Is anybody else tired of the word “billionaire” being used so often in modern media and society? I am. There are reportedly 2,800 billionaires on the planet Earth that is host to roughly 8,200,000,000 human beings. Here in the richest country in the world, there are about 1,000 billionaires, yet the term is used like it is commonplace to know/meet/see or do business with billionaires. It isn’t. Billionaires are rare in society. So are people with a nine-figure net worth, or even an eight-figure one, although there are far more of those pikers than real billionaires, right.
Pick up a copy of an establishment audiophile print magazine at your local newsstand (assuming you still have a newsstand near you, I don’t) and you can read about a laundry list of audiophile components priced for billionaires. Now, before I go off on some Bernie Sanders or “audiophile Robin Hood” rant, I need to disclose that I worked in the uber-high-end of the audiophile hobby early in my career. I sold more than my fair share of Wilson WATT Puppy (3/2) speakers back at a time when I was a freshman in music school. I guess I did well enough at that to get hired on at Cello Music and Film, just above the famed Sunset Strip, where I sold the world’s most expensive audio gear. In the mid-1990s, a Cello system cost $60,000 for starters, and $500,000-plus for a reference audio or home theater system. My first publication was started with a commission check from selling a famous professional poker player a $375,000 Cello Reference system, complete with a $20,000 CD-R and a 24-bit Nagra digital reel to reel that let him record The Grateful Dead (and other bands at places like the Thomas and Mack Center in Las Vegas), and then master the live recordings at home and archive them. He might have been a billionaire, but he was certainly an audiophile whale with the bankroll to buy the best music recording and playback system that the world knew at the time. And boy, did I benefit from that.
Having lived and benefited from the world of ultra-uber-high-end audio, it is amazing to see the number of brands that make products specifically for this lofty market today. In that mid-1990s era, there really was only Cello and perhaps Goldmund at this price level. Krell, Audio Research and Mark Levinson weren’t in that stratosphere. Wilson was getting there with their $67,000 GRAND SLAMM speakers, which today (under a different product name) cost closer to 10 times their original price, having been radically modified and re-engineered. Today, there are dozens of players trying to sell $30,000, $50,000, $100,000, and often far more expensive audiophile components. They’re not just made in the United States, as they can come from some more exotic places, be they Spain, Germany, Switzerland (that’s a big one now), South Africa, and others.
Who Is Buying Ultra-Uber-High-End Audio Components?
According to the latest U.S. Census, the median HHI (household income) is $74,580, and that number is down from 2021 by 2.3 percent, thus over $76,000. Respectfully, even if you live in a more modestly-priced part of the country, at $74,580, you likely can’t afford a lot of high-end audio gear. You might be able to get in on some of our favorite, more value-oriented products (think Schiit, NAD, Bluesound, Monoprice, Paradigm, iFi etc…) or Chi-Fi gear (brands like Topping, FiiO, S.M.S.L and so on). You and I might be able to afford a poster of a $250,000 WADAX DAC to pin on the wall of your listening room, like you did with a Lamborghini Countach or Cindy Crawford when you were a teenager. Owning one is a whole other level of wealth than any of us will ever know but we are sure allowed to dream, right?
So, who is buying beyond-expensive audiophile gear? First of all – people are. Perhaps not in the robust volume that audiophile publicists might have you believe, but it does sell. The fact is (and always has been true) that the vast majority of these deep-five-and-six-figure components are sold overseas. China is the most likely place for them to land, but there are quite a few Russian oligarchs who also like high-end audio. I heard that my mentor back in college, Mark Levinson, sold some of his expensive Daniel Hertz speakers to Mr. Putin, but let’s call that a rumor for now. The Middle East is also a big market for audio, as are specific parts of Asia, such as Japan, Taiwan, and the Philippines, as well as Singapore. Plenty of expensive audiophile gear gets sold in Western Europe, Australia, Canada and, of course, in the United States, but don’t think that the U.S. is the only market for these high-priced brands.
How Many Audiophile Whales Are There in the Real World?
Trickle-down economics has proven to be a failure as a concept, but it is still a relevant concept when it comes to technology. Without F1 racing being the pioneer, would I have paddle shifters on my Mercedes SUV? I doubt it. The audiophile world benefits from the same flow-through of technology, and that benefits the hobby without question. PS Audio’s new $3,995 Gold DAC has a lot of the advantages of its $7,995 brother, the DirectStream DAC, for half of the price, as an in-hobby example. (That lesser DAC is good by the way, I just finished my review).
Many people aspire to and love to dream about possessing exotic toys. Killer AV gear is that aspirational dream for those of us who are enthusiasts in the hobby. From all different categories, it is good (some say healthy) to have some goals to work towards in life. In my case, I love exotic cars, and I have a few picked out in my head to buy when I finally get around to winning Powerball (I got a new ticket in my pocket now, although the jackpot is only a shade under $200,000,00, so I might have to skimp on my audiophile cables or something even if I win), but for now, when I want to drive something fast, exotic, or perhaps even born in Maranello, Italy – I rent it. As a mere “millionaire,” I just can’t justify or even hope to afford the real-world costs of owning, driving, storing and maintaining an exotic car. The same goes for audio.
How Many Big-Dollar Clients Are There Out There, Really?
Walk around any of the growing number of regional audiophile shows here in the U.S., and there are plenty of customers to talk with. If you ask them about their systems, they often have pretty fantastic setups. Many of these guys have built their audiophile equity over time and curated a system that performs just the way that they want. They get treated fantastically by top AV retailers, with superior service, loaner products if needed/desired and more. Discounts come their way without even asking for them, as it is good to be an audiophile whale, but are there enough of these rich guys to support so many brands selling in this rarified air?
The market would suggest that there actually ARE enough big-ticket clients in the market today.I can think of an audiophile turntable company that makes a $250,000 spinner of vinyl not too far from here in California. They might only sell one or two per year (who knows for sure), but with only the engineer/designer on staff – they make a profit. Other brands in the uber-high-end sell far more volume than that, but again, you don’t have to sell too many of these products to be quite profitable.
In Seattle, Definitive Audio throws an event where their best clients visit them every spring or early summer. They sometimes have worldwide roll-outs of new products at their event in ways that we used to see in CES shows of the past. The number of Boeing, Starbucks, Microsoft and Amazon executives that attend is pretty impressive, as this is the core clientele of Definitive Audio. Let’s say that there are dozens of them at the event in a good day. These are guys who could pop for a $20,000 (or much more expensive) component, if they were so inclined. There are likely a few hundred, if not a thousand-plus, who can swing like this and who live in the Pacific Northwest and that is only one of many important regions in the United States market.
There are dealers like Sunny Components and The Audio Salon here in Southern California who focus almost exclusively on said whale-level clients. Both of these stores are owned by friends of mine and these fellow stereo salesmen (Little known fact: like the radio business or La Cost Nostra – you can’t ever stop being a stereo salesman) make a fine living and love what they do. Sunil at Sunny Components sells brands like WADAX, CH Precision and Stenheim. Maier sells iconic audiophile brands such as Wilson Audio, dCS, D’Agostino and Transparent. Neither of these lineups are uncommon in terms of product offerings, but what is unique is that they both have a full clientele of people who buy at this level. There are 22,000,000 people that live in Southern California and that includes a lot of audiophiles. I would guess there are even more whales down here than in Seattle. There might be even more in the greater New York area and so on.
You Don’t Need Many Whales as Clients to Make a Fortune in the Audiophile Hobby
The last time that I was technically a “stereo salesman” was back in 1994, when I worked for Mark Levinson and Joe Cali at Cello Music and Film Los Angeles. In the industry, Joe is considered to be one of the best audiophile salespeople ever. He has a background in acting, having been a co-star in Saturday Night Fever, but he’s made his career selling AV to rich and famous people, be it audiophile stuff or custom installation. His Hollywood client list includes the likes of George and Amal Clooney, Oprah Winfrey, Dr. Dre, Rod Stewart, Jimmy Iovine, John Fogerty, Cindy Crawford and countless others. Joe is a character, to put it politely.
In the CES show, right before I left to start my publishing career while still in college, Joe, being the consummate extrovert, met an Australian man walking the halls of the Venetian Hotel. The guy was into audio and, a little-known fact, he was the biggest gambling whale in Vegas (some say in Vegas history). His name was Kerry Packer, and he was second only to Rupert Murdoch in terms of wealthy billionaire Australian media moguls. At the time, Mr. Packer was retrofitting a nearly 400-foot ice-breaker ship into a private yacht. He ultimately hired Joe and Cello to outfit the project with a full complement of home theater. This system was inside, as well as redundant (for good reason) for the era. Much like Noah’s Ark, all of the gear on board was ordered with a backup. That included the AMPRO nine-inch CRT project, the Faroudja Line Quadrupler, the new Theta Casablanca AV preamp, as well as a lot of Cello audiophile gear and beyond. What would you do if something broke in your AV rig when floating off the coast of Phuket, Thailand? You fix what you have with the parts and components on hand, that’s what. Before I left Cello, I was tasked with going down Sunset Boulevard to Tower Video and ordering “every Laserdisc.” When I got to the manager in the middle of the store and asked for “every Laserdisc,” he said, “In the store?” “No,” I quipped, “every Laserdisc in print.” That was thousands upon thousands of movies that weighed a ton and were hard to ship and even complicated to get through customs in some cases, but we got it done.
This one client did enough business to float the West Coast retail arm of Cello for quite some time, thus we were very fortunate to find that one whale customer. And they do exist, but there just aren’t that many of them in the real world.
Some Final Thoughts About Audiophile Whales…
A distributor friend of mine was asked to take on one of the dozens of new, uber-high-end brands that have emerged in recent years. He does a good job importing more mid-level audiophile goods, stuff that is priced solidly in the four figures and low five figures. And he politely turned down the opportunity to distribute the line. His view was that he’d rather sell dozens of more affordable products than a handful of uber-expensive products. That’s where his sweet spot is for his business. Joe, Maier, Sunil and others make their living with a small number of very well-heeled clients. Others make their livings selling AV into new construction projects. There are those who sell low-cost, high-value products in volume (think: Schiit as a good audiophile example) and do really well with it.
In the end, there are a lot of ways to make a living in the audiophile business. There are some who get upset or jealous over others who can afford expensive gear, but that’s not right or healthy. For the few who can afford the biggest and baddest gear, congratulations to them. There are many more of us who have to stick with less astronomically expensive gear, and the good news for us is that there is a lot of performance and fun to be had with four-figure audiophile components, as opposed to ones that cost six figures. As for the audiophile marketplace, don’t worry about that one bit, for if there ever comes a time when the bleeding-edge components don’t sell in enough volume – the market will correct itself. These dealers are smart people and they, too, have families to feed. They will do what’s best for them, their families and their businesses. There will be plenty of good times for everybody who wants to be an audiophile, no matter what his or her budget is.
How many audiophile whales do you think there are in your city? Overall? Do you think the market in this high-end space is self-correcting? Have you ever met an audiophile whale? What was their system like? Share with us in the moderated comments below.
