30 bucks?

 

[Erik]

Congratulations, the author of the video has learned about a simple marketing strategy called product rebranding. Next step will be understanding that it is everywhere, not only in HiFi industry. The dark side of capitalism.

 

[Sancus]

This video is so bad, I already commented on it a couple days ago lol. Oh noes, in an industry where $10K power cables are a thing, someone rebranded a chinese board in a different case.

How shocking, how horrible, oh wait literally every single manufacturing industry does this and it's arguable whether it's even questionable at all. The same board in a different case with different levels of build quality and product support can be a legitimately different product.

 

[LightninBoy]

This is a nothing burger. Does anyone remember the Lexicon / Oppo incident?

https://www.stereophile.com/content/lexicons-stuffs-500-oppo-bd-83-chassis-and-sells-it-350000-1

 

[JJB70]

Or the Red Rose amplifiers which sold for $2000 a pop on the back of Mark Levinson being behind the company.

 

[Dimitrov]

This takes the cake :

https://www.audioholics.com/av-preamp-processor-reviews/simaudio-moon-cp-8-processor

$18000 Sim CP-8 processor which was a Denon AVR-2808 minus the power amp section. That is crazy.

 

[DuxServit]

Well, just think: if this is what they’re doing to audio gear, imagine what they’re doing to more valuable computer & networking gear.

 

[Hypnotoad]

My ex father in law used to sell outboard motors, and it's the same there, a 9.9hp/15hp and 25hp/35hp and so it goes up the range are identical motors, the only difference being that the lesser powered ones have a smaller carburetor, they cost the same to build but you pay more for the higher powered one.

 

[Ron Texas]

With only $30 at stake this is hardly a relevant example of anything. It sure isn't the dark side of capitalism.

 

[andreasmaaan]

For those defending this, what specific advantage does the $78 re-branded version offer? What does the 60% mark-up on the existing retail price buy you?

 

[Ron Texas]

For those defending this, what specific advantage does the $78 re-branded version offer? What does the 60% mark-up on the existing retail price buy you?

A different colored box. There's just not enough money here to make a difference. If it was a $1000 item marked up to $1600, that's a different story.

 

[Sancus]

For those defending this, what specific advantage does the $78 re-branded version offer? What does the 60% mark-up on the existing retail price buy you?

I'm not sure it's a matter of defending. It seems difficult to avoid, unless the plan is to argue only OEMs are allowed to sell products.

In this case it seems like the fact the Music Hall Mini was based on the Rolls board was already known if you spent 30 seconds googling the product and they may have used different components or made some minor changes. Whether or not they did, a $20-$30 difference could easily be accounted for by legitimate marketing spending. As a business owner, I could discover a particularly impressive niche product and decide that I can do a better job finishing the product and marketing it. So I buy the OEM's board and produce my own version. This is how the vast majority of small to medium size brands operate these days, just look at the PC component industry. Very few OEMs, but hundreds of brands.

If you argue that only an OEM can provide differentiation/value then you're basically saying support, marketing, distribution, and finishing are not useful industries and they should all go away. I think people would have far fewer options in products if that were to happen, and much less efficient markets. The two egregious cases mentioned above are a bit different because buying finished consumer products and reusing them in your own product without even the permission of the original brand(!), with a price 5-10x or more higher seems closer to actual fraud than normal rebranding to me.

In any case, though, Youtubers love to pretend they "discovered" something relatively minor that was already not difficult to find information about and make a video riling up their fans. That's the part of this that annoys me. If you want to rile your fans up, at least do it about something significant not a normally rebranded <$100 preamp.

 

[andreasmaaan]

I'm not sure it's a matter of defending. It seems difficult to avoid, unless the plan is to argue only OEMs are allowed to sell products.

In this case it seems like the fact the Music Hall Mini was based on the Rolls board was already known if you spent 30 seconds googling the product and they may have used different components or made some minor changes. Whether or not they did, a $20-$30 difference could easily be accounted for by legitimate marketing spending. As a business owner, I could discover a particularly impressive niche product and decide that I can do a better job finishing the product and marketing it. So I buy the OEM's board and produce my own version. This is how the vast majority of small to medium size brands operate these days, just look at the PC component industry. Very few OEMs, but hundreds of brands.

If you argue that only an OEM can provide differentiation/value then you're basically saying support, marketing, distribution, and finishing are not useful industries and they should all go away. I think people would have far fewer options in products if that were to happen, and much less efficient markets. The two egregious cases are a bit different because buying finished consumer products and reusing them in your own product without even the permission of the original brand(!), with a price 5-10x or more higher seems closer to actual fraud than normal rebranding to me.

In any case, though, Youtubers love to pretend they "discovered" something relatively minor that was already not difficult to find information about and make a video riling up their fans. That's the part of this that annoys me. If you want to rile your fans up, at least do it about something significant not a normally rebranded <$100 preamp.

In fact, I agree with all you say in general. But I don't see how these arguments apply to this particular case.

Here, we're not talking about an OEM board being packaged and branded. Instead, we have an already-finished product being repackaged and resold in an identical case, with only the colour and the brand name printed on it changed.

There is no added value, no advantage, just the same product in the same case with a different name on it. For that, we have a 60% markup.

What does this 60% markup buy the consumer?

 

[Sancus]

Here, we're not talking about an OEM board being packaged and branded. Instead, we have an already-finished product being repackaged and resold in an identical case, with only the colour and the brand name printed on it changed.

What evidence of that was provided though? It seems... unlikely that they are buying the finished rolls at retail, taking them apart and repackaging to charge $30 more. It's hard to imagine that being very profitable.

I'm not a lawyer and not entirely sure of the legalities of doing that, but it seems far more likely they're simply buying the boards wholesale from Rolls and then rebranding them. And in that case, if anyone's at fault, surely it's Rolls for selling their own boards to be rebranded at a higher price. But hey, maybe it makes economic sense for them to do that because Music Hall is better at marketing, and if it does, who is in the wrong here?

 

[andreasmaaan]

What evidence of that was provided though? It seems... unlikely that they are buying the finished rolls at retail, taking them apart and repackaging to charge $30 more. It's hard to imagine that being very profitable.

They don't seem to be taking anything apart - it's the same case too!

My guess is there's an arrangement in place between the two companies. But it's neither here nor there IMO. The more expensive unit offers no added value and could not cost any more to produce. I'm not so interested in why or how that is, personally.

But hey, maybe it makes economic sense for them to do that because Music Hall is better at marketing, and if it does, who is in the wrong here?

I ask myself: could I take a cheap product and make no changes to it and therefore add zero value to it, and then sell it for 60% more than the original product costs and not disclose that it is in fact the same product? The answer is no - this would be unconscionable IMHO.

I don't claim anyone is doing anything illegal btw...

 

[Sancus]

They don't seem to be taking anything apart - it's the same case too!

It is painted and labeled differently though, which you couldn't do with the board in the case. My guess about what is actually happening here is that Music Hall just orders wholesale from Rolls with different color and labeling specifications, and that Music Hall is not doing any manufacturing at all.

I ask myself: could I take a cheap product and make no changes to it and therefore add zero value to it, and then sell it for 60% more than the original product costs and not disclose that it is in fact the same product? The answer is no - this would be unconscionable IMHO.

We have completely different ideas of unconscionable, because literally all you have to do is stamp your brand on something to 'add value'. You do not need to make any functional change to it. And that value is very real, not imaginary. It's a valuable service for a brand to operate as a curator of OEM equipment, that they believe has quality, under a consistent aesthetic.

In this example, the Music Hall value is finding good products, and selling them with the same branding and aesthetic so they look nice together on your shelf. If Music Hall is doing a good job of that, not only would I pay +$30/product for that, I would consider it an incredible bargain given the ridiculous amount of research you need to do to find quality audio products from random OEMs yourself. And if they're not doing a good job of it, well then they're a ****** brand. Even then, being bad at your job doesn't make you unethical.

The above scenario is, of course, an extreme where the only value added is curation. It's entirely possible that Music Hall's other products have more manufacturing/design work put into them, and they just sell this preamp because they thought their lineup needed a preamp, but they didn't feel there was sufficient value add for them to design or manufacture their own. Also completely legitimate.

There's plenty of reasons for Rolls to sell to them. Judging by their sad website they have either no idea or no interest in effective online direct-to-consumer marketing, so that alone may be reason enough for Rolls to sell their product under Music Hall's brand. It is indeed entirely possible that Rolls makes more money selling wholesale for rebranding to various companies and they only add a small amount of revenue by selling direct.

Honestly the only possibly unethical part here is that someone on a website said that Music Hall claims their product has 'improved components'. I couldn't find that on their website, but, if they are claiming that when the board is actually identical, that would be dishonest.

 

[andreasmaaan]

It is painted and labeled differently though, which you couldn't do with the board in the case. My guess about what is actually happening here is that Music Hall just orders wholesale from Rolls with different color and labeling specifications, and that Music Hall is not doing any manufacturing at all.

Yes, that's exactly what I think is happening - what I alluded to when I said I suspect there's an arrangement in place between the two companies.

In this example, the Music Hall value is finding good products, and selling them with the same branding and aesthetic so they look nice together on your shelf. If Music Hall is doing a good job of that, not only would I pay +$30/product for that, I would consider it an incredible bargain given the ridiculous amount of research you need to do to find quality audio products from random OEMs yourself. And if they're not doing a good job of it, well then they're a ****** brand. Even then, being bad at your job doesn't make you unethical.

I have no problem with OEM boards being packaged and retailed for more than the individual value of the components. But Rolls is not an OEM. It is a manufacturer of an identical finished retail product.

Honestly the only possibly unethical part here is that someone on a website said that Music Hall claims their product has 'improved components'. I couldn't find that on their website, but, if they are claiming that when the board is actually identical, that would be dishonest.

I agree: if Music Hall did indeed falsely claim their product had "improved components", that would be unethical (and illegal). We don't know if they did this.

Assuming they didn't make such a claim, they're merely perpetrating a very small-scale rip-off, and one that I would not make myself a party to if I were in their position

To illustrate where I think the line is, if Music Hall were selling the Rolls unit and being open about what it was, I would consider them absolutely free to charge a 60% surplus over the standard retail price. But then nobody who used google to price check their purchases would buy it.

PS. I don't think anything about this situation is unique or unusual btw. It's all quite standard practice. Doesn't mean I support it or would engage in it myself though.

 

[Sancus]

To illustrate where I think the line is, if Music Hall were selling the Rolls unit and being open about what it was, I would consider them absolutely free to charge a 60% surplus over the standard retail price. But then nobody who used google to price check their purchases would buy it.

I think we just have different ideas of how much companies should disclose about their sources. To me, a company has no obligation to disclose their OEM, even if that OEM happens to sell an identical finished product. Would I LIKE them to disclose that? As a consumer, certainly, I always prefer to see more information than less on company websites. Especially if it's a product that isn't central to your offerings, I think you probably buy more in consumer confidence by disclosing than not. But there's a risk too.

As a hypothetical, lets say I'm an experienced electrical engineer and I steal Amir's audio analyzer(sorry, Amir). I do nothing but buy OEM products, test them with my analyzer and knowledge, and then make deals with those OEMs to sell the products I choose as "good" painted black with the word "Sancus" on them. I don't provide detailed specs or measurements on my website, all I provide is the product, but I nevertheless develop a following because people notice that all my products get good reviews from objectivist reviewers. Except for Amir, he's still mad I stole his analyzer.

That seems like a legitimate business to me.

But now what happens if I publish full details on how I found each of my products, what the OEM is and what they contain? Do I have a business then, or do I have an informational website that people go to to pick competitors audio products, resulting in my business failing because nobody buys my actual products?

 

[andreasmaaan]

Again @Sancus, I think you're overlooking the distinction here between packaging an OEM product (fine IMO) and re-branding an already-finished retail product and then adding a massive (in % terms) markup.

So I don't think your hypothetical business model can be compared to what's going on in this particular case.

Anyway, I accept this practice is relatively commonplace in business; it's just personally below my line.

I guess we'll agree to disagree