A Look Into The Future
Have you seen what house prices are like recently? I live in California – the State with the highest State Income Tax rate; the highest gas prices (the cheapest near my house is well over $6 a gallon, still cheap by European standards); and, according to Forbes Magazine, the State that has, in terms of 2022 real estate prices, five of the ten most expensive zip codes to live in in the entire United States (link).
And, except for the taxes (which might also increase) all of that is likely to change – not at all for the better – very soon.
In an (futile) effort to counter the greatest surge of inflation in more than 40 years, the Federal Reserve, on June 15th, 2022, raised its interest rate by three quarters of a basis point (0.75%). That's the third increase this year, triple the usual rate for such increases, and a strong indicator of more increases yet to come (link).
Simple: Audiophiles and members of the industry that serves us (count me on both sides here) have long been concerned about the fate of our hobby.
It's no secret that audiophiles tend mostly to be men and that, at least in the United States of America, we tend to be in our fifties or older. So, where does the industry go from here? Will there be a new generation of audiophiles to replace us after we're gone? And, assuming that there is, what sort of things will the new generation want to buy?
For the last several years, the assumption has been that, yes, of course there will be a new generation, and they will be drawn into our hobby by headphones and headphone-related products.
That line of thought really does seem entirely reasonable: Young people are certainly the logical replacement for older ones; they've always – going all the way back to the jitterbug era and beyond – had a love of music and made it an important part of their culture and daily lifestyle; and, adding to those things the facts that young people tend to have less money than older ones and that headphones and "personal audio" can be the cheapest way to get good sound, it's easy to think that headphones will be the perfect "door opener" to the audiophile experience and that, by getting started on them, a younger generation will ultimately become music lovers and audio enthusiasts just like us.
We saw that headphones are easily affordable, easy to use – even with just a cellphone as a music source –and we (or at least a good many of us) therefore thought "Aha! Every kid has a cellphone; every kid loves music; every kid will get "get into" good sound through his cell phone; and at least a majority of those kids will go on to wanting good sound at home. Voila! A new "us" and an ongoing market for our industry.
What I, at least, failed to consider was that not only do younger people tend to have less money than older ones, but they also tend to live in different places: Depending on their age, they may still be living "at home", with their parents. Or they may be in school, grad school, or working at whatever kind of job. Whatever their circumstances, though, it's likely that they're not going to be living in their own house, but in a room or an apartment, not only limited in space to set up a system or a listening room, but also subject to restrictions on how loud and when they can play their music.
Those last restrictions – space and the ability to play music at whatever volume they may want, at whatever hour they may choose, may even be more important in the long run than just budgetary considerations.
To a very substantial degree, what products will be sold to future audiophiles depends (and will continue to depend) on where the person who will be using those products is going to live, and that, in turn, is going to depend, to an ever-increasing degree, on the real estate market and the interest rate.
While current very high home prices may drop as a result of increasing interest rates, higher rates will make for higher overall mortgage payments which, as payments get higher and higher, will result in fewer and fewer people being able to afford them, which will reduce effective demand for houses and exert downward pricing pressure. Lower priced homes, though, may still not result in lower mortgage payments. Rising interest rates could easily offset price declines, and the total mortgage payment people have to pay could either remain the same or, depending on where rates finally settle, go higher, which could reduce house prices even further by making mortgage payments higher, and around and around, again.
In situations like this, it's not so much how much money you have, but what you can buy with it. People who can afford a down payment and the required monthly payments will still buy houses, That won't change, but two important things that could affect our industry certainly will:
First, financial issues will definitely affect the size, location, or condition of the houses people buy and, indirectly, how much they can afford for furnishing them and putting in a sound system.
Second, they will mean that many people will either never be able to buy a house or will have to put it off to some future date when they have more money or circumstances have changed to make things more affordable, or both.
That still doesn't mean that the predictions that headphone buyers will become the next generation of High-End hi-fi buyers aren't true. Consider this one recent post at Head-Fi.org: "Diving headfirst into speakers now. Bought the Focal Sopra N1 yesterday after an hour's demo with the local dealer. I was looking for standmounters that sounded similar to my favorite Focal Utopia headphones. These pretty much sound like them. Dynamic, fast, and detailed, with great imaging and center focus. I love the Focal house sound so these were right up my alley."
There are plenty of indications, though, that just the cost of a system may not be the issue: Right now, many headphone buyers are willing to spend the amount of money necessary to move on to speakers, and even more. The simple fact that multi-thousand-dollar headphones exist, and that people are willing to spend more multiple thousands of dollars for source and drive components to use with them proves it.
Bruce Ball, Managing Partner of AV Luxury Group, International, a luxury premium audio distributing firm, and former head of Questyle North America, a leading manufacturer of headphone electronics, says that the ultimate factor keeping headphone audiophiles from joining us as two-channel speaker audiophiles, is , as the say in the real estate biz, "Location, location, location." Where they live – whether in a house or an apartment.
Whatever the case, though, our industry would be well advised to remember that audiophiles of any kind are true audiophiles; that they all should be considered as important potential buyers, and that they all deserve to...