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Author Topic: Gibson Files For Bankruptcy  (Read 322 times)
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« on: May 01, 2018, 11:31:05 AM »

Iconic Guitar Brand Gibson Files For Bankruptcy

https://www.rollingstone.com/music/news/iconic-guitar-brand-gibson-files-for-bankruptcy-w519726
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« Reply #1 on: May 02, 2018, 06:50:54 AM »

I have to believe that the decline of guitar driven rock music over the last quarter century played a part here. 
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« Reply #2 on: May 02, 2018, 06:54:55 AM »

No question. Even in the late 90s when I was working at an independent music store, the owner was beginning to focus on DJ gear and church/school audio equipment because guitars, amps and the stalwarts of traditional rock were not selling as well. Things definitely havenít improved.

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« Reply #3 on: May 02, 2018, 08:24:00 AM »

I have to believe that the decline of guitar driven rock music over the last quarter century played a part here. 


No question. Even in the late 90s when I was working at an independent music store, the owner was beginning to focus on DJ gear and church/school audio equipment because guitars, amps and the stalwarts of traditional rock were not selling as well. Things definitely havenít improved.


That's not quite the reason and not the whole story. I've been having conversations with other guitarists about this since the reports of financial troubles at Gibson several months ago, and some have been saying the same things about guitars/amps/etc falling out of favor, etc. That if anything is a minor factor. It's also an excuse that's been bandied about for decades every time "guitar music" isn't as prominent on the charts and the companies look for excuses. Happened in the 70's, 80's, and at various times since.

What happened and what is happening at Gibson has much much more to do with corporate f***-ups. Without giving the long rundown of reasons why, consider the troubles have as much to do with corporate and financial decisions at corporate level than they do with the musical climate. And also factor in basic issues like quality control, branding, pricing, etc and the reasons will become more clear why they're filing for protection.

Gibson was known primarily for guitars, and beyond that specific model guitars like the Les Paul, 335, 175 (for jazzers lol), SG, and acoustics like the SJ-200, Hummingbird, etc.

When there was something of a boom in guitars in the last 20 years, Gibson saw that as an opportunity to diversify. Gibson wanted to become a "Lifestyle Brand" and go beyond guitars...what they are known for as a brand...and get into other areas such as home/personal audio, and all kinds of spin-off Lifestyle branding.

Oh, and they also started to make various investments in real estate and property, things like that.

Meanwhile in the 1990's the brand "Epiphone" started to churn out licensed versions of the Les Paul guitar that retailed between 400-500 US versus 2500-4000 US. Guitars made in Asia and other countries where the manufacturing costs were much less and they could cut the price point by making substitutions on materials used, etc.

So a lot of people who wanted a Les Paul, but didn't have $3500 for one, could drop 400 on an Epiphone - Great for students, young players, or even working musicians who didn't want to lug a 3500 guitar to a bar where they'd make 45 bucks for playing 3 sets of classic rock and risk having their Les Paul stolen at the gig.

So right there the whole supply and demand axiom shifted radically. If a kid into Slash wanted a guitar like Slash, he'd go to Guitar Center and pick up a flame-top Sunburst Les Paul by Epiphone for 400 bucks. And he'd get the sound, the feel, and the look with the exception of the cut of the headstock and the name on that headstock.

And the quality of those Epiphone Les Pauls could be great right off the sales floor. It could be even better with a few mods by the new owner, like swapping out the bridge and other metal parts, upgrade the pickups to some PAF replicas, etc.

And the price of Gibsons just kept going up and up, along with reports of a quantity versus quality ethic at corporate HQ. And the quality control issues started to come out via the internet and user posts and reviews.

So that's the players element, the actual instruments they were known for.

Factor in the corporate folks wanting to "diversify" the brand and make it a lifestyle, factor in wanting to invest in land purchases and other non-music investments, and also factor in some shakeups at the high corporate level where key execs were leaving then being wooed back...


And *those* reasons specific to Gibson's business operations were why it is where it is this week. Much more than the lack of guitar-based music on the charts.

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« Reply #4 on: May 02, 2018, 08:50:17 AM »

Iíd read about the rebranding too, but thought that was more recent, eg well after the financial writing was on the wall. That said, I donít pay much attention to the gear world these days, much less their makersí financials, so I wonít pretend to be informed enough to really discuss it.

The sub-brand phenomenon is an interesting one, though. Iím in marketing (in a very different market, admittedly), and you see it all over, not just in instruments. Trying to bifurcate your potential market and sell the Epiphone (in this case) as just as good, while selling the Gibson as superior, its name worth the cost, is rough. I think the seemingly inevitable commoditization of most products and services causes a hollowing out in the middle: youíre left with low-margin intro products for a bigger market and huge-margin luxury products...for a tiny, tiny market (usually of fetishist collectors more than regular users). Thatís my general take on the phenomenon anyway.
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« Reply #5 on: May 02, 2018, 09:13:10 AM »

That is one of the more interesting aspects in all this - The fact that the phrase "Gibson Les Paul" is pure gold in a marketing sense. No one has to market it, essentially. The brand name carries all the weight. Plus, and something I point out and demonstrate with my own Fender guitars, is that the basic design and features of the iconic guitars like the Paul, Tele, Strat etc have not changed since the 1950's. When you buy a Les Paul or a Tele/Strat, you are buying essentially what people bought in 1958 with the usual minor detail changes.

So at that point, the marketing is in the fact that the design and the product itself is the same. You see an old photo of Clapton or Duane or Angus or Jimi playing those guitars, and you can still buy essentially the same instrument in 2018 off the rack.

How many products or even product lines have not changed in over 60 years? Very few.

But the problems can arise when the company tries to change and innovate those stalwart brands and models. How much can you change or innovate a Les Paul or Strat?

With Fender, they tried innovating those designs in the early 80's. And it nearly destroyed the company. They tried to innovate their amps in the late 60's after CBS took over, and it nearly sank the company.

When these companies got back to focusing on the classic designs and the classic versions of the iconic models, they got back on track.

Consider Gibson tries and tries to innovate, but it's more or less the same platform on which they're trying to innovate. How many truly new designs in guitars has Gibson been successful with in the past 25 years? I mean are there any legit "new" model Gibson guitars that have caught on? I'd say no. Players want the models that existed since the 50's. When they try to innovate, the core market for their products almost rebels against the new changes. It's not what they expect from the brand or the name, with all the weight attached.

Now for Gibson, in the past decade they did come out with an innovation...the self-tuning "robot" guitars. They put the self-tuning technology on the classic Les Paul and SG models, and for a time there was a buzz about it.

And as they say, with bad fortune when it rains it really pours...Gibson was just slapped with a HUGE lawsuit over the "robot" self-tuning technology by a company who claims Gibson stole their technology to use on their guitars. We'll wait and see how that plays out, but from the industry reports I've seen so far, Gibson could be on the hook with this one to the tune of a whopping amount of money.

Point is, when Gibson did something that was innovative and applied it to their flagship products, they may have to settle a lawsuit over it if a court finds they appropriated the technology and design from another firm without due credit or compensation.

That could also factor into the recent file for protection by Gibson. Again, more due to corporate and legal issues than trends in the music business.
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ďSome people think you have to knock somebody down in order to build yourself up, I donít look at it that way. To the mentality that likes to disparage other people, I say perhaps you should get a life. Itís just wrong thinking in my opinion and I donít mind saying that.Ē - Mike Love

"Every single person who criticized Brian for having She & Him, Kacey Musgraves, Sebu and Nate Ruess guesting on his solo album can now officially go heartily f*** themselves." - Wirestone
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« Reply #6 on: May 02, 2018, 10:16:17 AM »

I have to believe that the decline of guitar driven rock music over the last quarter century played a part here. 


No question. Even in the late 90s when I was working at an independent music store, the owner was beginning to focus on DJ gear and church/school audio equipment because guitars, amps and the stalwarts of traditional rock were not selling as well. Things definitely havenít improved.


That's not quite the reason and not the whole story. I've been having conversations with other guitarists about this since the reports of financial troubles at Gibson several months ago, and some have been saying the same things about guitars/amps/etc falling out of favor, etc. That if anything is a minor factor. It's also an excuse that's been bandied about for decades every time "guitar music" isn't as prominent on the charts and the companies look for excuses. Happened in the 70's, 80's, and at various times since.

What happened and what is happening at Gibson has much much more to do with corporate f***-ups. Without giving the long rundown of reasons why, consider the troubles have as much to do with corporate and financial decisions at corporate level than they do with the musical climate. And also factor in basic issues like quality control, branding, pricing, etc and the reasons will become more clear why they're filing for protection.

Gibson was known primarily for guitars, and beyond that specific model guitars like the Les Paul, 335, 175 (for jazzers lol), SG, and acoustics like the SJ-200, Hummingbird, etc.

When there was something of a boom in guitars in the last 20 years, Gibson saw that as an opportunity to diversify. Gibson wanted to become a "Lifestyle Brand" and go beyond guitars...what they are known for as a brand...and get into other areas such as home/personal audio, and all kinds of spin-off Lifestyle branding.

Oh, and they also started to make various investments in real estate and property, things like that.

Meanwhile in the 1990's the brand "Epiphone" started to churn out licensed versions of the Les Paul guitar that retailed between 400-500 US versus 2500-4000 US. Guitars made in Asia and other countries where the manufacturing costs were much less and they could cut the price point by making substitutions on materials used, etc.

So a lot of people who wanted a Les Paul, but didn't have $3500 for one, could drop 400 on an Epiphone - Great for students, young players, or even working musicians who didn't want to lug a 3500 guitar to a bar where they'd make 45 bucks for playing 3 sets of classic rock and risk having their Les Paul stolen at the gig.

So right there the whole supply and demand axiom shifted radically. If a kid into Slash wanted a guitar like Slash, he'd go to Guitar Center and pick up a flame-top Sunburst Les Paul by Epiphone for 400 bucks. And he'd get the sound, the feel, and the look with the exception of the cut of the headstock and the name on that headstock.

And the quality of those Epiphone Les Pauls could be great right off the sales floor. It could be even better with a few mods by the new owner, like swapping out the bridge and other metal parts, upgrade the pickups to some PAF replicas, etc.

And the price of Gibsons just kept going up and up, along with reports of a quantity versus quality ethic at corporate HQ. And the quality control issues started to come out via the internet and user posts and reviews.

So that's the players element, the actual instruments they were known for.

Factor in the corporate folks wanting to "diversify" the brand and make it a lifestyle, factor in wanting to invest in land purchases and other non-music investments, and also factor in some shakeups at the high corporate level where key execs were leaving then being wooed back...


And *those* reasons specific to Gibson's business operations were why it is where it is this week. Much more than the lack of guitar-based music on the charts.



I know the decline of guitar based music isn't the primary reason, which I why I said it "played a part." 
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« Reply #7 on: May 02, 2018, 10:53:26 AM »

KDS - What I'm saying is look beyond the soundbites and comments given by the various corporate and business people in the financial media reports on this and related topics. What these people being quoted amounts to is often the classic case of a corporate figure doing the C.Y.A. dance. If something goes awry, if a business plan or decision goes bad, they will usually offer a list of excuses why, in order to cover simple cases of them simply fucking up.

The excuse on this - and some of the people chiming in surprised me but not in the usual sense - is that the guitar market is drying up due to music not having guitar featured, or any number of other reasons. It's been done for decades.

Consider that there was a lot of greed and overpricing if we're talking solely about the guitar market itself. For one, a lot of the business is in a secondary market where used and vintage instruments are the ones being actively sought and sold. A company like Gibson or Fender sees no profit from this, and if the secondary and used/vintage market is a major player in the overall market, every vintage or used guitar sold or bought is money not going to the companies who make guitars. The only benefit they get is the residual effect of keeping the status of the brand alive among those who buy or sell these used/vintage instruments.

Take a look a the new Gibson product line for 2018. The majority of their "new" offerings are either replicas, reissues, or recreations of vintage or classic models. There are barely any legit new instruments or designs being offered.

Why is this? One reason is the vintage market got greedy, to be honest. They overvalued and overpriced to the point where even the term "vintage" was a license to overprice and overvalue items out of the range of most players beyond the rich, and those wealthy guys having a mid-life crisis who were in the executive or professional fields but wanted to recapture the dreams of being a rock star with a hot guitar they had when they were 19 but couldn't afford the guitar they dreamed of.

Gibson in that regard priced most of their line out of the hands of regular players. That's the music aspect.

In the business aspect, the simple facts are that they diversified too much and tried to become a Lifestyle Brand, and it didn't work.

In the business of guitar shops, dealers, retailers...they each had some serious flaws in their day-to-day operations and business plans. Simple as that. In some cases they simply f***ed up.

And what you see now in the comments is coming from people who have creditors, investors, shareholders, and boards of directors asking them in meetings "what the hell happened?"...and the convenient answer is the guitar market itself is failing and falling apart.

It's just another variation of people whose actions and business plans flopped, but they need to have an excuse for those putting them on the hot seat. In short, it's more of the same business and corporate nonsense that happens behind closed doors on an hourly basis. lol.  Smiley

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ďSome people think you have to knock somebody down in order to build yourself up, I donít look at it that way. To the mentality that likes to disparage other people, I say perhaps you should get a life. Itís just wrong thinking in my opinion and I donít mind saying that.Ē - Mike Love

"Every single person who criticized Brian for having She & Him, Kacey Musgraves, Sebu and Nate Ruess guesting on his solo album can now officially go heartily f*** themselves." - Wirestone
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« Reply #8 on: May 02, 2018, 10:58:30 AM »

KDS - What I'm saying is look beyond the soundbites and comments given by the various corporate and business people in the financial media reports on this and related topics. What these people being quoted amounts to is often the classic case of a corporate figure doing the C.Y.A. dance. If something goes awry, if a business plan or decision goes bad, they will usually offer a list of excuses why, in order to cover simple cases of them simply fucking up.

The excuse on this - and some of the people chiming in surprised me but not in the usual sense - is that the guitar market is drying up due to music not having guitar featured, or any number of other reasons. It's been done for decades.

Consider that there was a lot of greed and overpricing if we're talking solely about the guitar market itself. For one, a lot of the business is in a secondary market where used and vintage instruments are the ones being actively sought and sold. A company like Gibson or Fender sees no profit from this, and if the secondary and used/vintage market is a major player in the overall market, every vintage or used guitar sold or bought is money not going to the companies who make guitars. The only benefit they get is the residual effect of keeping the status of the brand alive among those who buy or sell these used/vintage instruments.

Take a look a the new Gibson product line for 2018. The majority of their "new" offerings are either replicas, reissues, or recreations of vintage or classic models. There are barely any legit new instruments or designs being offered.

Why is this? One reason is the vintage market got greedy, to be honest. They overvalued and overpriced to the point where even the term "vintage" was a license to overprice and overvalue items out of the range of most players beyond the rich, and those wealthy guys having a mid-life crisis who were in the executive or professional fields but wanted to recapture the dreams of being a rock star with a hot guitar they had when they were 19 but couldn't afford the guitar they dreamed of.

Gibson in that regard priced most of their line out of the hands of regular players. That's the music aspect.

In the business aspect, the simple facts are that they diversified too much and tried to become a Lifestyle Brand, and it didn't work.

In the business of guitar shops, dealers, retailers...they each had some serious flaws in their day-to-day operations and business plans. Simple as that. In some cases they simply f***ed up.

And what you see now in the comments is coming from people who have creditors, investors, shareholders, and boards of directors asking them in meetings "what the hell happened?"...and the convenient answer is the guitar market itself is failing and falling apart.

It's just another variation of people whose actions and business plans flopped, but they need to have an excuse for those putting them on the hot seat. In short, it's more of the same business and corporate nonsense that happens behind closed doors on an hourly basis. lol.  Smiley



But, never did I say that the decline in guitar based rock was THE reason.   I simply said it played a part.   I don't think it's the primary reason, but I don't think you can discount it either. 
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« Reply #9 on: May 02, 2018, 11:21:20 AM »

I get that, but in a handful of articles with quotes from those in the business, they are playing the CYA game and using that "decline" as an excuse. For Gibson, for Guitar Center, for any number of big corporate music businesses falling from grace and losing money. And it's an easy excuse to grab, but it is just an excuse. Both Gibson and Guitar Center made some really, really bad corporate and business decisions and had business models that were simply not smart nor sustainable, not to mention their daily dealings with customers and the ways they did business.

So when a team of well-paid execs get called out by those who actually finance these corporations, they have to have a reason why things are failing that removes the blame and responsibility from their shoulders...and an easy one is to say in any industry "the market is changing" or "our primary brands are falling out of favor" or "the market climate is down overall due to blah blah blah".

McDonalds was all over the financial press some time ago with stories of how and why they were failing. Among the excuses was the consumers were either eating healthier or choosing "upscale" fast-food over the stalwarts.

As soon as McDonalds (and other stalwarts in that industry) lowered prices and expanded their various Value Menu options, the numbers went up. As soon as they decided people wanted lower prices and a feeling of more value for their dollars, the customers came back for those values. People on average do not go to McDonalds for a healthy salad and apple slices instead of fries. And people also do not like to pay 3-4 bucks for an order of fries that is worth $1.99.

Gibson getting into land deals and Lifestyle products and any number of non-guitar ventures was perhaps the prime culprit in this case...but pricing their items for years out of the hands of new Gibson customers coinciding with a public decline in quality and workmanship that got the company roasted on social media had as much to do with it in a pure musical sense as trends on the charts.

Guitar Center is a whole different story...but again, its decline has more to do with business practices and plans as it does with a changing consumer climate.
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ďSome people think you have to knock somebody down in order to build yourself up, I donít look at it that way. To the mentality that likes to disparage other people, I say perhaps you should get a life. Itís just wrong thinking in my opinion and I donít mind saying that.Ē - Mike Love

"Every single person who criticized Brian for having She & Him, Kacey Musgraves, Sebu and Nate Ruess guesting on his solo album can now officially go heartily f*** themselves." - Wirestone
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« Reply #10 on: May 02, 2018, 11:26:32 AM »

You talk about the used market. I'm surprised instrument manufacturers like Gibson and Fender haven't done something like car dealers have and offered "certified pre-owned" guitars to tap into those profits.
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