23rd Annual 50-Dealer, 50-State Review & Forecast

Competition at Every Turn, Yet Most Dealers Report Solid Sales Gains in 2006

Our publisher is fond of saying on numerous occasions, “No one said it would be easy.”

That maxim applies well to the world of music products retailing, according to results of MMRs 23rd annual canvass of music dealers in each of the 50 states. But while it may not be easy, most of this years respondents are reporting satisfying sales gains going into the fourth quarter.

Their comments reflect an ac-ceptance of the fact that the new face of competition is here to stay, embodied by the industrys own big boxes, non-music mass merchandisers continuing to cultivate MI sales on a major scale, Internet-only re-sellers, and the ubiquitous presence of eBay and lesser online auction sites. These forces, while not to be dismissed, are being met head-on by the independents in various ways, including niche merchandising, promoting lines, brands, or price points that cant necessarily be found at the nearest Target or Best Buy, and an increased emphasis on lessons and repairs. Many are also fighting fire with fi re in terms of the Internet by more aggressively pursuing online business rather than simply using their Web site as a “calling card” or road map to their brick-and-mortar location.

In terms of product trends, this years 50-Dealer/50-State results vary little from our 2004 and 2005 reports. Guitars, both acoustic and electric, continue to be a bulwarks at retail for virtually all participating dealers. PA systems also received high marks from many. Percussion sales continue to struggle, a state of affairs many attribute to the cyclical nature of the beast. The keyboard side of the business is once again a mixed bag. For those stocking acoustic pianos, the year has not been a good one for the most part, although many are finding increased activity on the digital piano side. The more high-tech products have largely been a tough sell, as units such as Digital Audio Workstations have been slow as end users opt for the much less expensive alternative of software solutions.

Overall, the scenario under-scores why most independents remain, with various permutations, full-line dealers: when one category is down, another will carry the day.

Economic forces, locally, nationally, and internationally, of course have also played a role. The effect of skyrocketing fuel prices earlier in the year played havoc with everything from store traffic patterns to shipping costs. On a more philosophical level, an uneven general economy and the increasingly disastrous situation in Iraq appeared to put a crimp on the national mood and, hence, consumer spending patterns.

Looking ahead, most of this years respondents remain optimistic with the clear understanding that, once again, it wont be easy.

ALABAMA

Andys Music

Mobile

Jim Andrews, president

“We are up moderately over 2005. Being a full-line store is beneficial: when one category is down, another usually makes up the difference. Throw in a successful Web site, and youve got a good mix. Our local economy is doing well. Any time there is a catastrophic storm like Katrina, the construction industry explodes. The downside is the cost of labor and materials.

“The experts say youre supposed to keep track of your competition, but I have enough difficulty keeping up with our business without worrying about our competitors.

“Most definitely, electronic keyboards stand out as our best seller. We sell and service Yamaha, Roland and Casio, and they all do well. The Digital Audio Workstations (DAW) have been slow for a while. We sell all the major brands but one, and theyre all slow. Part of the reason has to be software-based recording. Its simpler and more cost-effective for the home recordists to purchase Cubase SE for $99 than to purchase a DAW.

“Our industry has changed dramatically since we opened in the 70s, and its going to be interesting to see what changes occur in the next ten years. Regardless of what happens, if we act, and not react, we can continue successfully. Its sink or swim! Barring any unforeseen circumstances, itll be more of the same next year.

“We have been online since 2000, and it has been beneficial. Our Web site (www.andysmusiconline.com) helps insulate us from the local economy and provides us with another channel for sales and communication with customers.”

PRODUCT OF THE YEAR: “The Yamaha YPG625.”

ALASKA

The Horn Doctor Music Store, Inc.

Anchorage

John Kagerer

“Business is much better this year — we are about 15% ahead — which I credit to the fact that we take care of our customers. The Internet is our main competition, and our customers dont get taken care of online, so they shop us. We offer personal service.

“The economy has been a little slower than usual, and people are seeking out deals and shopping around more because money is a little tighter. Thats how they are finding us.

“We have a lot of local competition, and the way we compete is with personal service. We are really hands-on, and we work with the customer to make sure they are satisfied and happy with us. Its nothing new; weve always done business like that because it works. Weve just had one big-box store open up in town, but we dont see any competition from them because we are mainly a band and orchestra-type dealer. We are very family-oriented, and our customers dont seem to be so attracted to the big-box stores. It seems to be mostly the gear-heads who shop there. The big boxes are probably selling a lot more than we are, but our business is increasing, so we are doing okay.

“Seagull guitars are really selling through right now. They are well made, and we can compete with anybody on the Internet price-point-wise. We make a good profit on them, and their customer service is top-notch.

“My main concern with the industry is the inexpensive, low-quality imports that are taking over. In fact, I was just looking at an eBay site today where the guy is bragging that his $42 trumpet is the same thing that is sold by the major manufacturers, except that we mark them up 600-800%. Our mark-up on a band instrument is probably in the 10% range. Things we are buying for 50% off, we are selling for 40% off, and then we have to ship them a long distance.

“Our overhead is low because we own our own building, but other aspects, such as fuel costs, are pinching us. Its not that we are making less money, its just that the money we are making isnt going as far. Even though weve had an increase in business, our bottom-line profit may not be as good as last year.

“We use the Internet to research competitors. We dont have the money, resources, and time for much else. We used to have an online shopping site, but we quit because we werent getting sales off it and it was too hard for a small place to keep up with. The manpower involved would have included two full-time employees, and we couldnt afford that. People come in all the time, and they have an instrument they found on what we call a Death to the Industry Web Site. We will look up the product right then and there, and tell them what we can do price-wise for that particular product, and why they should buy it from us.

“We have a little advantage here because of the shipping — nobody wants to ship anything free to Alaska. We are able to ship five amps for the same price someone else ships one amp. A lot of our profit comes from the difference in the shipping costs.

“I think we are going to do even better in 2007. We are trying to build a new building so we have more room, but the city has been battling us because they want to re-do some property in this area, so weve had trouble getting our permits. Thats typical Anchorage politics.”

PRODUCT OF THE YEAR: “Seagull guitars are great, as well as the Selmer student-level horns.”

ARIZONA

Catalina Guitars

Tucson

Garry Knight, owner

“There is stronger, significant growth in Internet sales this year due to our efforts. The economy is the same as last year and the local competition is stable.

“Guitar and other instrument pickups stand out. L.R.Baggs violin pickups especially, as well as M1 Active acoustic guitar soundhole pickups.

“eBay has a particular impact, pressurizing pricing for all.”

“The industry is harder to operate in due to growth in Internet sales and low pricing. eBay has a particular impact, pressurizing pricing for all. Three-quarters of our sales are Internet-based. We have a Web site with shopping cart. The main site targets local business for guitars and electronics repairs. The shopping cart part targets worldwide sales of pickups and guitar parts. Im planning growth through Internet sales and the addition of a teaching school.”

ARKANSAS

Janet Davis Music Company

Bentonville

Janet Davis, president & owner

“Were up quite a bit. This summer weve seen a lot of interest.

“I havent noticed a lot of change economically from last year. Of course the gas prices escalating like they have is a big issue. This is a small area thats growing rapidly. Its a beautiful area of the country that is one of the top ten fastest-growing. There are a lot of retirees, also a lot of young people moving in, too.

“We specialize in the acoustic instruments, specifically guitars, mandolins, and the bluegrass instruments. Theres not a lot of local competition for that. Gibson instruments are the hot instruments here. We sell just about every banjo and mandolin they make. All the lines are doing well, though some are seasonal in a way. At certain times of the year when there are music festivals, we sell more accessories related to that. Theres no area thats weak right now.

“We definitely sell on the Internet; its a big part of what we do. A lot of people come to us via the Internet for the unusual instruments that not every music store has. They know well have it. And we make sure everything is set-up as it should be before we ship it.

“I hope things keep getting better! [Laughs.] We like to keep the world playing music.”

Product of the Year. “The Intelli IMT-500 Clip-On Auto Tuner. We sell it for $29.95 and just cant keep them in stock.”

CALIFORNIA

Barkers Music

Modesto

Kyle Barker, owner

“We are back to reality this year. I have been in the same location since 1969, and last year we sold more grand pianos than ever. We sold more $10,000 pianos than $4,000 pianos last year. The Central California Valley had one of he biggest housing bubbles in the United States, and the big houses were a fantastic place for grand pianos. Now we are back to reality and dont count last year. You have to forget those kinds of years because if you have an unusually good year or unusually poor year, you certainly dont want to factor those into your business plan. We are down 10% from 2004 and 40% from 2005, but thats all in perspective. Its not that this year is poor, its just that last year was unrealistically good.

“Unit sales are close to the same, but now we are selling a lot more of the Yamaha Clavinovas. In the last four or five months, weve had very large institutional sales. The private market has been tough, but the schools and churches seem to have money. We are 85% Yamaha pianos. At one time, we were 40% combo, but between the Internet and the big-box stores, we realized we should concentrate more on pianos.

“Our biggest competitor is youth soccer. It has nothing to do with money, its just a choice people are making today. Its more immediate gratification for the student.

“Gas prices are going down, and in our market everyone is being careful and taking a little more time to make a decision when buying the big-ticket items. The band and orchestra people are getting hit by the Internet and the box stores, but in this area we are the only piano store, and I know for a fact we have a large amount of market share. Ive always been aggressive, so we do pretty well. Our competitors and all of the local smaller towns rely on our lessons, service, and accessories. Its more fun to sell one big grand piano than a bunch of strings anyway.

“Our weakest-selling category is combo/accessories. We are located in the older part of town, and all of our competitors, including Guitar Center, are in a newer part of town. The towns growing north, and we are still south. I think location, convenience, and image means a lot, but I dont mind being the institutional piano store — its a lot easier.

“For as much information there is on the Internet, theres a proportionate amount of disinformation. We are going to develop a Web site for sure, because to me, the consumer in general seems to be less informed than ever before. I think the consumer is very overwhelmed, and for some reason they are easily led.”

PRODUCT OF THE YEAR: “Yamaha Clavinova, and theres not a close second. They just keep getting better and better. Its a killer of an instrument.”

COLORADO

Rockley Music Co., Inc

Lakewood

Liane Rockley, owner

“The first two quarters and part of the third quarter were down. We were seeing a decrease in traffic, and just a real struggle for consumer dollars. Its starting to pick up, but I dont think we will have any record-breaking Christmas sales. With gas prices still being through the roof and the Iraq war, I dont anticipate people loosening their pocket books until one of those two issues are resolved.

“Colorado has one of the highest housing costs in the nation, and we also have the highest foreclosure rate for mortgages. We are finding that the consumers are more willing to go with a little less. Why spend $2,000 on a guitar, when they can live with the $1,200 one? We are seeing a little more restraint in that area. Since we are destination location, a lot of our customers who are more or less regulars and live a little ways away, we arent seeing as much because of the gas prices.

“Falling MAP prices and Chinese imports are making it hard to get customers.”

“In the past year or so, weve seen quite a few of our competitors go out of business, and thats been hard. People are downsizing, and just from talking to other local music store owners, everybody has been reporting slower traffic.

“Guitars and pianos are our strongest-selling category right now. I am not quite sure why on the guitars, because we have quite a few Guitar Centers in the area; we could have found a little niche that they just arent hitting. We do have an on-staff luthier, and probably just a lot more knowledge than the typical Guitar Center employee. On the piano side, we provide acoustic and digital pianos to most of the major schools and universities in Colorado, so we generate a fair amount of sales through our piano programs.

“After 60 years of being in business, we just let go of our band and orchestral instruments because they werent selling and we could no longer effectively maintain our relationships with those vendors by only selling a couple of instruments a year.

“We are a single-store, family-owned business in the third generation, and weve seen other family-owned businesses go under because of big-box competition. Falling MAP prices and Chinese imports are making it hard to get customers. We are doing a lot to try to find our niche, and I think we have come to a real good place for ourselves.

“We have a Web site, but we dont do full blown e-commerce on it yet. Since we are a full-line store, there are a lot of restrictions on the piano and MI inventory that you can put on your Web site, and we are trying to figure out how we can link our computer system to our Web site to make order processing easier.”

PRODUCT OF THE YEAR: “The Roland RD Stage Piano series.

CONNECTICUT

Greenwich Music

Riverside

Linda Smith, owner

“We moved in February to a bigger base on the ground floor and were showing a trend upward. Our traditional growth has been between 10 and 15% and this year it has been 25 to 30%.

“Greenwich, in particular, is one of the wealthiest communities in the country, often referred to as the Gold Coast of the Northeast. Now, that doesnt necessarily mean that there arent people who arent feeling the effects of the economy and the high gas, oil and natural gas prices, but its not by any stretch a depressed area.

“This area has the largest saturation of music stores in the country. In Fairfield County, even Greenwich alone, we have four businesses competing in the same market. Outside of Greenwich there are probably 10 stores. So within a 15-mile radius, youve got at least 15 stores. And if you go over the New York border, we have Sam Ash and Guitar Center, so were in a competitive and saturated market.

“We have had a strong guitar year, and weve had a really solid band instrument year. We have made our own connections at the NAMM Show with Chinese manufacturers, so there are certain products that were able to buy for significantly less than in the past. Also, all the major names have been performing well for us.

“It is a different industry now, there is no question. The Internet is a challenge for everybody and it just keeps becoming a greater challenge as more people become savvy about using the Internet. Its tremendous to buy certain items over the phone and not require a salesperson. If youre buying a soap or makeup product that you use all the time, its a convenience. But with something you need to try on or hear how it plays, the Internet falls short. Im hoping this fact will become a reality for most people and draw them back into stores.

“You cant control the economy or inflation or politics or what is happening in Iraq. These things always have an effect on the psyche, on people spending money. Not to sound clich, but the success of any business definitely belongs to the people who run that business. You have to constantly be focused, working at it, reinventing it.

PRODUCT OF THE YEAR: “The Taylor GS guitar.”

DELAWARE

Seaford Music

Seaford

David Herring, owner

“Business in general is down about 15% over the same period from last year. We had a larger-than-usual percentage of our business in the Christmas season last year and Im hopeful that will repeat itself this season. The economy in our area remains depressed. The employment opportunities are limited because agricultural-based businesses have been hard-hit by the high fuel costs.

“The music stores in my area are spread out a bit and weve learned to peacefully co-exist. We each have our own immediate local community to draw from and have developed our niches. We have a pretty loyal customer base and our full-service guitar repair shop helps keep a flow of business coming into the store.

“Our strongest selling product category currently is accessories and weve tried hard to improve our selection in that category. A couple of products that have done well are the Dickies brand straps and the Korg CA and GA tuners. We sell a wide assortment of guitar pickups from all the major brands and offer quick installation service in our shop. Drums seem to be in a slump for us this year but Ive seen these cycles before. We are still doing well with small hand percussion items but snares, kits, cymbals, and hardware are a bit off and I cant explain why.

“My main concern in the industry right now is the shrinking of the profit margins. I am a big believer in MAP and I only wish that manufacturers would work to raise the selling prices of their products. It gets a bit frustrating for a small independent to try to remain competitive when the MAPs are set so close to cost. The small independent shops made many of these companies what they are today, but the companies have lost sight of this fact. If something isnt done soon to resolve this, the mom-and-pop store may become a thing of the past and go the way of the buffalo.

“We use the Internet to draw attention to some of our higher-end special products, but it generally doesnt create many of our sales. We operate an online store with a secure server and we keep a steady flow of sales of accessory items. It isnt as busy as it once was and I suspect it has something to do with the amount of inventory I see on auction sites such as eBay.

“Im seeing a welcome drop in fuel prices and Im going to stick my neck out and say this is going to allow more money for the local folks to spend on their musical hobbies. I would hope that transportation and manufacturing expenses might be reduced so perhaps well see some great deals from our suppliers.”

PRODUCT OF THE YEAR: “Its a tough one and ends in a tie between the G&L Tribute series guitars and the Paul Reed Smith SE series guitars. Im sure Im not the only one to notice that the Korean imports from these two companies have raised the bar for everyone on what I consider to be a very affordable high-end guitar.”

FLORIDA

Bailey Music

Plant City

Ken Bailey, owner

“Business is better this year. The biggest reason is that I am becoming known for high-quality instruments and service. Our economy is under some pressure due to the energy costs and worries about the war. Still, I believe it is a strong economy in central Florida.

“I dont have a fair gauge of most of my competition. Overall, the small music store is struggling. Weber mandolins have been my most profitable item. The Yellowstone is my best seller. The selling price is between $3,500-$4,500, depending on the custom options. Acoustic guitars are my slowest-selling item. The reason is that it is a crowded market and I only sell the very best, so my guitars are on the upper end of the price range. My main concern with the industry as a whole is that the trend toward Internet-only and big-box stores continues until its a Wal-Mart-like, price-driven business with no soul.

“My Web site and business is linked to my main suppliers. My Web site explains my niche store and services and has inventory with pictures online. Quality, service, and product knowledge will make my business successful.”

PRODUCT OF THE YEAR: “My new Weber Fern Mandolin. It rocks big-time.”

GEORGIA

Braswell Music

Suwanee

Jim Bowcock, general manager

“Business is up about five percent from last year. People are spending a bit more money this year; slightly lower gas prices seem to have had some psychological effect. Next year, I predict more of the same: an increase in lessons and a decrease in margins.

“Guitar Center is 15 minutes away and another independent is two blocks away, but it seems weve found our niche. Step-up guitars and amps in the $300-$400 range are our best-selling category. The best-selling product is the Vox Valvetronix AD30VT. Our weakest are percussion accessories. People dont seem to be playing djembes much anymore.

“Products in retail outlets like Wal-Mart and Costco concern me. It makes an instrument a commodity, something to be tossed into a shopping cart with flour, eggs and jumbo laundry detergent.

“We have a Web site and a Myspace page that we actively update.”

PRODUCT OF THE YEAR: “Vox ADVT amps: best value, best flexibility.”

HAWAII

Bounty Music

Maui

Paul and Avi Weinstein

“Business is about the same this year as last. We are a very mature store having been here for 27 years and so we have established a strong client base.

“The economy has improved a little. There havent been any major problems, so that is always a plus.

“Most of our competition comes from the Internet. In most cases we are able to be very competitive with their prices, sometimes we can actually do quite a bit better than they do. As far as Costco and Wal-Mart go, I tend to avoid the products they carry. They have very few models and they mostly are entry-level. We try to not go head-to-head with what they are carrying, so they really dont affect our business at all.

“Guitars are our best sellers right now. Fender, Taylor, and Martin are all strong for us. Guitars and ukuleles have always been our strongest sellers. We specialize in ukuleles and do a lot of business with them.

“Keyboards are our weakest seller because of pricing. Generally speaking, the keyboard market has been really tough because its a smaller mark-up than other products, and they are big and bulky with a lot of freight.

“We have a Web site, (www.ukes.com) which weve had for quite a long time, and it has given us really strong presence on the Web. We probably have the best selection of ukuleles anywhere. Being such a small market, its hard to find a good ukulele in many parts of the country, so we find the Web site works really well for us. It represents overall only about five percent of our business, but its business that didnt exist 10 years ago. We do a lot of e-mailing business-wise because of the time difference involved. The Internet makes it easy for us to communicate back and forth quickly.

“I expect 2007 will be another good year. We tend to go up slightly each year, and I dont really see any reason why we wont be able to continue that trend.”

PRODUCT OF THE YEAR: “The Baby Taylor Series and the Little Martin are the best products of the year.”

IDAHO

American Music, Inc.

Caldwell

Mason Simmons, manager

“Were up about 30%, and have been for the last three years. Weve been consistently gaining market share and theres a lot of growth in the area. Were noticing a lot more cash sales versus rent-to-own or lease options. I would say the economy is pretty steady and has been climbing back up in the last couple of years.

“We have quite a few local music stores, and a Guitar Center that opened in 2001 in Boise, about 25 miles away. Part of our success might be because weve had customers go to them for a while and who are now returning to us out of loyalty, because they know we can and always did take good care of them.

“Fretted instruments have been good. Weve been doing really well with Taylor guitars, and Ibanez guitars have been moving fairly well too. Were not doing as much with keyboards, especially entry-level, though still doing a fair amount of pro keyboard business.

“Were pretty picky with our product lines, vendors, and reps, and careful when we take on a product. I know there are a lot of people out there selling more products on the toy side of things, but we avoid those. We dont bring in something just because of its price point when we know our customers wont be happy with it.

“We dont use the Internet much. We thought we would want to go into e-commerce but our demographic arent into Internet type things, so were sticking to local business.

“Sales are strong, and growth in the area is still pretty strong, and weve done really well this year with school rental programs. I would guess that wed keep growing next year.”

PRODUCT OF THE YEAR: “The Taylor Big Baby 307. Weve been really impressed with that guitar for the price point.”

ILLINOIS

Brookdale Music

Naperville

Jack Morgan, owner

“For the first time in 13 years, our business is slightly down, about two percent. We have grown consistently from year to year. I think the slight downturn is partly due to increased competition in the area, and from customers making purchases on the Internet.

“I do not think the economy has negatively affected our market as much as it might in other parts of the country.

“We had a Guitar Center store open up about a mile down the road from us last year. That has had a slight negative impact on our business in the areas of guitars, drums, and sound reinforcement, but I believe it has actually given us a boost in other areas, such as music lessons, sound equipment rentals, repairs, and print music sales.

“We have been doing very well with digital pianos this year, especially with Yamaha, Casio, and Roland. The Yamaha P-70s and YDP models and Casio PX-110s are particularly strong. Our weakest area would probably be drums and percussion

“Manufacturers should look more closely at how their products are being offered in the marketplace. This has been addressed to some extent with MAP and has always been an issue with mail-order catalogs, but it is becoming worse with the Internet. Too many great products are being offered as commodities at pennies above cost and retailers are not going to stock them if there is no profit margin. It is a problem affecting big-ticket as well as small-ticket items and the no sales tax issue doesnt help. Every day we have more and more customers asking if we will match an Internet price. Who wants to match Internet prices and make pennies on a $40 box of reeds?

“Our Web site is primarily informational. It mainly lets customers know what we do, what brands we carry, and what events are happening at the store. I think there is a lot of potential for us to increase our business via e-commerce and we will be working on that in the coming year.

“I think 2007 may be a difficult year for many retailers, especially companies with high debt. Interest rates are continuing to rise and interest costs are going to eat into the slim retail music profit margins. If interest rates keep rising and loans get called, it is going to be an ugly scene even for the big boys.”

PRODUCT OF THE YEAR: “The Roland Micro Cube amplifier, the Roland CD-2 recorder, and the Edirol UA-4FX Audio/MIDI interface all stand out.”

INDIANA

Klaverenga Guitar & Piano Studio

Lafayette

Julia Klaverenga, vice president

“Retail is down a little bit, two to five percent, but lessons are up. I have so many people buying their guitars online, at Wal-Mart, at Circuit City, then they come in here for lessons. The quality of the guitars they bring is not very good, but how do you tell someone if they had spent $20 more they could have gotten a real Gibson?

“One kid brought a Wal-Mart guitar in and the a tuning peg just fell off. And parents will ask, Why does the teacher have to stop the lesson and tune the guitar four times? and I say, Did you buy the guitar from me?

“Were streamlining our inventory. We carry more instruments in the $150 to $1,000 range. If it cost more than $1,000, they try it out here and then buy it from Musicians Friend. We cant compete with that.

“Our economy is a little down, but parents will still do without to send their kids to music lessons.

“Our local competition is a Fender dealer, but we mainly feel our competition is the Internet and Wal-Mart.

“Epiphone Les Paul Special II is probably one of the best guitars, but we make most of our money on lessons. The high end is the weakest category right now. People come in a try out a Les Paul for two hours and hand it back and say they are going to buy it online unless we can sell it with no sales tax. Same with Taylor acoustic guitars. I hate being an Internet showroom! [Laughs.]

“Im concerned that its harder for the mom-and-pop stores. Weve been here for 21 years and weve built up the industry through lessons and repairs. Youre seeing the Internet threaten that. I have the same prices as Musicians Friend, but weve taken the time to set it up right. Nobody there has touched that guitar to make sure its even working. And it bothers me that Gibson and Fender are selling entry-level guitars at Target and Cosco. Where is the dealer loyalty? Its frustrating, and they dont seem to care about it.”

PRODUCT OF THE YEAR: “Epiphone Les Paul Ultra. Its a pretty guitar, and we sell a lot of them.”

IOWA

Tegeler Music

Clinton

Don Tegeler, president

“Were up about 10%. We were affected a little by high gas prices. Disposal income becomes tight when that happens, but were seeing prices come down, so Im hopeful.

“Were a community of about 30,000 people and there is only one other store. We do have competition in the Quad Cities, which is a 45-minute drive from here, and there are three or four bigger stores there.

“My strong suit is P.A. equipment, and band instruments are strong this year. Electronic keyboards are probably weakest. Theres not much call for those like there used to be. I think you look at the trend of music in general and there is not much keyboard-related music out there. Theres classic rock, heavy rock, and thats all guitar/bass/drum. Ill still sell digital pianos to churches and schools, but I see a serious slowdown in that market.

“Like everyone, Id like to see an even playing field. I dont like that the big-box stores are getting better deals. But if I was a manufacturer and a guy came to me and said that he will be spending millions and wants a better deal, I dont know what Id say. I do applaud the manufacturers who dont give better deals. I was pleased to hear that Elixir strings told Guitar Center that they wont get a better deal on their products than others. The biggest thing I see about determining what products I sell is what is the margin on the MAP. Thats the bottom line.

“We have an informational Web site, but I am looking to sell online after I exhaust the local market. When I want to expand the business at that point, thatll be the easiest way to do it.

“I dont like to make predictions, but for my business, I have a gut sense that Ill continue to get more of the market share of the area. We are expanding next year, and Im looking forward to an exciting year.”

PRODUCT OF THE YEAR: “Greg Bennett guitars from Samick. I dont have to force them on customers you show them the quality, you show them the price, and thats it. Plus its still at a price point where you can make some profit on it.”

KANSAS

Midwest Music, Inc.

Salina

Blake Blackim, owner

“Weve got several stores, and gross sales will be down. Our store in Wichita is more full-line/combo with a large emphasis on drums and the store in Salina is more of a school music operation with full-line/combo. We also have a sound contracting division out of the Salina location. Our third store is located in Hays, and its full-line. Our school institutional sales were down a little bit, and a Guitar Center has opened up in one of our markets, so I would also say increased competition has taken a toll on us. A lot of our business is large institutional school business, and last year we had some very large school districts that made some very large purchases, so its not that business is bad, its just that sometimes you get a large school bid and that kind of skews your gross. Our net sales are very actually good.

“I think the economy is better than it was last year. Over the last five years, the economy has gotten better each year. I see more people coming into the store with discretionary income to spend on musical equipment, which means consumer confidence is up. Kansas is agriculture-based, so a lot of times we will go in the same direction as agriculture. If gas prices were hovering around the three dollars a gallon mark, we might have some problems, but with the gas prices coming down, it has certainly helped things out.

“We always try to provide a very competitive price, and we try to have the best staff on hand for professional service. We also offer in-house services and lessons. Our advantage is that most of our employees are musicians, so we are the local destination for information.

“We havent had them that long, but Jupiter Band Instruments have been really strong for us. Fender has always been a good line and Pearl drums are also very strong. A surprise seller has been the Phonic PA gear.

“Step-up and pro-line band instruments are a little soft. I dont think there are enough band programs which push the students to get into an upper-line instrument.

“My main concern about the industry is an erosion of profitability, as products seem to get cheaper and cheaper. Overhead and everything else in business goes up, but profit margins seem to be shrinking. Thats a big problem.

“At this point, our Web site is more of an information site, but we use eBay when we can, although we used to do a lot more things on eBay than we do now because even the profitability with that has gone away. I could see in the near future our Web site becoming more of a selling site.

“Business is good, and it should hopefully continue to be good through 2007. I dont think we are going to set any monumental records, but if gas prices stay low and there isnt any major turmoil in Asia or the Middle East, business should remain fairly strong.”

PRODUCT OF THE YEAR: “Jupiter Band Instrume

KENTUCKY

Uncle Sams Jamms

Louisville

Jeffrey Hillerich, owner

“Business is about the same. The economy has been pretty brisk, but some of the major plants have cut back and thats affecting us. Ford is our major employer here and theyre cutting back and its hurting a lot around here.

“My competition is the Internet, basically. And no sales tax, you know — thats my biggest sore spot.

“Its across the board about even in terms of my different product areas. PA is strong. The more affordable lower-line amps are good. We have a lot of higher-end gear on the floor, so were making more sales there. The Internet stole all the lower-end stuff. There is nobody buying under-$150 guitars locally. Most of it is online or the Wal-Marts around here. As a matter of fact, Im gearing my business to get away from that market. There is no money in it. Behringer did well thats like the Peavey of the millennium. They sell everything from PA to lighting. Bogner, the high-end amplifier, Alvarez, Ampeg and Schecter have been good too.

“The entry-level guitars are weak, the mom-and-pop packages. Its the Internet, and were catering to a different area. Were trying to shoot for more pro players because of the way it is. Were going into more used equipment than new stuff. The profit is made on all the used gear.

“I sell a little Internet, but not even 10%. The reason is the profit margin is so slight. With eBay, the markup is nothing. Id rather have it in my store and sell it to people. I think next year is going to hit really flat, honestly.”

PRODUCT OF THE YEAR: “The Tech 21 Trademark amps.”

LOUISIANA

Jody Mayeuxs Music Shop

Walker

Jody Mayeux, owner

“Business started slow this year, but now its good. The economy was down in the first part of the year after Hurricane Katrina hit. Now its back up again better than before and I think it will be this good for a few years. Guitar Center is only about 20 minutes away from me, but we do a lot of lessons, guitar repair, and sell a lot of products that they dont have or maybe they just dont want to carry. In this day and age, its impossible for anyone to carry every guitar product out there, I dont care who you are. Theres just too much product.

“Acoustic guitars are our strongest sellers, especially the Washburn D-10 and Takamine S35. Keyboards are my weakest. I think its the area that Im in. Theres a big bluegrass/acoustic market here. Im concerned with all the big-box stores that keep popping up and cutting the throats of the single stores.

“We have a Web site that emails our customers of our specials once a month and we have a link from our suppliers for new customers. Next year will be a very good year! No more hurricanes.”

PRODUCT OF THE YEAR: “Washburn acoustic D10s and D10 SCE guitars are the best bang for the buck. No doubt about it.”

MAINE

Mainely Music

Ellsworth

Chris Jovanelli, Jr., manager

“On the upside, gross sales are up. Weve been picking up about 20% each month over the previous year. On the downside, the profit margins keep getting slimmer on most products, so its still tough to make real gains. All in all, the economy seems the same. From most accounts, it was a bad year for tourism, so a lot of businesses felt a pinch. On the other hand, the year round population in this area is increasing (unlike many parts of Maine), so the business climate is improving from year to year. We have seen a notable increase in Canadian traffic this year. Their dollar is worth almost as much as the USD now, so they get substantial savings by shopping here. Theres a bigger city nearby (Bangor) with three stores to contend with.

“Surprisingly enough, after a long lull in sales, basses and bass amplifiers have been selling really well. As far as strong products go, the SWR line, which we just picked up this summer, has been a hit. The weakest sellers change from month to month, but right now recording gear is slow. I think it is in large part due to seasonality. Once winter hits up here and people have more indoor time, they start to think more about recording projects.

“We dont like to see big-box stores selling substandard guitars to beginners. They justify it by saying to the industry were bringing more people into the market which can only help you down the line. Of course the reality is that steady sales to beginning musicians are one of the few things keeping many dealers in business. Also, if a kid gets a poorly made instrument and has no one to help him set it up or answer questions about it, then chances are hes not going to stick with it. Also, there are certain manufacturers out there that have chosen a business strategy that excludes independent retailers. Gibson, for example, now has only one or two independent retailers in Maine, New Hampshire, and Vermont combined. They have, in a roundabout way, chosen to distribute strictly through big corporate channels, leaving huge areas of the country without a place to try and buy one of their instruments. Were all curious to see how this plays out for Gibson in the coming years.

“The Internet has been a great tool for us, especially during downtimes in the winter, when we can keep cash flowing by selling used gear on eBay. We have a Web site (www.mainelymusic.com), which gives us some presence on the Web, helping draw in referrals from manufacturers Web sites. We have broadband now and use it all the time to research item specs, values, and pricing

“What do I predict for next year? The Boston Red Sox will win the World Series!”

PRODUCT OF THE YEAR: “Bourgeois Guitars out of Lewiston, Maine. When it comes to value, Im also a big fan of the Ibanez GSR200 bass.”

MARYLAND

Bullocks Piano Salon East

White Plains

Jerry R. “Byx” Bullock

“Overall, we are down five to 10% from last year. This was truly the weirdest summer in more than 30 years. The piano business wasnt. Now in September it has once again started.

“As for local competition, there are eight music stores in my market and I am the only one selling pianos. Nevertheless, I do not have a monopoly. The interest in new pianos and even used pianos is weaker than ever. No proper home is without its fourth computer, third automobile, summer home, but today many homes do not have a piano.

“Band rental has been interesting and we have slowly gone to School Year Rental Contracts with the whole year prepaid. This has kept us less upside-down in rental inventory. For me, it just lightens the aggravation level. I am the dealer who in the late 70s stopped growing my band business and concentrated on pianos and organs. This did not make me wealthy, but it allowed me to do my business my way. Consequently, I am still working 12 to 14 hours days and loving every minute of it.

“Crate acoustic guitar amps have been solid. We have sold upright basses and cellos regularly. Digital pianos and ensembles have slowed, but still the GEM RP800 has been a real winner. Seagull guitars and six-string bass guitars have had some motion.

“Weak products continue to be organs and used organs. Old upright pianos are nearly over. Sheet music, as opposed to collections, is dropping and, oddly, drums are way off for me.

“I am concerned that in three more years there will only be 100 piano stores left in only major cities and that guitar stores will carry digitals. No small dealer will own their own band inventory and will simply cream-skim the rental and lease plans, leaving the real profits to the NEMCs and the Music and Arts programs. Lessons will become the strongest part of many operations. Any services such as repair, delivery, instruction, short-term rentals, set-ups and restringing can become more profitable.

“As for the Internet, I suspect all retail stores will have a Web site and try to develop business through that medium. Personally, I still like the telephone. I also prefer the type of multiple listing service that allows hundreds of dealers to list 30 to 100 items at one major site listing. The saddest part of the Internet is the opportunity for weaker and less competent sellers to flood the market with low-grade, mislabeled, marginal products. The consumer always wants something for nothing and, sadly, there is not a week that a customer comes in with an instrument that cannot be played that was purchased on the Internet.

“I see a continued softening of the large purchases but a continued strengthening of music education as a whole. Chinese products are beginning to improve dramatically and cautious optimism will prevail in the retail marketplace. Controlling costs and slowly increasing margins will allow us to survive in the future.”

PRODUCT OF THE YEAR: “Fender G-DEC or Baldwins Hamilton Console in Cherry or GEMs PRP 800.”

MASSACHUSETTS

Kurlan Music Center

Worcester

Paul Gervais, president

“Were running at three percent over last year, but I expect a busy last quarter. It seems like the economy has been depressed. I think that gasoline prices have really hurt a lot of people with marginal incomes. After all, who likes spending $60 to fill up their car?

“We were fortunate enough to have a Guitar Center open up in the area. They supposedly will create more business for all. Well have to see As far as the rest of our competition, one is a Worcester mainstay and the others are chain stores.

“Without a doubt, guitars are our biggest seller. The Fender Strat, in all the various models and colors, continue to fly out the door. The weakest sellers are computer software and accessories. We dont pay enough attention to it, probably due to its low profitability.

“We should raise the MAP. All the vendors should follow Fenders recent MAP change. This makes everyone more profitable. If the vendors dont open their eyes, all the privately owned shops will slowly disappear, and then whats left?

“Our Web site is for information only. We use eBay to dump old/dead stock.

“I predict that The Patriots will win the Super Bowl, the stock market will struggle, and the Feds will impose an Internet tax.”

“All the vendors should follow Fenders recent MAP change. This makes everyone more profitable.”

PRODUCT OF THE YEAR: “The Roland BR600 Digital Recorder is really a great item. Sleek design, easy to use should be a great seller for the holidays.”

MICHIGAN

Herter Music Center

Bay City

Fred Herter, CEO

“Were down. The politicians dont want to admit it, but theres a recession going on. In Michigan, Delphi is one of our major players, and GM is another, so when you have a bunch of people taking early retirement, and new hires are getting $14 an hour instead of $30, its tough.

“We have a Guitar Center here, and Fender is in their back pocket. If Guitar Center wants to sell something at a certain price, Fender bows down and puts it at a MAP that kills stores like myself. I was a loyal Fender dealer for 50 years, but I dont sell them any more. Its not profitable, especially with all the colors and models.

“Were big on school service. We have a lot of guys on the road servicing school and its good, except for the problems with Wal-Mart, Sams Club, and now Target selling Gibson/Baldwin products. Its takes advantage of the marginal parents who never experienced music themselves and they cant justify $800 for an instrument at a music store that they see selling for $200 at one of these big-box stores. And they learn to pick them up with their bottle of milk and hamburger.

“Organs and acoustic pianos are weakest. I think its because baby-boomers are not attracted to organs. In acoustic pianos, the digital models are so much better than they used to be and have all the bells and whistles, so the first-time buyer is easily swayed toward them.

“I think the main concern is the loyalty of companies to the guys fighting in the trenches were creating the desire for the product and some of the bigger companies like I mentioned the manufacturers are putting all their eggs in one basket, and disregarding the smaller guys who arent given a chance to compete.

“I have a Web site. I use eBay to sell some products. I havent gotten to the point where Im selling right off my Web site. Its probably something well have to look into.

“If we can turn this economy around, we hope we can get better. But in Michigan its especially tough. All the music stores in the region are struggling.”

PRODUCT OF THE YEAR: “Seagull guitars are doing tremendous business. They dont sell in the big- box stores, and we have been able to do reasonable margins on them.”

MINNESOTA

Alexandria Music Store

Alexandria

Jim Langman, owner

“Business is up this year because we are just good at what we do and Ive been at this a long time now! We are up about five percent this year. We give around 400 lessons a week on guitar, piano, violin, and so on, so traffic has been steady and lessons have been good for our business.

“The real estate economy is down, but tourism is a big thing here because of our lakes region, so tourism is higher this year and we are getting Minneapolis and Fargo people who travel to their summer vacation homes. Alexandria has a population of about 10,000, and in the summertime it goes to over 23,000.

“One of our local competitors just went out of business. We dont have any big-box stores in this area, and the closest is about 160 miles one way and 120 the other. We do have a Wal-Mart, but they really arent competition.

“Guitars are our strongest selling category right now, and Alvarez is the best-seller overall with their RD8. Basses are our weakest sellers right now, but that goes in streaks. Theyll be back.

“We are losing a lot of stores in the industry, and that is one of my main concerns. We dont want to lose all these small businesses and have the big boxes own everything. I would think that our trade organizations should be supporting the smaller business better than they are.

“I use the Internet for research and we have a Web site. The Internet, as far as people ordering online, isnt really hurting us. Minnesotans are very touchy-feely, and they want to see and play a guitar before they buy anything. I have sold off of our Web site, but that isnt a key for us.

“I think business the next couple years is going to be about the same until the next presidential election. The war and Bush is slowing everything down and people are just dissatisfied, and I really dont blame them.”

PRODUCT OF THE YEAR: “Alvarez acoustic guitars are just amazing right now.”

MISSISSIPPI

Harmonic Sounds Music

Jackson

David B. Ambrose, president

“This year has started out slow, but throughout the year it has increased to be a pretty positive and productive year compared to 2005 when we dealt with the hurricane. The economy is pretty much the same.

“Our strongest-selling product right now would be the marching band equipment and marching percussion equipment. We are a strong Jupiter, Dynasty, and Buffet company and we sell these products to most of our customers. Guitars are our weakest. We are in an area that is not really interested in guitars. In our area, marching band is king!

“Of course, I have the same concerns as many other vendors, Im sure: Internet sales. Whereas the larger companies are selling products over the Internet at MAP (i.e. woodwinds and percussion etc.) the customers come in the store thinking they can get the same price in the store. We basically use the Internet for strictly giving our location and we dont really sell products over it.

“2007 is going to be a marvelous year, in Jesus name!”

PRODUCT OF THE YEAR: “The Casio Workstation – the WK series. We cant keep enough in the store.”

MISSOURI

Dexter Music Center

Dexter

Steve Agee, owner

“I opened this store in November of 2004. My first year was excellent and surpassed my projections. In the second year, we doubled business every month from the previous years month. Im smokin. This town has fewer than 10,000 people, but were pulling from a 200-mile radius, so we continue to grow.

“Theres not much poverty or welfare in area. Jobs are good, and theres little unemployment.

“My local competition is found in the neighboring towns of Sikeston and Poplar Bluff. Since Ive opened up theres been three music stores in Sikeston go out of business and one in Poplar Bluff.

“Gibson has been doing great, and the USA models sell well. The Epiphone line has catapulted recently. They have great lines, but you have to actually have some stock. Im a Gibson dealer, and when you walk in the store, you know it. I have 200 Gibsons hanging on the walls. Its the same with PRS and Taylor. I have depth and width. If you stock half a million dollars of guitars, youll sell $100,000 worth! [Laughs.]

“Crate amps are doing really well, which was a total surprise. I almost didnt stock them at all but then I agreed to take them, and they smoked everything. I own three myself and they are fantastic.

“Takamine and Ovation acoustic lines have not done well for me and Im trying to close those outs. With all the advertising Takamine does, I was shocked not to get a good response. Gretsch electrics are also very slow, but I sell a lot of them online.

“Im doing some work on my Web site to make it more friendly, and Im doing some selling there. Im getting calls from all over the world. Its been great. I get a lot of tips from Gibson, and they recommend me to people.

“In 2007, I want to continue to grow. I think that it will because I still have untapped avenues. That means getting out more online, making the Web site more attractive. I believe Im going to double my business.”

PRODUCT OF THE YEAR: “The Gibson J45.”

MONTANA

Morgenroth Music Center

Missoula

Gary Bowman

“Business is up about 18%. A couple of reasons are because we have better consumer financing available, and we have really worked with our sales staff on product knowledge, training, and sales presentations.

“The economy seems to be about the same as last year. I think people are concerned about gas prices, which are now beginning to let up.

“We are a full-line store, and we look at our competition in the music products industry as being more global, such as the Internet and catalogs. We dont have any big-box music stores around here, other than a Wal-Mart thats selling the Chinese instruments. When those instruments come into our store for repair, we try to not alienate a customer because of a purchase they made. We first encourage them to try to return the instrument, and if that doesnt work, we will take it on a trade just to get them into something that is of better quality.

“In pianos, the Yamaha Clavinova is moving. Taylor guitars are doing really well for us with Martin almost right with them. The Korg tuners are a very good product, and band and orchestra-wise, the Yamaha Allegro line of step-up instruments is strong.

“Our weakest-selling category is sound modules. We dont stock a lot and there is such a strong learning curve that goes with them. The mark is generally not as good on those products for the amount of training and knowledge you have to keep up on.

“Being a brick-and-mortar store, we see the Internet gaining more power every year, so I have concerns about that. I am also concerned about the amount of people who just jump into the business temporarily. I think the music business is an easy business to get into, but a hard one to stay in.

“We have an information-only Web site with a Contact Us section. We use that and we follow up with e-mails and make sales that way. We use the Internet a lot for information not only on our product, but on our competitors product. Some of our vendors are doing online sales training for their product, and we take advantage of that.

“In 2007 we are looking to have an even stronger year because we are seeing our school enrollments going up. The school programs in this area are very strong.”

PRODUCT OF THE YEAR: “The Roland V-Drum.”

NEBRASKA

Star Music

Lincoln

Jon Hischke

“Were up a little bit. The majority of what weve done in the past is school band rentals, and we recently moved to a bigger place. Now we have three times as much space and thats contributing to our growth.

“The local economy is pretty good. Of course, the housing market is weird everywhere, and that has an impact on the local businesses. Overall, Lincoln seems to be holding its own very well.

“Dietze Music is the only real competition as far as rentals go, but since we now have more space, we introduced a line of nice acoustic guitars, mostly offering the smaller sizes to appeal to beginners and children taking lessons. We do have a Guitar Center that opened up a couple of months ago, but the niche I got myself into is more toward younger children, and I focus on the educational end of it, so I dont see them as competition too much.

“With the rentals, people take what I pretty much give them. And we have some books, but pretty much stock method books for individual teachers with their own studios.

“Im not affected by any of the mergers that have happened. Ive gotten myself into a fairly narrow educational niche.

“Weve always done better than the year before, and our old space was a little off the beaten track. Now were on a busy street with more exposure. And well be doing some direct mail and in-house demonstrations and presentations. Were taking it fairly slow and steady.”

PRODUCT OF THE YEAR: “Im really excited about the Phil Jones Bass Amplifiers. Its the best amp ever made. And the P. Mauriat line of saxes are very popular here, especially with the [University of Nebraska].”

NEVADA

Sparks Music and Learning Center

Sparks and Fallon

Mike Manning, owner

“Our 2006 year to date at our main store is $600,000. Last year was $568,000 for the whole year. We will close at around $800,000 to $850,000 which will be about 50% up from 2005. Our Fallon store (less then one year old) pays for itself, but the numbers are smaller there as we are just beginning to develop our student base. It will not take off until the first quarter of 2007. We are less than three years old, so our growth is unusually aggressive despite several area store closures and their liquidation sales.

“We have more than 400 students and are growing at 30 per month without radio or print ads. We have innovative programs like student level 1 showcases, which each teacher is encouraged to help his or her students with. We use the Berklee Get Your Band Together book and CD as part of each lesson. Once a month, we hire a band and have studio students play live what they have learned with a pro band. We also have monthly Teacher Shows, which are a chance for teachers to show off.

“The economy is fantastic, with huge growth everywhere. I knew we had two to three years to get Sparks Music off the ground before Guitar Center came, and not knowing where they were moving to made me nervous, but our desire to make our stand helped us build on our strengths apart from an unknown looming reality.

“Our retail side has been financed entirely by our studio. We designed a system in which we manage the students as clients and pay the teachers as employees and associate private contractors at various pay scales. We manage teachers and students, retail, repair departments, and rental with a staff of five part-time employees. Dolores, my wife, is the real powerhouse of this venture.

“On the retail side, we sell all categories fairly well. Of course, guitars — Michael Kellys the bomb! We do well with B.C. Rich and Ibanez at our Fallon location and Traben, OLP, Floyd Rose, and Aria here. Give me a guitar under $475 any day of the week! We sell Hardman pianos by having several samples and having a sales book to order from. This way we are not sitting on a lot of inventory. Piano sales are not good for us, but students and customers feel good seeing them in our store anyway. There are probably a lot of collateral sales due to this. We sell Yamaha, Korg, and Viscount digitals, and although they are not selling well yet, they will and we are ready for that. We love Mapex drums, as they just have the price point for us. We also sell Tama in our Fallon market.

“We tried all the Web ideas to no real avail in the first two years. I signed us up to a Yellow Pages.com fiasco in which the sales rep convinced me they would market our site and bring us huge sales. Zip. Cost? $2,000 and I had to fight them and I lost! Now we have Hanser Complete. That was the best marketing tool we could have invested in. We also have a Web site marketing company and another Web site tool we pay for. I dont hire anyone who does not double as a Webmaster. We make several sales per month, we have a tour of the studio button, in store stock, pre-owned and consignment sales button, and lots of info on our events. Its been a painful exercise, but the Web gives us a big look for less than newspaper ads.

“My prediction is as long as parents want their kids to grow up with the opportunity to focus on something other then the state of dismal world disfunctionality, they will encourage and support music in their homes, churches, garages, and headphones. We are in the fantasy-fulfilling business of making the music we can, and loving the music we cant make without a jealous heart.”

PRODUCT OF THE YEAR: “Michael Kelly Guitars.”

NEW HAMPSHIRE

Ear Craft Music

Dover

Andy Cacarillo, salesperson, drum technician

“This year is more cautious than last year. The economy in the area, is about the same as 2005.

“We have to compete with chain stores like Daddys Junky Music, Guitar Center and online music distribution. Were a niche market, but you have these chain stores with all these specials and they can buy in bulk. But then you have a product and they have nowhere to go with it, and thats why we have a niche.

“Fender or Taylor guitars are our strongest. The Taylor 110 and 210s are doing really well.

“Online pricing is my main concern. You get a very low price on something, but the quality is equally as low. We have people buying something online and getting ripped off and have to talk to a person. Thats detrimental to us because they come in here with something online and have to find out how it works.

“We expect the same kind of growth next year. The idea is that our niche will become greater when people want a more specialized service. I think when people realize what they get in an online store, you cant get your hands on it … when you come here you can see whats going on with the stuff. Thats our biggest attribute.”

PRODUCT OF THE YEAR: “The Taylor GS-1 or the Taylor T5.”

NEW JERSEY

East Coast Pianos

Fairfield (corporate office and showroom)

Enrico P. Aquino, president

“This has been the slowest summer season in the past 10 years. Business is down between 10 to 15%. Since 2005, the New Jersey housing market has slowed and costs including the price of gas have risen significantly. Customers are much more cautious. The average customer once spending $8,000 is now only spending $4,000. We have a very dense population and a large number of dealers in a very concentrated area. Several small dealers have recently closed their doors. Being a very aggressive dealer, we are taking this down time to reevaluate our inventory and redirect our marketing plans.

“Presently, we are selling more used pianos and entry-level pianos. We are the direct importer of the J. Strauss & Son pianos. It is a full line of vertical and grand pianos. Our technicians and sales team is very happy to sell and service this product. We have been doing very well with it. High-end piano sales are still steady, but we have observed a large drop in the sales of the middle-line products.

“Advertising that was successful several years ago is not as effective. Todays market is much more complicated. There is a severe decline in the response to newspaper advertising and a similar decline in response to radio advertising. Direct mail campaigns still work and the response to Internet advertising has increased. Our Internet sales are increasing every month. We have an excellent staff managing our Web site. We also have a large network of movers and technicians that has allowed us to become very successful in this new avenue of trade.

“I think that there will not be much improvement for 2007. It is a time to stay focused and maintain our strengths.”

PRODUCT OF THE YEAR: “Our two best piano lines are the J. Strauss & Son pianos and the Hallet, Davis & Co. pianos. Eighty percent of the pianos that we are selling are Chinese manufactured.”

NEW MEXICO

Chappells Music

Alamogordo

Nancy Lee Jones

“Business has been different than last year. Times that were usually good were slower, and times that were usually slow were better. It was all turned around, but overall we continued to improve from last year. Not as much as previous years, but we did go up in sales.

“The economy in this area is very depressed. I think the average family income is around $35,000. People just dont have a lot to work with when spending.

“There is only one other music store in town, but for a while we were the only one in town. Its always better to have another, otherwise people drive out of town for other music stores.

“Entry-level guitars are doing good. Ibanez, both V-series and the Performance series, are really moving. For the last couple of years, people have come in and said, Ive always wanted to learn how to play a guitar.

“DJ equipment isnt a fast mover for us. There are a lot of DJs around who put together a home stereo, but dont have the money to get a real PA system for themselves, so everything is just pieced together. There are some really nice units available now to do DJ work, and I have it available, but I just cant sell it because local DJs cant afford to buy it.

“We work with Peavey, and they are really good about watching the MAPs, as is Ibanez, but some of the other companies arent. People are very price-driven, and they will shop elsewhere thinking they are getting a better bargain, even though they are getting a product that isnt set up, or its warped. It seems like these other companies dont really quality control anything before it is sent out. So customers come to us with warped instruments and expect us to fix them.

“We did the Internet thing for a little while, and found that at least 90% of the queries we were getting were scams with stolen credit cards. It just wasnt worth it. We have a Web site, but we never update it because it is pretty much for information so customers know we have a place in town and where we are located.

“I think 2007 will improve. I am hoping it will be a little more equal across the board.”

PRODUCT OF THE YEAR “The Boss Micro BR mini-recorder. Its a really cool product.”

NEW YORK

Barcones Music

Kingston

Tim Barcone, owner

“Business is up about 15% over last year. The economy is about the same and it wasnt that great to begin with. Most of my competition is being bought by Music and Arts or are involved with franchise operators such as NEMC and K&S. There are very few of us independents left.

“Our school rental program is strong along with our repair department. We purchased a local guitar shop in July and it is too soon to tell how that will turn out. Band instruments sales are the weakest area due to Internet, mail-order, and box stores.

“The import trend is not going to stop any time soon. I think three-quarters of our manufacturing will go overseas. The competition among dealers for rental students will increase with absurdly low trial rental fees undermining the school music programs. Educating the teacher is paramount so they dont let these affiliates ruin their programs with high dropout rates.

“We are not using the Internet at this time, but are in the process of building a Web site. I think 2007 will bring more of the same, more consolidation for dealers and manufacturers in order to stay competitive.”

PRODUCT OF THE YEAR: “Fender Standard Stratocaster.”

NORTH CAROLINA

Fredericks Music Company

Goldsboro

Carlton Frederick, president

“Compared to 2005, business is about the same. And compared to 2005, the economy overall seems down. Competition for us is very tough. There are too many competitors, for one thing.

“The strongest products for us are guitars and amps, particularly Fender and Ibanez. The weakest area is pianos due to products being Chinese, and also the hike in gasoline prices keeping people away. Im mainly concerned about the Chinese products, gasoline prices, and lack of jobs in this area.

“We use the Internet for products and information. After 46 years in business, we have watched business good and bad. We just do our best to go with the flow. This is a family business, and we try to work business conditions out the best we can. We are a complete-line music products store with the same lines for many years.”

NORTH DAKOTA

Red Star Guitar and Drum

Fargo

Troy Salonen, co-owner

“Business this year is up by about seven percent. We are the new place in our area and we are seeing a nice increase in traffic and terrific repeat business. The economy here seems strong. Obviously, nobody liked the high gas prices this last year, and being a bit of a luxury item we felt the squeeze a bit, but the prices have come down and people are spending a little more freely now.

“There are a few well established music stores in the Fargo/Moorhead metro area. We cut our teeth at one of those and felt the need was there to open a different store with new products not being offered in this area and with much more competitive prices. Opening a new store here with other shops already existing, the competitive juices have been flowing from every direction.

“The strongest-selling product category is entry-level to mid-priced electric guitars. Schecter has introduced some new guitars this past summer which have been selling well such as the C-1 She Devil and the Omen 6 always does well. The slowest-selling product category now is digital recording equipment. It is possibly due to people buying software for their home computers to do their recording.

“My main concern with the industry now is when some of the larger retailers use their buying power to actually influence the manufacturers. Whether it be to simply command a better price, or to keep other outlets from selling products online, it makes it difficult for the smaller independent dealers to compete.

“We have a brand new Web site (www.redstarguitaranddrum.com) we launched this summer. It has links to our manufacturers sites, contact info, and a new and closeout page as well. We will be opening an online store soon, too. I really think 2007 will be another good year with continued growth. As we get another year under our belt, more and more people will find us. I recently opened another location right next door to expand our lesson program and have added another great instructor. I think this expansion and addition will further increase traffic and awareness and ultimately boost sales.”

PRODUCT OF THE YEAR: “The entire line of Vox amplifiers. From the all-tube reissue Custom Classic series to the Valvetronix modeling amps and Tonelab processors, these simply sound awesome and are really fun to sell.”

OHIO

Bluegrass Musicians Supply

Columbus

Merilee Dempsey, assistant manager

“Ive been here for a good bit, and its a little slower this year. I just think everything is slower. I just bought a car yesterday and it was like vultures around me. However, I got what I wanted. Thats another thing. If youre going to spend money, you can say I want this for this. Theyre taking anything because its better than nothing.

“Were a niche market here. Were almost exclusively an acoustic store and almost exclusively a bluegrass store. And there is a lot of that music out here but many other stores dont carry that stuff.

“Along with instruments, we sell a lot of CDs, books, and strings. I think the Michael Kelly mandolins are awesome and the Gold Star banjos are outstanding. There is just so much there, so much value. Of course, Martin guitars are always good. Its hard to beat an HD-28 Martin. They make fancier stuff, but for the money, thats an amazing amount of sound. And its made in the USA. Big plus in my mind. Thats why I bought a Chevrolet. We sell a lot of Indiana guitars, too.

“I would love to see more American instruments. I dont like seeing everything going overseas. They can make an amazing sound for not much money, which would be hard to do here. I dont know how those people live on what they get paid. I like to see American products and American jobs. I realize you have to share some things, but it seems everything is going overseas, and that leaves Americans without jobs who want to work and need to work.

PRODUCT OF THE YEAR: “Intelli IMT-500. Its a new tuner I like a lot that I think is a godsend. It has a meter on it, its chromatic, and I think its wonderful.”

OKLAHOMA

Gardner Music Co.

Woodward

Leon Gardner, owner

“Business has been up considerably, and the physical location of our store is part of it, plus the fact some of our competitors went out of business always helps.

“The economy is up tremendously here, about 30 to 40%. A lot of it is due to oil, because our area has increased tremendously in oil production. Anytime the oil field pours money out, it helps the economy.

“We are in a small town, and we have no competition here. Our competition seems to be about 90 miles away, and we are far enough away from any big-box location to not be affected. We do have some of it, but not enough to make a difference.

“We are doing well with Takamine guitars right now. We also had a very strong school rental season, and did a lot of rental business.

“Our weakest product category right now would be acoustic pianos. The market has been down for some time on them, and consumers in our area just dont seem interested. The digital field has been going strong, but acoustics just arent what they used to be.

“Weve increased each year in sales and the oil field is being good to us, so 2007 should probably be even better than this year.”

PRODUCT OF THE YEAR: “The Peavey SP series has done very well.”

OREGON

Marilyns Music Plus

Baker City

Tim Keneipp, manager,

sales & marketing

“Were up 27%. Weve remodeled, brought in new product lines, put on in-store events, and opened a stage in the corner of the store. Weve also diversified. The local economy is all right its not booming or anything, but its been steady.

“We have one guy who used to work here who went and opened a store, but hes about to sink like a drowning cockroach. [Laughs.] We dont have any other local competition. Were in a small rural market. Our town has 9,600 people and there are only 16,000 people in the entire county. But I bring in business from four or five outlying counties and we actually get some international and national pass-through traffic.

“Strongest for us are mid-range acoustics guitars, from the $400 to $900 street-price range. Seagulls and Breedloves do well for us. Pianos and keyboards are our weakest area and that has to do with the product mix. Of course its band season, and theres a pickup in that, and accessories and drums, especially hand drums.

“Being smaller, the Internet mostly impacts us in two ways. One, I make more money off accessories percentage-wise than guitars — thats where our online competition is greatest. Two, MAP gets confusing when you have a company like Ibanez working with Musicians Friend and they give them an exclusive on a product that is basically the same as one you have but in an exclusive color. I cant get it, and that exclusivity screws up the concept of MAP. Like an Ibanez bass basically identical except for a color, and Musicians Friend gets to sell it 20% lower than what I can, and I cant even get that exact bass.

“We have a Web site we put up two months ago, and have some guitars for sale on it. We use it for a lot of promotional things. Our business plan includes selling more on it.

“My prediction for 2007 is Bush gets hit by a meteor oh, wait, thats a wish. But I say midrange guitars will stay up, and for us, its going to be a really strong year because a lot of the programs weve instituted this year are kicking in. Being in a rural market, we have to reach hard and far.”

Product of the Year: “Art & Lutheries A&L Dreadnought.”

PENNSYLVANIA

Brighton Music Center

New Brighton

Richard Schiemer, general manager

“We were down about five percent over last year, mainly through a decline of walk-in traffic. Some of this has to be attributed to the rise in fuel costs. The economy is about the same. There are revitalization projects going in the river towns in Western Pennsylvania, basically a fresh coat of paint, new sidewalks. The hope is that it will draw people to these little towns. Time will tell.

“All Alvarez guitars – in particular the RD20S stand out. This has been one of our strongest lines over the years. The Korg line of tuners is our strongest-selling accessory. Computer recording equipment is our weakest. One of the problems is the ability that people have to download whatever software they want to from the Internet for what they see as free. The profit margins are so short on these items. By the time the salesman has explained how it works to the client, the sale has actually cost the store money.

“Suppliers are getting further and further away from helping the independent retailer. It is harder to find suppliers with good customer service. Freight costs are continuing to rise and freight deals are harder and harder to achieve, even with the price of gas beginning to retreat.

“We are currently re-designing our Web site to be able to service our existing customer base better. Allowing them to make payments for open account and rentals will also drive traffic to the site. I dont see us being able to compete with the larger, more established sites. Our goal is to make things simpler for our existing clients and then trying to drive more traffic to the site.

“We also sell instruments on eBay, mostly vintage or rare. We have started to take consignment items for eBay and are considering an eBay store.

“The Internet is quickly becoming one of the strongest competitors to all independents. The notion that this industry is one that people need to touch and feel before they buy a guitar, or any other instrument, is quickly going away. As the younger generation grows, they are used to doing everything on the Net, so a strong Web presence is required. The trick is to be able to sell on the Internet without having to give away all the profit.”

PRODUCT OF THE YEAR: “Yamaha EMX series mixers. This has been a great redesign of this product. The new lighter weight and the addition of more power has really changed which model of powered mixer we are selling.”

RHODE ISLAND

Ross Music Sales & Service

Warwick

Dave Ross, manager

“Business is about the same as 2005. The economy is about the same as last year, too. We have to compete with the new chain stores that have come in over the last five years. Most of the middle-size stores such as ours are slowly going away. Were one of the last mid-sized stores left in Rhode Island.

“Im a Gibson dealer and the whole line stands out. They cover everything from jazz to blues to heavy metal. As a whole, its my flagship line and the bulk of my business. My weakest seller would be deejay products. That has died out big-time. Live music is back.

“The main concern I have is what is going on with how much they are going to let these big-box stores like Wal-Mart get into my product range, such as guitar strings and cords and stuff popping up.

“I actually am using the Internet more as an image-builder and information center for my store. I tried the whole e-commerce thing and it wasnt even worth the effort and investment involved so I backed off to just an image-building Web site. It just helps. The customer goes to the manufacturers Web site, which links me to being their dealer in their area.”

“I havent given next year much thought. Im just trying to get through this year.”

PRODUCT OF THE YEAR: “The Ludwig Accent Custom Elite drum set.”

SOUTH CAROLINA

Andy Owings Music Center

Myrtle Beach

Andy Owings Sr., owner

“Im 65 and I started when it was a fun business. But now its not fun. Its survival. A lot of owners Im sure look at figures all the time. I have a gut feeling by my bank account where we are; Id say its up, but how much, I dont know.

“The economy is probably up, too. If I had to give you figures on my area exclusively, it wouldnt be as rosy. Were in a high tourist area. As long as the tourists make it here, sales like guitars climb. If the tourist industry drops and not as many people visit the beach, my sales go down. We sell to a lot of people who visit on vacation. Were in a major mall. If I had to depend on the locals, I dont know if I could even break even. Tourists come here and they see the selection and what we sell. You talk about my market area, and youre talking about the majority of my market area is the Southeast. Its everyone who visits Myrtle Beach.

“I look at my competition basically as my partners in a way, but my biggest competition is not the guy downtown. My biggest one is Musicians Friend and Guitar Center and ABC Music the big guys. Thats your biggest competition. The guy down the street is doing the same thing.

“Guitars are doing well. Fender and Ibanez are very strong at the lower-medium price. At the high end, Taylor is just shocking me. We sold more Taylors in a quarter than Gibson acoustics in a whole year. Thats just blowing my mind, and customers are paying high-end dollars. Were doing great with PRS, too.

“There is no loyalty with the manufacturer and the dealer anymore. They dont stay with the company that has stayed with them all the years. They will dump them and do what is fashionable. The manufacturers dont treat all dealers equal. We are all in this together and should be treated equally. Guitar Center doesnt bother me. Ill play with the big guys as long as in the game we have the same ground. We all should start with 0, but when I start 20 points in the hole, its hard to climb out of.”

PRODUCT OF THE YEAR: “Yamaha Disklavier Mark IV.”

SOUTH DAKOTA

Haggertys Music

Rapid City

Tom Haggerty, vice president

“Were about the same as last year, but overall, were pleased. There are months when were way down, and right now is a very critical time. The last two Septembers weve been way up and I thought it would be a miracle if we made last years numbers again, and were thanking the Lord for that.

“The local economy is solid. We have a large Air Force base here, and we were on the closure list but now were not on it and thats huge. Combo products in particular would have been affected. And now it turns out they are adding jobs to the base, and thats good.

“The truth about our local competition is that theyve all died. We just had the most recent competitor close his doors a month ago. So now our biggest competitor is the Internet. For the younger generation, their first stop is the Internet. Our shopping area contains only around 150,000 people, but the irony is were the second-largest city in South Dakota. [Laughs.] There are more wild turkeys than people in this state.

“We try not to drop all the way to MAP, and try to discount 20% and start there. In the old days you could start with retail price but now they would just walk out the store if its significantly higher than whats online. We still wheel and deal from there, but that discount approach helps keep our combo business good.

“Otherwise were very diverse. Were in sound installation and maintain margins there, plus get paid for labor. And our repair facility its absolutely critical in a smaller population to be all things to all people. I have an incredible staff.

“School music products are strongest, followed by guitars. Electric guitars have been weaker than normal. High-end drum sets sales are pretty much nonexistent. We sell a lot of student-level, but getting someone to spend over $1,000 for a drum set is very difficult.

“I really believe that for 2007 sound installation will be what keeps us growing. We just have to stay lean and mean, and thats why we survive. Were optimistic. Weve been opened since 1979 and this is our best year yet.”

PRODUCT OF THE YEAR: “Im chagrined to say it, but the Fender Squier Drum set. Its a great value and the hardware is good. Weve sold a zillion.”

TENNESSEE

Lunsfords Musical Instruments

Knoxville

Sonja Dittrich, owner

“Business has been great this year — up at least 10%. I think the economy is better, but with me its more my store – the way were looking at it is why its better. I had to come down on my prices to Internet prices. Instead of my typical 25% off, I had to go to MAP prices. Now Im making more sales because my people are looking on the Internet and they ask what I sell it at. If Im at the same price or $25 higher, theyll come and get it from me. Even though Im losing profit, Im gaining. If you cant beat em, join em.

“Care kits and stands are our biggest product category. We have sold many of them because we put it on our rental agreement, and that is a good selling point for any store, especially to the surrounding schools. When they bring the agreement in, they just circle it and add it on.

“Everything going overseas concerns me. Eventually itll be like a VCR. If it tears up, you throw it away and get another one. I had a man in yesterday who bought a trombone for his kid for $105 online and of course the father didnt know. I said, Please, by Christmas get him another one, youre only holding your child back. He didnt know. He just thought he got a great deal. I said put it on the wall as a decoration.”

PRODUCT OF THE YEAR: “The Bach soloist trombone, model TBSOL210.”

TEXAS

Murphys Music

Irving

Mike Murphy, owner

“Business is up about 10% because the economy is just getting better, I think. The dropping gas prices have created a flow of people back into the store. Every time gas drops 20 cents, traffic goes up about 10%.

“Since Brook Mays went out of business, we brought in the band books and band accessories, something we never carried before, and that helped keep us at a steady growth. Other dealers dont seem to be doing as well as we are, but we are just staying aggressive and expanding our store by bringing in more inventory, which has paid off for us.

“Our biggest competition is the Internet, and next year we plan on growing our Internet business so we can sell off of our new site as well.

“PA is doing really well. We basically carry every product there is, and every department seems to be moving steadily, but PA is way ahead.

“The weakest part of the business right now is high-end guitars. Maybe because people with expendable cash are putting it back into the stock market, which could be why that is doing so well.

“My major concern is the manufacturers making and un-level playing field for us with Guitar Center. As long as we are doing a good level of business, we should be able to buy at the same price. I have a tough time matching prices if somebody is shopping me with Guitar Center. In this area, there are seven Guitar Centers.

“I think the industry is going to continue to grow, and we need to learn to change as the industry changes. Whether it is changing the products, or just changing the store around.”

PRODUCT OF THE YEAR: “The entire Yamaha product line.”

UTAH

Bill Harris Music

Provo

Bill Harris, owner

“2005 was a good year, and 2006 has been even better. We are 20% ahead of last year. The Utah economy is very good, houses are selling, and there are plenty of jobs. I think it is going to stay this way for the next year or two.

“We have tons of local competition, but we dont even give them a thought. We dont want to be rude, but we are much to busy too worry about our competition. We are just a family organization, and we keep busy.

“We sell a lot of guitars and amplifiers. Line 6 amplifiers are really moving, and as for guitars, the Ibanez and Schecter lines are doing great.

“Acoustic pianos are not moving. Ive been at this for 53 years, and I am scratching my head as to why thats the case. All the other stores north of us are having armory-type sales every month, so I know they are witnessing the same things. For some reason people in Utah just arent buying pianos.

“Now that doesnt mean we arent affected by [big boxes], because we are, but its not a life-threatening thing.”

“The biggest concern we have is that the average small dealer pays too much attention to his competition, instead of just paying attention to what they need for their own business. We havent had any type of a slowdown in our business with or without the big-box stores. Now that doesnt mean we arent affected by them, because we are, but its not a life-threatening thing.

“Very surprisingly, we dont use the Internet in our business. We dont have a Web site, but eventually my son will get one for us. Once it is up and running, there is no question that it will be an important part of our business.

“2007 should continue to roll. We are very optimistic and are just going to keep doing what we do best and run with it.”

PRODUCT OF THE YEAR: “The entire line of Schecter electric guitars.”

VERMONT

BE Music

Rutland

Brian Hobbs, president/owner

“Business is about the same as last year. Its about what I expected. The economy has slowly been going downhill in the last 10 years. We used to be the second-largest city in the state, and we no longer are. Were creeping up on fourth.

“Our competition for 10 years has been the discount catalogs, online sites, and eBay. We have basically lost all our local competition because its a tough area around here. Weve had some big stores come in here and try to make it. The closest music store is 40 miles away and its in the middle of nowhere. Weve outlasted five other stores.

“Acoustic guitars are our best sellers. Always have been. In our market, whatever is the cheapest is what goes out the door. As far as what we like to sell, the best thing for the buck is the Alvarez line. We do very well with Ibanez and Fender acoustics as well.

“Our weakest seller would be an even tie between PA equipment and digital pianos. One of the biggest problems is the discount catalogs offering these packages. They get around the MAP pricing by offering packages with the PA systems. We sell everything at catalog prices, but when they put those packages together, it kills you. And then the biggest thing with digital pianos is all the local piano teachers tell them they need to get an acoustic piano. Weve been trying for 10 years to drive home the benefits of the digital piano. It falls on deaf ears because they go by what the teacher is telling them.

“We dont use the Internet. Thats not why I started the business. I started it to serve the local community. Its something I always wanted to do. At this point Im so fed up with it, Id like to get out of it. If I wanted to use the Internet, Id do it out of my own house.

“You cant foresee things like war and other things, but as long as everything stays the way it is, I think itll be about the same. I dont think itll go up much or drop much. Its a unique area and a shrinking town, but things dont change much here. Even when the economy goes wacky, were about a year behind that. No matter what happens in the world, people still need their music. Its not like other things that are more recreation. Music is important to people.”

PRODUCT OF THE YEAR: “Behringer guitar and bass amps.”

VIRGINIA

Alpha Music

Virginia Beach

Eddie Hancock, owner

“Foot traffic overall is lighter, but those who come in are here to do business. And overall we are par with last year. The economy is a little slower with the announcement of our Ford F-150 plant closing and the possible closing of the master jet base Oceana. Theres caution on behalf of the buyers. Those who have money are still spending on high-ticket items. The chain stores are business as usual and the smaller independents seem to be holding the line.

“Guitars are our strongest sellers, both acoustic and electric. Gibson sales, in particular, have been off the hook and we owe that to the limited distribution of the product and kind of veering from other manufacturers philosophy of opening everybody with certain product lines. The Gibson thing is really strong because of their current philosophy of 200 dealers in the nation and they dont have the mindset of dealers that is opening anyone everywhere.

“Karaoke is the weakest seller. It used to do really well. Now most people are going online and demand fell off and it had to go.

“The real concern is most of our vendors race to zero and products go to mass marketers. Speaking of the mass marketers, I really feel its stunting the future growth of our industry and people who shop those stores generally get poor guidance. The instruments are not properly set up. People have to remember that these are not video games and rather than acing these things in a couple of hours, this is something that takes a lot of nurturing, instruction, and good advice. Unfortunately, they dont get that through these stores and the worst-case scenario is these instruments end up in the closet with all the other things that didnt work out. What that does is it takes a possible player out of the market who could go onto good things, and long-term customers.

“Were on the verge of launching an e-commerce site with more than 4,000 SKUs and a 24-7 shopping cart and we see this as the real expansion. Its the way to go rather than brick and mortar.

“Hopefully there will be a coup with the manufacturers and dealers that will demand one NAMM show a year rather than two, in a central location where itll be convenient for everybody, and itll help reduce the cost of the manufacturers showing as well as the dealers attending.”

PRODUCT OF THE YEAR: “The Rane Serato. Its deejay software and its absolutely off the hook.”

WASHINGTON

Noisy Neighbor Music

Lynden

Lawrence Miller, owner

“Merchandise sales are 11% above last year and lesson income is eight percent above last year. Lesson income has been limited by the number of studios we have. In November we moved into a new store where we went from three studios to five larger studios. We expect to see a lesson income jump. The economy here, if anything, has improved. There are two nearby oil refineries, which are probably doing very well, and an aluminum producer has added to its production. We are very agriculturally based here and that tends to stay steady.

“This store is located in a small town of 10,000 and we are the only music store here. Bellingham is 10 miles away and has several small to medium music stores but no GC yet. We do lose entry-level guitar business to the Costco, Wal-Mart, and Target stores there.

“Guitars are our strongest product category, although they are about even with accessories. Alvarez guitars are our standout brand. Keyboards are weak. We tried selling pianos but almost two years later we have sold three of the five we bought. We had Suzuki keyboards here but they were slow selling and we finally sold out. We are not stocking keyboards in the new location.

“My main concern is Internet competition. We tried just saying we would match any price but customers would buy online and tell me Oh, we knew you couldnt match an Internet price. So now all our instruments are priced the same as they will find them on the Internet and we even have a computer in the store with an Internet connection so we can show them we will match online prices. We dont make as much on a sale but we figure a little of something is better than all of nothing. Also master orders concern me: companies want us to re-up every year. I dont see why if we have a good representation of a manufacturers product, we cant just maintain that level with steady reasonable orders. Every year we have to cram our storage room, and even a rented storage unit, with overstock from another Master Order. I was letting my stock of Epiphone guitars dwindle in anticipation of another master order only to be informed they were increasing it by more than 2 times and with only SKUs of their choosing, effectively squeezing me out.

“I predict our business will continue to increase in the coming year. We are a friendly, helpful store and have many loyal customers. Lesson income is approaching, and will soon surpass merchandise sales. We have positioned ourselves as a learning store and are not reordering the more expensive pro-level instruments. There are plenty of growing families in the area and we want to be the ones they think of when they consider introducing music to the kids.”

PRODUCT OF THE YEAR: “Epiphone Casino, a great hollow-body electric you can play professionally right off the shelf for $600 MAP. But since Gibson is not interested in my business anymore, I will say the Alvarez RD20SC, a solid-top acoustic electric dreadnought that sounds great and looks better and can be had for a little more than $300.”

WEST VIRGINIA

Cheapbeats Drum Sales/WV House of Music

South Charleston

Phil Perry, store manager

“Business this year is substantially better than last year. The economy is growing. More folks are investing in higher-end gear. We are known as the specialty drum shop with the best selection in the area. We are actually a full service music store now with lines such as Line 6, Behringer, ESP, Ibanez, and Schecter as well as Tama, Mapex, Ludwig, Taye, Yamaha, and Ddrum on the drum end. We cater to the younger kids, which makes us unique in our area and without much competition in what we do. We also re-cover drums in cool, exotic, and vintage finishes. We actually have a working relationship with stores in our area. If we cant get what we want, well send you to the folks who do.

“Our best-selling products are Ludwig and Mapex. Our weakest is live sound reinforcement. We are just now beginning to really push it.

“My main concern about the industry is probably the fact that young people have so much to keep them occupied (Internet, computers, video games) that serious musicians may be a dying breed. We try to do our part to prevent such a horrible thing from becoming a morbid reality.

“We use eBay, of course, for used gear and we launched our Web site (www.cheapbeatsdrumsales.com) in November.

“The economy will grow, leaving more disposable income for consumers. I have seen an increased interest in musicianship in this generation of students.”

PRODUCT OF THE YEAR: “I personally just purchased a Schecter PT Fastback electric guitar for myself. I am in love with this product.”

WISCONSIN

Kraft Music

Brookfield

Ben Kraft, owner

“We are up. Right now were tracking 10% and may finish up ahead 15% or 20%.

“About 10 years ago, 95% of our business was walk-in. Now about 95% of our business is through our Web site. So the local economy has little effect on us. But well be moving into a new building in a different area where well again have a better showroom.

“Keyboards and digital pianos are 50% to 60% of our business and electronic drums are very strong. Most of us are keyboard players and have been doing it for a long time, and when we deviate from those products too much, the personal touch and expertise goes away and you lose your edge. Every day we try to figure out what people are going to buy, and its hard to do that with products you dont know.

“Our weakest segment is 61-key keyboards. Synthesizers and workstations on the lower end are just terrible. That whole market seems to be shifting over to software. Seems like were all fighting to keep hardware alive, but customers dont want anything to do with it. Workstations in the $2,000 to $3,000 range still do well. Customers want one good one rather than a rack, and those make the $500 and $1,500 keyboards go away. Anything with 88 keys still move.

“Two things that hit us are the cost of fuel and freight. We have to pay $150 on our digital pianos to get them to a customer. Right now the gas prices are coming down, but right after the election, I wouldnt be surprised if they shoot back up again.

“The other concern, the universal complaint, is the setting of MAPs. There are so many instances that the manufacturer is really not confident in their product and are afraid to charge for it. It seems like stuff is being given away on all levels. I dont know why it has to immediately go to the bottom price but that seems to be the trend.

“Im hoping 2007 will get even better. Every day we see people spending money. The key is having the products people want to buy and getting to the people who can buy them. The only looming concern is if something happens in Iran, or if theres another terrorist attack. But people seem interested in music. At least thats what I want to believe! [Laughs.]”

Product of the Year: “Yamaha YPG 625. Its an 88-key hammer-action portable keyboard, sells for $800, and the features are incredible.”

WYOMING

Hill Music Co.

Casper

Kurt Gilbert, manager

“Business has picked up, and we are up around 15%. Its a pretty good jump from last year, and the economy is going up a lot because they can afford to bring the oil out and all the natural gas and coal around here. Its a good time to be in Wyoming.

“We do have quite a bit of competition in Casper. We are a full-line store, and there is one other full-line in the area as well as a few guitar shops in town. We compete by bringing in a better-quality of instruments. We decided to bring in quality, U.S.-made brands and boutique products.

“Pianos are our strongest selling product category right now. The Yamaha Clavinova has been doing really well for a while now.

“My main concern is the cost of shipping. Thats really digging into our bottom line. Thats what it all boils down to.

“We are not making use of the Internet, and we dont have a Web site as of yet. I would say in the future we would need to get a Web site up, but as of now, I dont have the time to put into it to make it happen.

“In 2007 I predict we should see some increase and that its going to be a good year.”

PRODUCT OF THE YEAR: “The Mesa Boogie Lone Star Special. Its a high-end amplifier that has a great sound quality and is very well built.”