The Credibility Gap

In the 1950’s radio disc-jockey Alan Freed, one of the most high-profile and influential DJ’s of his time, was fired from ABC for accepting money from record labels in exchange for more heavily promoting their artists and their songs. This was the practice of “payola” – a portmanteau of “pay” (duh) and “Victrola” (or any number of other ‘olas that were popular music-making devices in that time) – and, though it was not illegal at the time, it was considered to be an unethical practice primarily because of how much influence DJs had on the purchasing decisions of their listeners. This kind of influence is quite valuable to those who stand to gain in the battleground of commerce, and so the practice of radio DJs accepting payment in exchange for radio airplay was deemed to be illegal except under specific circumstances in which the arrangement was disclosed publicly as “sponsored airtime” and not a portion of regular airplay.

Far from being a peculiarity of history, this issue remained a problem even into the 2000’s when Sony had to pay a $10 million settlement for paying radio station personnel to feature its artists, revealed in an investigation headed by NY Attorney General Eliot Spitzer.

“Our investigation shows that, contrary to listener expectations that songs are selected for air play based on artistic merit and popularity, air time is often determined by undisclosed payoffs to radio stations and their employees.” – Eliot Spitzer

Spitzer indicated that the investigation revealed Sony BMG had paid for vacation packages and electronics for station programmers, paid for contest prizes, paid for some of the operational expenses of radio stations and hired middlemen (aka “independent promoters”) to slip illegal payments to radio stations in exchange for increased airplay for Sony’s artists. Clearly, Sony believed that the power of influence that radio’s “taste-makers” wielded over their listeners was so effective that it was worth the expense – and the risk of breaking the law – to influence the influencers. Influence is valuable.

 

Influence

 INFLUENCE

 

Influence is valuable in the high-end audio arena, as well. With gear that can cost tens to hundreds of thousands of dollars, and an audience of enthusiasts who really love this stuff, the opportunity to gain positive attention from the “taste-makers” in the audio press can present itself in many different ways … none of them expressly illegal, but some of them perhaps skirting the ethical obligations assumed to be part of Audio’s 5th Estate rule-book.

There was a recent discussion between several audio writers and bloggers (as friends) covering some aspects and pitfalls about our role in the audio world: our responsibilities, what kind of moral high-ground anyone can actually take when it comes to these sorts of things, and how it is that we interface with the manufacturers, distributors, and dealers. It’s a complicated aquarium here, because of how interbred our hobby is to begin with.

As an opener, we’ve got to face the fact that High End Audio is a niche with a generally specialized appeal. As a result, folks become involved in various aspects of the industry at various times in their careers. This is utterly true about myself, and so I can share some of the thoughts I’ve had when it comes to being a manufacturer and importer while also being a writer and editor. In fact, as we began this project, it was a concern of mine that THFR remain utterly above board in its business, and that means not acting as an agency for the promotion of commercial interests that any of us stand to benefit by as a result of that promotion. With regard to my own (non-editorial) involvement in this industry, my partner Joseph Weiss and I agreed that the products I make and represent could not be covered or even mentioned in our pages.

The above-mentioned discussion had more to do with the notion that some writers in our industry also work in other capacities, especially commercially rewarding capacities, and that these associations should be disclosed to readers. Anyone reading a review of gear should have a better grasp of how to contrast that with the other interests of the writer in order to determine, for themselves, whether or not there may be a conflict of interest. If a writer pens a piece praising XYZ DAC while working for XYZ, Inc. – this could be an ethical problem. Integrity is paramount when sharing professional – and influential – opinions about products, so disclosure is paramount to preserving integrity.

At the core of this philosophy is the notion that the audio press must be able to hold itself apart from the commercial interests of those companies and individuals who stand to benefit by their praise, or who stand to suffer from their criticism. This means that the press should also hold itself apart from the influence of those same companies and individuals, and so it is understood – prima fascie – that any flow of money or value from a manufacturer, distributor, or dealer to a gear-reviewer constitutes a potential influence. If XYZ is signing your checks, your loyalties might be split.

 

I’ve never met anyone who came to this writing occupation rubbing their hands greedily and thinking, “Man – I’m gonna make a MINT at this!”

 

double-dipInfluence is applied and value is exchanged with members of the press in many ways, not just the obvious “pay to play” schemes that come easily to mind. And this article is not meant to address the even more obvious influences of advertising revenue in exchange for access and attention. At the larger mags there is the notion that advertising and editorial are insulated from one another, utterly different compartments, but the facts on the ground are different and – at least in one high profile instance – editorial and advertising are literally in bed together. At the smaller mags and blogs, editorial and advertising are the same people – which is merely a practicality, because very few of them can afford staff large enough to split up the duties. But advertising happens out in the open for everyone to see, and buying advertising is a level playing field – you pay your fee, you get your banner. Your competitor can also do the same, and it’s all out in the open because it has to be – it’s advertising.

It’s also important to note this: Audio reviewing is hardly a road to riches, and those who engage in this kind of activity come to it because of a deep passion for music, for great audio, and with the desire to share that passion with like-minded people. I’ve never met anyone who came to this writing occupation rubbing their hands greedily and thinking, “Man – I’m gonna make a MINT at this!” Instead, everyone I know that is involved in this industry in any capacity has come to their choice in career because of a deep affection for music, audio, and our unique little tribe.

That doesn’t mean that influence isn’t being peddled for selfish reasons, though, or that some members of the audio press aren’t the targets of influence from commercial interests seeking their public approval. The press has acted in the past and even in the present as a sort-of Kingmaker, and it used to be that if a company received a rave review from the right person – their sales would skyrocket. This was more true in the 1980’s and 1990’s than it has been in the past 5-10 years … the decline of editorial influence is largely due to the proliferation of opinions (ours included) on the internet. What has happened more recently is that readers tend to seek the opinions of other end-users in forums and other social media environments rather than the opinions of writers in the field. It is understood at a very basic level that other end-users have real skin in the game, have actually spent their hard earned money to buy various components and accessories, and because they’ve invested – their opinions hold more weight than the opinion of a reviewer who hasn’t bought the piece of gear they’ve just raved about, or who has bought it at an extreme discount (what we call in the biz, “accommodations”).

ACCOMMODATION PRICING

This is largely understood to be a professional courtesy that manufacturers offer to each other, to dealers, and to other professionals working in the industry. It is typically expressed as a 50% discount from retail (though at some companies the % may vary one way or another). This was a far narrower practice than it is now, and was originally offered as a way for sales staff working at a dealership to buy into a brand that their store represented. This was good for everyone, as it vested the sales staffer in the brand who – as a lover of Hi Fi and of the brand – could share much more insight with the potential customer about the doodad they now own.

The courtesy began to creep away from that narrow focus and so accommodations were offered to other manufacturers and dealers outside the network – why not? A fellow making amplifiers needs loudspeakers, a fellow making loudspeakers needs an amplifier. Instead of making these transactions with the dealer as middleman, manufacturers and distributors just expanded the practice. It was good for business, it was good for fostering relationships, and it was good for creating strategic partnerships.

The 50% discount is classically based on dealer cost. What this means, in short, is that the dealer typically pays 50% of the retail price for any gear they might carry. Sometimes the cost is 60% of retail, other times the cost is 40% of retail, and in some extreme cases the cost can be lower. Nevertheless, 50% is pretty much the median and the traditional dealer discount. Dealers are offered this discount because they perform a valuable service for the manufacturer by cultivating local clientele, maintaining a showroom, maintaining a staff of people to help potential customers navigate the offerings, and ultimately for providing a means to sell their products to end users. This is a fair exchange of value, and how commerce in our industry (and most industries) is fostered. In short, the dealer earns his margin – his monetary benefit – by providing a valuable service to the manufacturer and a valuable service to the customer.

So, in the case of the dealer discount and in the case of the historical accommodation, the discount from retail is offered because (A) the manufacturer doesn’t stand to lose any margin, because their margin is already built into the 50% dealer-discount and (B) because the parties on the receiving end exchange a sort of value with the manufacturer. In the case of the dealer, the value comes to the manufacturer in the form of cultivated sales: direct commerce. In the case of the accommodation, it comes in the form of influence through brand building. If Joe Blow’s loudspeaker company uses Anthony Bologna’s amplifiers, and vice versa, each stands to benefit by the other’s investment in gear and influence on their customers. It’s not uncommon for Joe to recommend Anthony’s amplifiers to his customers, nor  for Anthony to recommend Joe’s speakers. This is a kind of sincere promotion between two companies that are more or less strategically aligned to serve each other’s interests because they really appreciate what the other one is doing or offering, and that kind of influence is very valuable. It is the same kind of influence that a manufacturer is seeking when they offer the accommodation to the sales-staffer at the dealer: A vested-interest in promoting the product.

sommovigo-opinionWhere I think this train starts to come off the rails a little bit is when this same consideration is offered to reviewers in the press, because reviewers occupy a special place in this collection of influencers. The influence of the local dealer is fairly focused in their local area, the influence of the strategic partner is fairly focused on their group of customers, but the influence of the reviewer is far wider and – further to that – readers tend to think of reviewers quite differently than they think of dealers and strategic partners. Readers (mistakenly) expect reviewers to behave as some sort of consumer advocates, parsing the wheat from the chaff, and offering a level of detached guidance that readers might be able to trust more than those who stand to gain – directly or indirectly – a valuable benefit by the promotion.

Quite in contrast to the opinions of other consumers who have the full vestment involved in their opinions, reviewers buying their gear at 50% under the auspices of a professional courtesy leave themselves open to criticism because they have received a valuable benefit from a manufacturer, and as such are understandably suspected of having their influence purchased through the application of this benefit. This does not mean, AT ALL, that every reviewer who seeks and accepts the privilege of accommodation pricing is, by default, intentionally operating as a promotional agent for this or that manufacturer. But it is not without its pitfalls, and manufacturers tend to see such courtesies as some sort of Quid-Pro-Quo exchange of value with whomever they are offering it.

The most obvious indication that this exchange of value (discount for influence) is taking place is when the reviewer tells the reader, “I loved this thing so much that I bought the review sample!” I mention this not to suggest that the reviewer is being dishonest at all, because why would anyone part with serious cash of any sort if they didn’t really love something to begin with? This is certainly the most common occurrence of accommodation for the reviewer, and it reveals an enthusiasm so great that they are willing to lay down real money in exchange for the gear. I’d say that’s pretty authentic. But there’s this haze created because of the deep discount, and because of what this can suggest with regard to the exchange of value between the manufacturer and the reviewer, and also what it means to the customer who reads the review and has to lay down twice as much as the reviewer in order to obtain the same gear.

Social mediaThis leaves a potentially huge credibility gap, and is one of the reasons that audio enthusiasts are turning to each other in various social-media communities for guidance and turning away from reviewers. Much like the way the government works, the High End Audio industry seems more like an oligarchy and much less like a meritocracy. “Special Interests” have far better access and influence than ordinary folks, and the Special Interests with bigger bankrolls who are outspending those with small bankrolls get the benefit of more and better access to those taste-makers we call reviewers. So despite the fact that the industry is teeming with meritorious small players, readers tend to read about the same gear across many publications multiple times per publishing season. As with government, the more cheese you spread on the right crackers, the more you can expect in return for your investment.

 

SOLUTIONS?

So what is it that anyone can do about this situation? It isn’t criminal – no one, at least that I know of, is breaking any laws. And while there is an ethical promise assumed to be operating within the press, there is no overt promise of consumer advocacy … how could there be? As with television and radio – the viewer/listener/reader isn’t the customer … the Advertiser is the customer. So the awkwardness of the problem begins with the notion that it is unreasonable for the reader to assume that the reviewer is a consumer advocate in any way, shape, or form even if they protest and assert that they are, and even if they assail criticisms such as this as being unfounded. It is not unfounded at all – they receive their benefits as a result of value flowing from the manufacturers, distributors, and dealers to them, either directly or indirectly.

So, Step #1 is for you, the reader, to understand that there is this somewhat incestuous relationship between the press and the commercial world of audio, and that opinions coming from the press must always be taken with a grain of salt. Not because reviews are written for the sole purpose of promoting brands or products, but because these relationships do exist, and because value flows from the commercial world into the editorial world, and therefore it is up to the reader to defend themselves with healthy skepticism.

Step #2 is a little bit harder to achieve because the press believes, largely, that access to accommodations is a right that they have because they are operating as professionals within the industry. When I’ve brought this up, indeed when I brought it up in our spritely discussion, porcupine-quills come out and the defensiveness was thick to protect this sacrosanct right of discount. Step #2 is for the editorial leadership of any particular publication to create a policy internally that prohibits their writers to use their association with the publication as a means to request accommodation pricing from manufacturers, distributors, or dealers. This is something that Joey and I have discussed as being necessary for the protection of our credibility – both as individuals operating in this space, and as “The High Fidelity Report” specifically.

As with other magazines and blogs operating in this space, we cannot afford to eschew revenues generated by advertising. That said, it is the rare publication that is actually earning a livable wage from their advertising income. We’re all in this for the passion of our enthusiasm, and to that end we make certain sacrifices by doing this and not something more profitable (such as work). However, as one of various steps we feel that we should take in order to preserve the trust that we hope to earn with our readers, we make the following declaration:

NO ACCOMMO

Component reviewers for The High Fidelity Report are prohibited from using their association with The High Fidelity Report to request and secure discount privileges (“ACCOMMODATIONS”) from any manufacturer, distributor, or dealer. The High Fidelity Report will sever ties with any writer violating this policy.

 

This may be seen as a trifling issue by some, as it was by a couple of writers involved in our quite active discussion. But much like other kinds of addictions, the accommodation for reviewers will be very difficult to cleave from their breasts – especially because they see this flow of value and influence from manufacturers, distributors, and dealers as “trivial” … but it is not trivial at all. One writer shared his opinion that he thought of the accommodation as an “industry-standard perk and part of a writer’s compensation” – and that kind of thinking worries me a little. If special prices weren’t available to reviewers, would they still review? And if not – what does that say about their motives in the first place?

If we’re going to restore credibility to this enterprise, we’ve got to address the soft and non-obvious ways that value and influence flows from commercial interests to the taste-makers, as well as address the more obvious ones. The obvious ones are “gimmes” – easy to shoot out of the sky, and therefore are distractions from the non-obvious ones which operate almost entirely underground and beyond the notice of those readers with whom we hope to earn and maintain trust.

This is a start, not an end, and we hope to hear opinions about these issues from our readers, both by email and on our Facebook page. What do you think of the accommodation privilege being extended to reviewers? Is this making a mountain out of a molehill? Or is it something that deserves a serious conversation?

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