So much has been written about MAP policies—both pros and cons—that it would take more time to read it all than to binge watch the entire run of “Game of Thrones.” Aaand…here’s just a bit more.
I’ve always felt that MAP as a price point has helped in the Cleveland OH area. Prices in C-town have been so depressed historically that Guitar Center actually had to lower prices when it moved into town in the late ’90s. So, MAP can normalize prices…at least, on the surface. Online sellers that follow MAP make us look as though we’re in the game and not hopelessly overpriced. Margins improved on many products in my market when items sold at MAP. Sure, some companies set MAP at about five percent above bottom-tier dealer price, so only the quantity buyers can make any money. However, there are manufacturers that adopt realistic pricing, and those are the lines dealers loyally embrace.
So, MAP pricing isn’t my gripe, although it certainly affects some markets adversely. My issue is centered on enforcement. Last month, I received an e-mail from the MAP-policing arm of one of the major wind instrument manufacturers. It contained links to items that I had allegedly listed on Amazon priced significantly below MAP, and it warned me that my violation must be immediately corrected to remain a dealer in good standing.
The problem is this: We don’t sell on Amazon. The Amazon “store” was an entity identified as “SKY-LINE.” That isn’t my store; my store is Skyline Music. That business sells non-music products, as well…about three-quarters of a million of them, across several industries, including computer gear, personal care items and art supplies. It even shows up when you click on another entity called “Best Seller,” a “company” that presumably sells from the same catalog. There’s also “KingsWay” with more than a million products listed, and “Arcadia Yamaha” with a similar catalog. That’s the tip of the iceberg, but you get the idea.
Now, “SKY-LINE” annoys me the most, because (of course) there is no direct contact information, location or other details about it through its storefront. I’ve fielded a number of calls for all sorts of MI products from dissatisfied or frustrated customers who looked around the Web and found Skyline Music. Sorry, folks. Mine is not the store you’re looking for.
Yet, the MAP police made the same mistake, even though it’s obvious with a couple of clicks that “SKY-LINE” is a store-bot front. Do due diligence rather than doo-doo diligence, folks. Yes, I know…it’s super hard to play “MAP whack-a-mole” with all these instant lowball stores. That’s why it’s time to change the battle plan—for the good of manufacturers, dealers and, more broadly, the future of the industry.
The American Bar Association, in an article entitled, “Dealing with Unauthorized Online Dealers: Sales of ‘Genuine’ Products,” by Robert W. Payne, suggests that unauthorized sellers pose a major threat to the intellectual property integrity of many prominent brands, regardless of industry. Whether the products are counterfeit, gray market or transshipped, the sale of such items undermines the brand value in many ways.
I believe that price chopping isn’t the problem to solve; that’s merely a symptom. The so-called companies doing it are also ignoring everything but their own greed, and it’s to the detriment of the industry. We lose instantly because we’re so small. (Nike, by contrast, posted 2015 revenue of $7.8 billion. That’s around the size of our industry.) It doesn’t take much to sap revenue and reputation within our little sphere.
But we also have the muscle of companies like the aforementioned Nike (ask them about counterfeits…) to forge the way for us. They’re slugging this out and pushing the selling sites to police their platforms better. They’re very focused on the damage to their brand from these sellers. Price protection is secondary to the loss of revenue and reputation from sketchy products and shadow sellers.
No, we can’t fight all these rip-off sites solo; we don‘t have to, though. Battles won by Nike (and others) set precedents that we can cite.
So, instead of simply policing price around the Web and jumping dealers for presumed violations, MI manufacturers should better police their own supply chain. MAP violators (as opposed to counterfeiters) are getting product from somewhere. Companies that sell serial-numbered instruments theoretically know which dealers received them. Even eliminating (and, by “eliminating,” I mean cutting off product flow—not just slapping wrists) the transshippers and undocumented seller names used by actual dealers will help to shore up brand integrity.
Of course, that might mean dealers that move a lot of product are exposed as doing it in violation of dealer agreements, which can be…awkward. Cutting off such a dealer would potentially hurt the supplier in the short term. Yet, I think the long-term, cumulative damage to our industry is worse.
Look, I know none of this is easy, especially because there can be no taint of “price fixing.” No one wants to go down THAT road again. Yet, this isn’t just a battle for Nike…or Gibson or Yamaha, for that matter. I believe this is our industry’s equivalent to climate change. We can work to fix this now, or we can accept the consequences later.
If we want to protect brand integrity and perceived value, ensure that there are dealers in the field to evangelize and support branded products, and preserve the goodwill of the consumers who use those products, then brands in the music industry must be more aggressive about keeping the pipeline clean. Rather than worrying about dealers that don’t move enough product, they should focus on dealers that damage their brand, regardless of how much they sell. After all, the more they sell, the greater the potential damage.
Once a brand is commoditized at a fractional price, it’s tough to climb back up. Without loyal local support, brand prominence is in the hands of the Twitterati. And I don’t think MI can afford to regularly pay for Kardashian tweets…or even Taylor Swift’s. By the time that’s happened, brands, stores and consumers start to disappear. The expression “race to zero” is again appropriate.
Of course, dealers must be ready to do their jobs properly. We can no longer be a “skim the cream” industry that sells hot products without regard for retention or customer service. If the manufacturer polices the pipeline and works to ensure a stream of clean and profitable product, the dealer’s job is resource management, growing a larger consumer base that’s engaged for a lifetime. If we both do our jobs, then this industry can thrive.