One of my favorite parts of participating in NAMM shows has to be Frank Alkyer’s “Best In Show” panel. I’ve been a part of “Best In Show” at Summer NAMM twice, and I will be participating in the panel again at January NAMM or, as some of you call it, “The NAMM Show.” I enjoy looking for new products and seeing innovation, and the panel itself is a hoot. After the panel at Summer NAMM this year, one of my fellow participants said about one of my selections, “Wow…I can’t believe you chose that product.” He explained to me that the company’s products were continually advertised at below MAP on Amazon. I researched his claim and, sure enough, I found that two of my “Best In Show” picks listed at nearly dealer cost on Amazon.

I know that it’s hardly news to those of us in MI retail that many products can be found online being advertised below MAP…and, sometimes, at (or below) dealer cost. You can even compare prices using Google shopping and search everywhere all at once. Most manufacturers encourage retailers to report MAP violations, but they do little actually to curtail them. Manufacturers are completely impotent in enforcing a policy that, supposedly, was enacted to save all of us from a race to the bottom.

Apple, a company that many in our industry seem enamored with, has perfected the business model: You can buy its products across multiple channels, and the pricing stays consistent. Apple enforces its pricing so well that, save special deals it sets up with various retail outlets, all new Apple products are the same price directly from Apple or purchased through a retail store or Internet reseller. The Apple model itself will never work in MI retail, because every person on the planet is a potential Apple customer, whereas only roughly 10 percent of the total population will ever play a musical instrument. It does prove, however, that MAP can be effectively policed.

Now, although most retailers bemoan the lack of MAP protection and lament the rise of the Internet, they simultaneously say that we should thank our lucky stars for MAP’s existence because, if it weren’t there, “who knows how low prices would go?” But here’s the thing: MAP is a sham.

MAP—or “Maximum Asking Price,” as some retailers and manufacturers sarcastically have come to call it—began as the promise that this is the bottom dollar anyone can advertise our product for. This is not a revolutionary concept by retail standards. It was instituted to be a price floor under which no one could advertise, thus allowing a minimal margin on all products and keeping catalog operations—and, later, Internet sellers and big-box retailers—from undercutting small, independent stores. The assumption was that most retailers would continue selling at desirable margins and MAP would prevent anyone from terribly undercutting the independents. However, the inherent flaw in this was that MAP figures were set much too low.

Almost immediately, all prices dropped to MAP. Almost immediately after that, big-box, catalog and Internet retailers began finding ways to skirt MAP policies. Since manufacturers have been unable (or unwilling) to police these tactics properly, MAP has taken the place of MSRP in the minds of consumers. Thus, it has effectively lowered the selling price on all MI retail goods. This has become so true that major manufacturers have begun removing MSRP entirely. Consumers are no longer swayed by MSRP-to-MAP comparisons and, instead, they expect the deeper-than-MAP discounts that Guitar Center and other retailers have trained them to seek. It’s the natural result of creating giant Web site banners that advertise “15 percent off everything” every day.

To help extend their own online reach, many small stores started using alternative platforms, such as eBay and Amazon, knowing their own small Web sites could never compete with giants that had a following built upon decades of catalog sales. This further ate away at margins. Meanwhile, the wholesale cost of those goods has only gone up in recent years. Murky sales-tax laws also meant that independents had to eat sales tax for years, even while price matching Internet sales: an encumbrance that only now is beginning to be remedied.

What was supposed to be a safety net to protect independent retailers from price wars has now become MSRP in the minds of consumers. What was supposed to be the lowest price at which a retailer could advertise is now the starting price. And, just as nothing sells at MSRP, almost nothing sells at MAP, either. Sure, some brands have built excellent margins into their MAP prices, but they are few and far between. Thankfully, some are correcting the error by slowly raising MAP to add margin, so that dealers are still able to turn a reasonable profit on most items. But, for the most part, MAP has caused margins to fall so low that it’s prevented independent dealers from growing their businesses—and their profits—at a sufficient rate to truly compete with large-scale retailers. It’s been a staggering deterrent to independent small businesses, and it’s caused many to scale back or close, even while it rewards private-equity-owned companies that are comfortable showing their investors a negative balance sheet at the end of each year, just so long as they’re opening new stores in Times Square or gaining online market share.

Much has been written about the financial state of Guitar Center in the last year. I’ve mostly avoided the topic for one simple reason: the fate of independent MI retail has little to do with Guitar Center. It is not solely responsible for a changing, struggling retail marketplace, although it certainly has escalated the problem of dwindling margins. Its business model is in transition, shifting away from constant sales to a more MAP-centric business model—a necessity given its debt and high overhead—and adding services that include repairs and lessons, both proven profit makers. This is despite its announcement two years ago that it would no longer obey MAP policies. However, I don’t believe you can put the genie back in the bottle.

Shrinking margins and an extremely competitive marketplace—to be specific, a retail segment in which only 10 percent of people will ever shop—have resulted in some pretty interesting industry shifts. The root cause of these shifts? The policies by which sales are dictated, and the willingness of independent retailers to have those policies dictated to them by the same companies that, now, are adding direct-to-consumer to their sales strategy.

MAP has been an almost total failure on nearly every level. Either MAP has to contain enough margin so that dealers may once again negotiate prices without fear of losing their business, or it must be done away with and/or replaced. It’s time independent retailers begin to set their own policies, rather than having them dictated to us. It’s time for a change.

What do you think? Has MAP helped us or hurt us? Is it repairable, or has it seen its day? Write to me at

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