The crumbling control exerted by the bigger manufacturers and major distributors cracked and then collapsed, as the market finally realised that there were alternative sources of information and alternative products out there. Sure, there’s a lot of garbage online, a lot of unsupported or ill-informed opinion – but there’s also well-informed writing if you seek it out. And that writing isn’t cost constrained by print and paper prices. An online publication – especially one with a responsible editor – can offer a product as much space as it deserves. Once readers started comparing the shallow, short and lightweight words found between the covers of printed magazines, to the in-depth and detailed (laboured?) coverage available online, the game was pretty much up. Of course, not everything written online is the audio mother lode, but the mere existence of such extensive coverage reveals just how sparse the reviews in print titles have become.
There are exceptions to every rule, but in this case the reality is inescapable – as are the consequences. All of which makes the failure of the high-end print titles to migrate successfully online all the more remarkable. Until they realise that a financial model based entirely on paid access is no longer viable and that their falling circulation no longer justifies their ad prices, that isn’t going to change.
“It’s the economy, stupid!”
In a market that is increasingly moving towards direct sales, or direct to dealer sales, the three-tier distribution model is fast becoming an expensive anachronism – at least as far as Europe and the US is concerned. Normally, the three-tier approach means that it is the product’s manufacturer who faces the highest costs and risks and reaps the lowest profit, while the dealer, at the end of the mathematically accumulating margin chain makes the most money from each sale – and often, has the least invested risk. Increasingly with high-end products, dealers hold no stock and often don’t even floor a demonstrator. By moving to a two-tier model, a manufacturer can rebalance the cost and profit equation more equitably, while also keeping closer control of the sales channel and marketing – and that’s actually a good thing for everybody, in that it allows (but admittedly doesn’t guarantee) greater control of sales practice and the customer experience.
These days, few manufacturers have the sales or the sales outlets to require the services of a distributor – and these days, few distributors actually properly fulfil the function. Those manufacturers who cling rigidly to the past are going to find that their products are more expensive and less competitive than they used to be, as more agile and aggressive competitors undermine them. Sure, if you’ve got fifty or sixty US dealers, you’ll need either an internal or external method and structure for managing them. But you’ll also have the sales to support than structure. If on the other hand – and as is increasingly the case – you are a boutique brand with between three and six dealers for your incredibly expensive, low volume sales products, then you can easily manage those outlets internally, whether your company is based in America or Amsterdam. Dispensing with the distributor doesn’t imply the shedding of a complete margin/cost tier. Products still have to be shipped, supported, advertised and marketed. But it should signal an end to the mathematical escalation of prices imposed by the old, three-tier model.
