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This statement jumps off this thread like a full-grown blue whale breaching the ocean on a calm day.
Originally Posted by aboutIt
…requires deep thought. Originally Posted by aboutIt
I suspect otherwise.
I'll get back to you on this sometime in the next couple of years.Last edited by Hammertone; 05-19-2016 at 04:16 AM.
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05-19-2016 12:07 AM
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Yeah you put Brian Wilson on the same level as Allan Poe (whose alcohol problem has been greatly exaggerated by self-indulgent people just like you, other than the fact that alcohol is much less dangerous than drugs) ... You mentioned about the only known exception, PKD, whose subject matter was altered states, rather what was behind them and in the end was methodically searching for God. Originally Posted by drbhrb
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A jazz guitarist would have to be eight miles high to pay what Gibson is asking for a Gibson guitar (sorry, couldn't resist). 😉
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If one compares the price of pot and the price of a new Gibson today and also looks at their respective prices in 1970, one could argue that they have both increased at the same rate.
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I love Gibson L P Guitars
if you can make one ! Then you know what is the cost to you ??
but the difference is ~~~" many people can have income " ??!!
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Yeah, but while Gibson still produces tobacco burst finishes I have yet to see a cannabis burst. So by inference Gibsons aren't valued as high in some states, double entendre and all. Originally Posted by Stringswinger
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Sad to say, but I have seen a few Gibson bursts that looked as if the painter might have partaken in a bit too much cannabis..... Originally Posted by lammie200
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https://reverb.com/news/guitaronomic...5428c-58366061
More to think about.
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The Reverb article on guitar economics is interesting, but does not factor in two things:
A) The cost of raw materials used in high end guitars has gone up. This affects Gibson and Martin way more than Fender.
B) The article compares MSRP. In the 50's and 60's, dealers could get MSRP, today only a fool pays MSRP for a new guitar.
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I can't speak to MSRP, but although prices for raw materials have gone up, they probably haven't gone up enough to justify the price hikes. We'd need real data to prove this out. Originally Posted by Stringswinger
One of the better indicators would be the per unit profit for each model. Obviously speculation, but the gross margin on a '59 Historic LP or L-5, is probably much greater than in the 50s and 60s...perhaps even multiples. Especially since costs for innovation are probably low (been the same formula for decades).
I bet Hammertone could give us a feel given his relationship with Hofner.
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There's a joke in there somewhere about Gibsons costing so much because they are high end instruments. Originally Posted by Stringswinger
<-- high sign
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Guys, there is no way the increased cost of a Gibson today (about 50% more than cost of inflation) is due to materials and labor.
In most businesses, production costs decrease over time as you create efficiencies throughout the production process. Look at the cost of a PC compared to 30 years ago!?!
It is most definitely due to the prestige factor and collectors. It is what the market will bear, but let's set aside the increased costs argument--it just doesn't hold water.
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I bought a new SG Standard around 2004 for MAP which was around $1,200 back then. I just looked online and Guitar Center has 2016's for $1,199.
Archtops have gone up quite a bit in that time.
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Gibson probably has an economy of scale with SG's. Archtops are a small segment of the market and they probably require more labor to build in any case. Especially of the "carved" variety. Originally Posted by MaxTwang
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This may be overly technical babble for a music forum, but here it goes... Originally Posted by Doctor Jeff
Honestly speaking, I think that we can blame some of these recent price increases on Quantitative Easing. Here in the USA the money supply has tripled, as the Fed continues to use novel approaches to monetary policy at the zero-bound (aka inflationary tools) to lift our economy out of the recent recession that was caused by the popping of the housing bubble. Astute financiers, business people and the garden-variety MBA in finance all understand that excessive money supply generates inflation. They realize that when there are 3x as many dollars in circulation today than there were a few years ago, that the value of the dollar isn't what it used to be. They respond by wanting more dollars than they used to want, because a dollar just isn't worth a dollar any more.
The problem is that inflation doesn't effect all commodities at the same rate. Copernicus (the famous astronomer Copernicus) wrote about this back in the 1500s. He observed that different commodities have different time constants in responding to inflationary pressures, where some commodities changed prices very rapidly with respect to others. Some commodities respond so quickly that people suffer immediate price whiplash, while other commodities respond so slowly that the price pressures are difficult to perceive. Commodities that are quickly consumed tend to change prices the fastest.
This shouldn't really surprise anyone -- we've all seen how food prices have inflated faster than our paychecks. In some respects I have to think that guitars, being partly a commodity that is based upon consumption of scarce/regulated resources, should have a fairly fast time constant. So there's at least a theoretical reason to explain the economics behind the price changes. Of course, there is a lot to be said about Gibson doubling the prices on instruments just because an MBA knows they can get away with doing it. They take whatever the market will bear. Good for them, bad for you and me.
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Originally Posted by MaxTwang
Demographics are changing. The baby boomers are seniors now. Some have the income and want for old timey guitars like archtops. I don't think that Gibson is blind to this. Originally Posted by Stringswinger
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Originally Posted by Stringswinger
Originally Posted by lammie200
And:
1) SG's did see a price increase, but the price has been lowered again. SG buyers must be inflexible on price.
2) Gibson is facing competition from a glut of SG's on the used market.
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Too bad SG's are lousy for jazz! (Or are they? I have not owned an SG since 1980. Maybe an SG with TI flats through a good jazz amp would be OK?)
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I got an SG Std and actually play some jazzy riff on it more often than I do on my Les Paul Std mainly because of 2 reasons: its lighter and more comfortable: 6.9 pounds vs 10 and also bit less sustaining than the LP.
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+1 on this. Those graphs are revealing. Originally Posted by lammie200
Again, to belabor the point, I don't think labor and raw material costs have gone up as much as some would claim, and these are generally offset by economies of scale and improved production techniques for the first and finding alternative materials for the second.
And let's be honest, how much does a 1 oz fingerboard or a .05" slice of veneer contribute to the cost of a 175 for instance? Maple veneer??
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Trying to reflate at the zero interest rate bound though, many economists argue, is like pushing on a string. Originally Posted by BeBob
Also, there hasn't been a recovery in wages and in fact, wages have generally been stagnant for decades for most outside of the richest earners. That's well documented. This is the other side of food px > wages. Food, like many commodities, is also considered more short term in nature given give other immediate and exogenous factors (like weather for example). Look at oil for pete's sake...it cratered in 12 months and is taking out lots of companies.
Look at Europe and Japan...negative interest rates and their economies are still not recovered (Japan about to go into technical recession again). China about to implode perhaps with so much bad debt.
Point is, there are global factors that would argue against significant balancing reflation despite easy monetary policy...therefore, Gibson should mark down their L5s so we can all consume consume consume and help our GDP!!!!!!!!
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Except that there is zero evidence of the money supply being too large, or of inflation occurring. The US is growing slowly, with stagnant wages and prices, and much of Europe and Asia are in near-depression conditions. There is a worldwide aggregate demand problem, not a money supply problem, and QE ended two years ago without having had all that much effect. What astute financiers and economists understand is that money supply is one of the forces that affects inflation under some but not all conditions, and that in depression and zero-bound interest conditions its effect is not very large. People who remonstrate otherwise (e.g., mainstream political demagogues and TV stock pickers) are not that astute and/or have agendas other than honest discourse. I realize that there's a trope among goldbugs and libertarians that the Fed has done crazy stuff to the money supply, but that's all nonsense. By the consensus view of how to measure it (M2) money supply has grown proportionately with the economy over the last many decades. Since 2001 M2 has grown a bit faster than GDP (roughly 2x vs 1.7x), but that doesn't support any of the hysteria among certain circles about the money supply tripling. Originally Posted by BeBob
Yes, the CPI and other measures of of inflation are aggregates that may mask details of trends within subsets. Some items' price trends fall above the line, some below. But inflation does not mean "some items' prices are increasing, even though others are not." it means "there's a general, sustained increase in prices across a broad spectrum of the economy." You can't argue that inflation is happening by looking only at the components of an index that are rising. Originally Posted by BeBob
Over the last many years, no, we haven't all seen this because food prices have barely risen overall, and not everyone is in the same place on the wage vs price curves. Many people have experienced food insecurity though, but this speaks much more to the problem of economic inequality than it does to inflation. Originally Posted by BeBob
I think it makes more sense to think of Gibson as a producer of luxury items than as a re-seller of commodities. To the extent that they use true commodities (e.g., non-scarce woods like maple, plastics, metals), price trends in the rest of the industry make it clear that these are not major drivers (good guitars made out of the same stuff keep getting cheaper except for a few producers). Scarcer materials like ebony, rosewood and gold that are increasing in price are a tiny component of the cost of a Gibson guitar. Gibson prices are driven mainly by there being demand to support them, and probably also by financial costs resulting from Gibson's poor credit rating and high debt loads (driven by Gibson's M&A activities). Originally Posted by BeBob
John
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I think that I read somewhere that Gibson is considering itself a producer of entertainment goods since they bought audio equipment manufacturer Onkyo. I guess that you could lump that into a luxury item classification. Also, like you said Gibson has some debt service issues. This has all the ear markings of a company losing focus and straying away from its core competencies. Originally Posted by John A.
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check this out: Originally Posted by Stringswinger
https://www.jazzguitar.be/forum/guita...n-sg-jazz.html
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I wouldn't suggest that *all* commodity prices have to be increasing in order for inflation to be taking place. Some commodity prices are inherently deflationary, which spoils the concept that everything needs to be on the increase for inflation to be occurring in an economy. Tech is a good example. The cost of computing power has been falling for decades and will continue to fall, but the prices of many other things continue to rise. What is more likely is that some commodities are subject to inflationary pressures while others are subject to concomitant deflationary pressures. Mathematically speaking this is reflected as some commodities having time constants that are positive while others are negative. The idea is nothing new... Copernicus wrote about this in the 1500s.
In many respects, we in the USA are now living through the deflationary period that invariably follows as the result of previous inflationary excess. Those who are inclined to inflate a stagnant economy, through the manipulation of monetary supply and credit, want to continue to use moderate inflationary pressure as a growth engine. Unfortunately inflation financed growth is a two edged sword -- it works for a while and then it comes back to bite you. Inflationary expenditures on expansion of manufacturing capacity often results in excessive manufacturing capacity, and deflationary pressure invariably results when the excess manufacturing capacity beings to exert it's own deflationary pressures. If one's view of the time constants is long enough, it becomes evident that inflationary growth is followed by deflationary contraction, and the net result is a zero sum game. Unfortunately those who manipulate these variables don't seem to be learning from the Japanese example of the 1970s. Japan was only able to export it's unemployment for so long; while it worked they had a booming economy followed by a real estate boom. When their economic model failed, they suffered a terrible recession, a real estate collapse, and prolonged zero bound currency manipulation. They're still trying to recover. The lesson from Japan was clear -- none of those methods are suitable long-term approaches. It's just too bad that the guys at the Fed thought they could repeat the same basic experiment and have it yield a totally different outcome.
Of course, this is evolving into a bit of a thread hijack. Although I believe that there is some inflationary pressure in the Gibson market, I agree that most of the upward pricing pressure on Gibsons comes from those other forces that have already been mentioned.
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