Pros & cons

The success of companies like (top to bottom) Fullcompass.com, Harmonycentral.com, and Musiciansfriend.com has been made possible in part because of the proliferation of digital audio and video workstations that are now considered "professional" equipment.

Meanwhile, brick-and-mortar retailers assert that they are in a much better position to get used equipment as it comes in. At the same time, they say customer service is their bread and butter. "The thing we're focused on is personal service, and that's one thing that [online] auction services can't offer," says Dave Malekpour, president of Professional Audio Design, a Boston-area new and used equipment dealer and the sole authorized reseller of pre-owned SSL consoles in North America. "You can look at thousands of items online, and if you know exactly what you're looking for, that's fine. But when you need help finding exactly what's right for your situation, then you need personalized service. And this is an industry where that has been the norm until recently."

Or, as Mike Bogen, director of pro audio products at Manhattan's Dale Audio, says, it doesn't take a lot to sell an XLR connector. "But we've invested hundreds of thousands of dollars in a facility where people can come in and really get a sense of what it is they need and what they're actually buying," he says. "It's not the box that sells, but the human interface it uses. Every workstation does cut-and-paste with keystrokes. But does it take four strokes or seven to accomplish the task? You gonna find that [answer] online?"

Bogen, a 20-plus-year veteran of the industry, much of it in retail sales and broadcast engineering, cautions that the virtual commercial environment not only takes the personal aspect out of the equation, but also lends itself to fraud. "I like buying watches on the Internet," he says, "but I won't buy unless I know the reputation of the company. There are too many counterfeit products out there. When it comes to microphones, how do I know what shape the ribbon is in, or if all the parts are original?"

Online sellers concede that there are occasional Internet scams. "People do misrepresent items at times," says Digibid's Maxwell. "People also put the same item up on [multiple] auction sites, then take the best bid from one of them and renege on the other bids. But people are legally bound to sell an item they put up for auction. When we find people doing that, we terminate their memberships."

But the online sites offer some implicit advantages in the Internet Age. One is the lower overhead that comes with being virtual. While some companies warehouse stock, others have manufacturers drop-ship for them. And all of the online retailers benefit from lower advertising costs using the Web.

Then there are the less tangible benefits. For instance, some online retail and auction sites seek to re-create the sense of community that pro audio and video conventions offer — a larger, more ethereal version of the cacophonic village that is a musical-instrument or pro-audio equipment store, like one of the Bazaar-like component shops on New York City's funky Canal Street. "We don't have a showroom, but I'm convinced that this model represents the future — a significant opportunity for creating an environment in which pros can congregate," says Maxwell.

That environment has become a very comprehensive one. Sweetwater, a 21-year-old company based in Ft. Wayne, Indiana, added catalog sales in 1990 and went online in 1995. Currently, 15 of the company's 200 employees are dedicated to its growing Internet-based sales business. Stewart stresses customer support and a friendly atmosphere as reasons the company has done well over the years. He now believes those strengths can be expanded to the company's Internet business. "We've been selling pretty sophisticated stuff over the phone for years, so we think we can apply that to net-based sales," he says. He adds that Sweetwater is the nation's largest Pro Tools dealer. However, most of Sweetwater's sales are to the MI market, and consist mostly of new equipment purchases.

But this is not a classless society. Maxwell stresses that Digibid is aiming at a higher professional level than its competitors, with more used pro audio gear, such as vintage microphones, available on its auction site.

While the company is more focused on the upper end of the technology spectrum than other sites, Digibid's business model is similar to that of its competitors. Sellers register for free with the service and can then list used gear online for sale. Digibid acts as the intermediary and takes a 10% commission. Other online auction sites, such as Musichotbid, offer sliding scales between 3% and 5%, based on an item's sale price. Digibid holds the purchase price in escrow, giving the buyer 72 hours to inspect the purchased item and make sure that it lives up to its online representation. If there is a dispute, Digibid will intervene, sometimes canceling the transaction and returning the money, other times asking the seller to adjust the price.

Online sellers also stress that auction and retail sales are only part of what they offer members. Other perks include news services, reviews, and general industry information.

For their part, most of the brick-and-mortar sales operations also now have websites listing gear for sale. If you were to see a microphone or a pre-amp that you fancied online, they'd be more than happy to box it up and ship it to you upon receiving your credit card information. The only difference between the transactions is that a live telephone call was made. And even that could change, as the trend even among hard-core traditional retailers is to move further into fully automated online transactions. Like B&H, these retailers are contemplating expanding the functionality of their websites, initially to sell basic items like connectors, but with an eye toward expanding their range in the future, as well as the possibility of third-party banner advertising on the sites.

In fact, even online retailers are trying to improve their websites. "There needs to be an increase in the amount of interactivity they offer," says Sweetwater's Stewart. "That's one of the things that everyone has to improve."

Next: Looking ahead