 BREAKING BUZZ
FCC Rules Against Behringer
(Port Washington, NY - June 14, 2007) The Federal Communications Commission has imposed a $1 million fine against Behringer, concluding it “marketed 50 models of unauthorized radio frequency equipment, specifically digital audio music devices, in willful and repeated violation of Section 302 of the Communications Act of 1934, as amended, and Section 2.803 of the commission’s rules.”
The FCC stated on its Web site that Behringer “acknowledges” it “failed to comply with applicable rules governing testing, labeling, and the filing of Form 740 for certain of its products.”
Form 740 states that imported devices are subject to mandatory custom declaration filing requirements.
Behringer responded to the ruling by saying it pertains to products that were shipped between 2000 and 2005 and were not known to pose safety or RF emissions hazards at the time.
“For those products that had passed stringent European standards, we believed that they also complied with FCC verification requirements. Later we realized that our assumptions were too broad regarding the differences and similarities in testing standards and procedures under FCC and European requirements,” said Behringer’s Global Communications Director Ron Koliha.
Behringer CEO Michael Deeb assured that, “Testing and labeling oversights like the ones that happened prior to 2005 are behind us now.”
Koliha added that the company “Stopped shipping these products to the U.S. and other markets immediately after the February 2006 notice until we could have third-party laboratories re-verify our compliance” as a precaution. “However,” he said, “we erred on technical requirements involving proper labeling and we were inconsistent in our filing of certain forms, all of which led to FCC’s forfeiture order.”
One point of contention for Behringer, however, is the FCC’s allegations that the company took too long to comply with its notifications. “Behringer’s top management took that as a serious ‘wake-up call’ and set about to prevent mistakes like this from happening again,” said Kohila. “That’s one reason why all currently available models shipped to U.S. dealers after our response to the complaint in early 2006 fully comply with FCC regulations and are properly identified as such.”
MORE BREAKING BUZZ
Roman Guitars Closing
(Port Washington, NY - June 15, 2007) As a correction to yesterday’s news writeup, Ed Roman said his store did not go out of business. Instead, the Las Vegas-based Ed Roman Guitars, known as “The World’s Largest Guitar Store,” began closing out the store’s inventory on June 13. This comes six months after Roman sold the business to a company operating area car dealerships. Nine employees were let go in May, followed by 13 more on June 13. The layoffs came as a result of liquidating the assets. This statement is accurate, however Ed Roman was mistakenly attributed to making this comment. The Music & Sound Retailer regrets that error.
A car dealership will likely replace his store, due to the potential for more profits. However, the store is not expected to close until after Christmas, when a massive holiday sale will take place.
Ed Roman is in the process of buying my name back. He didn’t sign any non-compete clause, so he plans to downsize and reopen a store within 60 days, although it won’t be as large as his last one.
Guitar Center Considers Selling Itself
(Port Washington, NY - May 30, 2007) Guitar Center (GC) hired an advisor and will consider selling itself, reported panelist Jeff Macke, known as “The Lone Wolf,” on the May 29 edition of CNBC’s nightly program “Fast Money.” Macke cited an L.A. Times article, and GC’s stock rose $5.04, or 10.63 percent to $52.47 a share during the trading day. The stock was up as much as 12 percent intraday with 2.24 million shares traded, 376 percent more than its daily volume. The 2.24 million figure represents 7 percent of the company’s outstanding shares. GC closed trading at its highest level since May 2006.
Goldman Sachs analyst Matthew Fassler said he expects an earnings turnaround in 2008, according to the Associated Press. But, he added in analyst note, “We also believe Guitar Center is optimally positioned for a sale, given its dominant competitive position and capital allocation possibilities, as well as a savvy shareholder base that is likely increasing weighing in with the board and management, but continue to view this is a fallback strategy.”
William Armstrong, an analyst at CL King in Albany, N.Y., told Bloomberg News there have been many private-equity buyouts in recent years. “Guitar Center is often mentioned as a likely candidate because they dominate their market and are debt-free,” he told Bloomberg.
The Music & Sound Retailer has discussed the possibility of Guitar Center going private since its January issue. If GC does decide to sell itself and go private, Kohlberg Kravis & Roberts (KKR) and Goldman Sachs Capital Partners would probably be considered top candidates. Either or both could make sense for the following reasons: Both are flush with cash; Sageview Capital, which owns more than 6 percent of GC’s shares, was founded by two longtime KKR veterans; and a leveraged buyout would allow the two capital firms to become an MI powerhouse, considering they announced they would jointly purchase Harman International for about $8 billion in April.
GC is currently valued at approximately $1.55 billion. It’s expected GC would expect at least a 20 percent premium if it decided to sell itself, meaning a sales price of about $2 billion.
A GC sale to a public company would be less likely, because it has no large-capitalization competitor. However, it is not out of the question if Best Buy, Costco, Target, or Wal-Mart wanted to greatly expand their music departments. Steinway Musical initially showed interest in getting into MI retail when it put in a bid for the bankrupt The Woodwind & Brasswind (WWBW). That deal later fizzled however, and GC eventually purchased the retailer. In addition, Steinway’s market capitalization is about $328 million, less than one-quarter of GC’s market value.
Fassler called the WWBW purchase a beneficial move for GC and a reason, along with improved investment spending and capital allocation, why GC should recover in 2008 and may not need to put itself up for sale.
THE LATEST BUZZ
NAMM Takes on TV
NAMM Member retailers across the U.S. appeared on local and regional TV shows as part of NAMM’s Wanna Play? Campaign. Members like Clint Strait of Strait Music in Austin, Texas, demonstrated the benefits of music making to their TV audiences. Strait appeared on KTBC-TVs Fox 7 News in the Morning in Austin with Austin School of Music’s John Fannin, who gave the show’s hosts a guitar lesson. Other NAMM retailers hitting the airwaves were Marvin Morrow of Musicians Outlet in Palm Desert; and Diane and Dean Schafer of Music Tech Studios in Miami. Future programs are set in such cities as Dallas, Charlotte, Phoenix, Denver, and New Orleans.
(l-r) Slash, Assistant Manager Jon Croft, Winner Rhett Lawrence, and Elliot Easton pose with Lawrence’s prize Jimmy Page guitar at Guitar Center’s Gibson Platinum Nights in Hollywood, Calif. |
Gibson Replicates Page Model
Gibson partnered with Led Zeppelin guitarist Jimmy Page to produce 25 replicas of his 1971 EDS-1275 model. The 12-string Jimmy Page Signature Double Neck features 20-fret rosewood fingerboards on both necks. The guitar carried a price tag of $7,999.99 and Guitar Center sold out serial numbers #003-011 of the guitars—plus nine that were autographed and played by Page and sold via random drawing for $30,000 each. Page kept serial number #001 for his personal collection.
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Bach Plant Employees Reject Offer
Workers at Conn-Selmer’s Vincent Bach plant rejected the company’s latest contract offer by a vote of 113 to 20. According to the South Bend Tribune, workers claimed that the contract left the union powerless. The publication had reported prior to the vote that Dana Messina, chief executive of Conn-Selmer parent company Steinway Musical, said “even if the union members approve the contract, none of them will go back to work” during a conference call with investors, because the jobs have since been taken by replacement workers. The South Bend Tribune posits that the “next likely step” will be to decertify the United Auto Workers Local 364 union, which has been on strike at the plant since April 1, 2006. A petition to decertify the union was filed with the National Labor Relations Board on April 27.
DJ Times Teams with Pioneer to Present
America’s Best DJ
Who’s America’s Best DJ?
Music & Sound Retailer publisher Vinny Testa with Gen Inoshita, general manager of the PRO SV Division for Pioneer. |
Find out this summer, as DJ Times teams with title sponsor Pioneer Pro DJ to determine which jock will earn the lofty title.
The process began March 21 with the launch of a five-month online vote of 100 top U.S.-based DJs (at americasbestdj.net). The winner will be announced Aug. 20. The voting for America’s Best DJ will be supported by a Summer Tour, which will present 40 DJ events at leading U.S. venues like New York’s Pacha, Philadelphia’s Fluid, and San Francisco’s 1015 Folsom.
As an incentive to participate in the online vote, the promotion offers $25,000 worth of prizes. In addition to the latest DJ gear from Pioneer, voters can win prize packages from Beatport and Sirius Satellite Radio, including trips to the Spanish party island of Ibiza.
At Winter NAMM in Anaheim, Calif., DJ Times—America’s first professional DJ magazine—entered into an agreement with industry-leading manufacturer Pioneer Pro DJ to present America’s Best DJ. At a dinner that included key personnel from DJ Times and Pioneer’s offices in Japan and California, DJ Times publisher Vincent Testa shook hands on the deal with Gen Inoshita, general manager of the PRO SV Division for Pioneer.
“We founded DJ Times in 1988 and we’ve staked our claim in the market with this franchise,” said Testa, president of Testa Communications. “After the long-running success of the magazine and its International DJ Expo, the next logical step is having an award that recognizes America’s DJ culture and market. Along with the Summer Tour, we believe America’s Best DJ will help give stateside DJs the respect they deserve, and it will spread the word on the DJ category’s exciting new technological developments.”Pioneer’s Neil Altneu agreed. “It’s going to take the world of the DJ to a new level,” said Altneu, vice president of sales and marketing for Pioneer’s Pro Audio and Video Division. “I’m starting to see the category grow exponentially. Little kids are emulating DJs. They’re the new stars—DJs are everywhere. Even video games are now offering the ability to scratch. The online vote and summer tour will heighten the awareness of the DJ to an even greater extent—it’s just the tip of the iceberg of many great things to come for the DJ market.”
Numark to Sell Alesis Products as Always
To clear up possible industry confusion, a closing deposition only will take place on May 23 in Los Angeles regarding Alesis Corporation. According to Alesis LLC’s Mark Frederick and Numark’s Grover Knight, the deposition is only a final dispensation pertaining to Alesis’ Corporation’s original Chapter 7 bankruptcy filing in 2001. Numark bought the company’s assets later that year. This in no way affects or involves Numark and it will continue to manufacture Alesis-branded products as always.
NAMM Independent Retailer Committee
Recommendations Named
The NAMM Independent Retailer Committee devised 12 recommendations for how NAMM can best help the independent dealer. They include:
1. Expand opt-in promotions similar to the Vans Warped tour which allow members to participate and expand their presence in their local markets.
2. Collect proven retail promotions in all industry segments from around the country and package them in templates for NAMM members to use in their markets.
3. Collect, catalog, and provide advertising resources and images that can be downloaded and used by musical instrument retailers.
4. Employ a top PR firm to create brand identity for full-service local music stores, and create packaged advertising templates and POP ads that promote supporting the local music store.
5. Work with all independent music retailer associations that may form in the same way that it works with other industry associations.
6. Consider funding the projects of such independent associations in the same way it considers funding the projects of other industry associations—based on NAMM’s mission to benefit the health of the industry.
7. Continue to support research on the benefits of music making, as the committee specifically recognizes the value of this research to the industry.
8. Develop short training modules in multiple formats (video, podcast, text, etc.) on fundamental skills of retailing including salesmanship, customer service, profitability, merchandising, time management, internal security, display, etc. including testing and certification.
9. Encourage the formation of buying/sharing groups and facilitate placing members with groups through NAMM U sessions, Web postings, DVD’s, and handouts.
10. Continue to educate and improve communications with the membership about the use of such methods as the NAMM Action Alerts on the NAMM Web site under Government Relations in regard to the passing of the Association Health Care Bill in Congress.
11. Continue to fund lobbying for sales tax parity, support the coalitions for sales tax parity, and encourage membership to contact their congressional representatives through the NAMM Action Alerts on the NAMM Web site under Government Relations.
12. The committee recognizes that NAMM as an all-industry association should not, and cannot, legally interfere in relationships between retailers and their suppliers.
WEB ONLY BUZZ |
Berklee’s Picking Daisy
Daisy Rock and Berkleemusic, the continuing education division of Berklee College of Music, have come together to create an online platform for teaching women to play guitar. Special packages will also be tailor-made for women who enroll in online courses at the school. Available online amenities include Flash demonstrations, Quicktime movies, downloadable Mp3 files, and tablature.
Moog Alliance Announced
IK Multimedia and Sonic Reality entered into a strategic alliance with Moog Music in order to develop sample-based products focused on Moog synthesizer sounds. The companies created SampleMoog, a plug-in collection of Moog samples powered by SampleTank, as part of this arrangement.
“Dad was committed to creating tools that allowed musicians to customize their instrument's sounds and therefore give their creativity a musical voice; this product is an extension of that in the digital world,” said Bob Moog’s daughter, Michelle, who also serves as the director of the Bob Moog Memorial Foundation for Electronic Music.
Randall Names U.K. Distributor
Sound Technology took on U.K. distribution of Randall Amplifiers, a division of U.S. Music Corp. Sound Technology is one of the United Kingdom’s largest independent distributors of musical instruments and audio products, and already distributes other U.S. Music Corp. brands like Washburn and Parker Guitars.
Dynacord Distribution Changes
Bosch Communications Systems announced that it will now take on distribution of Dynacord pro audio products in Canada. This ends the partnership between Dynacord and former Canadian distributor Erikson Pro, a division of Jam Industries Ltd.
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