This brilliant article, featured in Rolling Stone Magazine, discusses how Gibson’s bankruptcy doesn’t tell the whole story about the future of the guitar. It also includes some great quotes from Andy Mooney, CEO of Fender and some important comments about female guitarists.
Headlines haven’t been kind to electric guitars. Slipping sales year over year made for a bleak portrait, and by last September, even Eric Clapton wondered if the instrument was on its way out. “Maybe the guitar is over,” he mused, responding to reports that electric guitar sales had crashed half a million in a single decade and that industry leaders Gibson and Fender were both in debt. As if fulfilling prophecy, Gibson, maker of the famed Les Paul model wielded by everyone from Jimmy Page to Slash, announced this month that it is filing for bankruptcy. The Guardian pondered the “End of the Guitar”; business news site Marketwatch asked if people might be “falling out of love with guitars” at last.
Actually, not quite. Guitar sales in many markets are on the rise, and the industry is in one of its more optimistic times. A report from research firm IBISWorld, which tracks guitar manufacturing in the U.S., shows consecutive growth in the last five years and a projected upswing through at least 2022. Even if today’s music fans are more likely to worship pop stars and rappers than their parents’ guitar heroes, there’s little to indicate that the guitar’s reign is over – and there might actually be more to show the opposite.
Gibson’s bankruptcy reflects much more on internal missteps than the health of the broader guitar industry, analysts say. The company freely admits its mistakes. Gibson took on an audio and home electronics business in 2014 that saddled it with debt; it’s pledging now to “unburden” itself of that division and “restructure” around its core business of musical instruments. “My dream had always been to build a major music lifestyle business, similar to what Nike is to sports, and grow beyond guitars. We tried to do that with the acquisition of a Phillips subsidiary and it didn’t work out very well,” Gibson’s CEO Henry Juszkiewicz tells Rolling Stone.
Juszkiewicz adds that as the company restructures, it will be able to “clean the slate” and “concentrate 100 percent of our energy into our competency in musical instruments” without distractions. Which makes sense: That’s an industry that made a steady $5.6 billion in U.S. revenue in 2017. While Gibson still has eyes on being a lifestyle brand, any future moves the company makes in that direction will be firmly tied to its guitar business, Juszkiewicz says.
It’s true that six-string electrics have stumbled a bit in popularity – but there are bright spots yet. Gibson’s electric sales rose more than 10 percent between January 2017 and January 2018, according to its bankruptcy filing. Doomsayers also forget to notice that sales of acoustic guitars have soared in the last few years, perhaps thanks to Taylor Swift and the abiding popularity of the instrument in country music and Americana. Taken together, 2.6 million acoustic and electric guitars were sold in the U.S. last year, up 300,000 from 2009, according to the National Association of Music Merchants. And IBISWorld finds manufacturing revenue has bounded back to pre-recession levels. “There’s very, very healthy growth in the guitar market. From our perspective, the industry has actually never been in better shape,” Fender’s CEO Andy Mooney tells Rolling Stone. “People are focusing on the Gibson situation which has nothing to do with guitars. For Gibson, the problem child has been everything else.”
Some of the perception that guitars are dying has been brought on by the retail world – of physical guitar stores on the street – shuttering fast. Guitar Center, one of the U.S.’s most recognizable instrument sellers, is in dire straits. A novice guitar player’s first bet these days is usually the Internet, which is the same trend being echoed across other industries like fashion and publishing. “Retail is Darwinian,” Mooney says. “We’re seeing a sway in retail to online – those retailers are growing by leaps and bounds.” Fender estimates that as much as 50 percent of its products, sold through a variety of sources, are being bought on the web. Robert Miles, an IBISWorld research analyst, says that while guitar manufacturing revenue is on the rise, it’s the reverse for guitar retailers, which are being squeezed out by big-box stores and online sellers like Amazon.
Just because hip-hop and pop are ascendant in the streaming age doesn’t mean there aren’t thousands of guitar bands recording and gracing concert stages every year, from newcomers like Empath to modern mainstays like the National. It does mean, however, that guitar makers have to find new customers. As the charts and stages change guard, companies are also stepping outside of a demographic upon which they relied for decades – white, male buyers – to ask themselves: Who were they missing all this time?
When Fabi Reyna first started She Shreds, a magazine for female guitarists, five years ago, few in the industry paid attention. But now – with those old guitar heroes exiting the zeitgeist and Taylor Swift and her ilk drawing massive crowds of female fans and imitators – instrument-makers are taking notice of a huge audience they’d ignored. Guitar-wielding women, from Lucy Dacus to Soccer Mommy to 19-year-old Lindsey Jordan of Snail Mail, have made some of this year’s most remarkable albums. Perhaps the enormous potential had been there all along.
In a consumer survey across North America three years ago, Fender found that 50 percent of new guitarists today are women. The company has since sought relationships with female artists and highlighted women in marketing campaigns. It also decided to focus on more on the future than the past, launching several new guitar lines and making them customizable to score points with millennials, who favor the ability to personalize designs. “We are going after younger consumers. We decided, when I joined, that we needed to pick up the pace of product innovation, to abandon names of the past and invest in names of the future,” Mooney says.
Those new markets are already flourishing on their own. Reyna’s magazine has expanded and partnered with various music brands; projects like the Girls Rock Camp Alliance are helping set up female-specific guitar programs over the world.
Fender also sees education as an area ripe for potential. The company found in its survey that while half the guitars every year are bought by first-time players, 90 percent of those players are abandoning the instrument in the first year; the 10 percent who stick with it, on the other hand, are willing to shell out as much as $10,000 on guitars, amplifiers and accessories over the course of their life, making it paramount – i.e., highly profitable – for guitar companies to get people to buy guitars and actually stay with them.
To that end, Fender launched a subscription service last year called Fender Play, which offers online lessons for fretted instruments at a fee of $10 a month. The company saw a 14 percent growth in dollar sales soon afterward. If Fender succeeds in reducing the abandonment rate, Mooney says, “we have the potential to double the size of the industry. We think it’ll be quite a significant needle-mover in the industry.”
Juszkiewicz points out there is also a lot of money in the opposite endeavor: catering to lingering nostalgia. Gibson offers several lines of guitars resembling those famously wielded by Jimi Hendrix, Slash and Jimmy Page. It has developed a manufacturing process that speeds up the aging of wood, giving guitars – and their sound – an immediate, mature feel. Some of its new instruments are selling for as much as $500,000.
“Gibson guitars are one of the few instruments that has vintage value,” Juszkiewicz says, adding that the company has a solid base of older customers who, now that they’re richer, are buying the top-of-the-line Les Pauls that they admired and longed for in their youth.
As for guitar heroes on stages and charts, there’s a new – albeit different-looking – crop of them on the rise. Reyna points out that while Swift may have been the most noticeable female guitarist a few years ago, other acts like St. Vincent, Japanese Breakfast, Haim and Speedy Ortiz are also doing their part in getting an entire generation of girls into the instrument.
Guitars may also find a new home by toeing into the classical realm. Sharon Isbin, a Grammy-winning classical guitarist who founded the guitar department of New York’s Juilliard School, says collaborations between classical and popular music have blossomed. “One of the ways the instrument has benefitted from its iconic exposure in the popular music world – jazz, pop, rock, anything – is that it’s now something very familiar and cool,” she says. “It can cross over so many different boundaries and bring with it new listeners and appreciators. There are ways for those worlds to meet.”
Yet all of that is not to say the guitar market doesn’t face real challenges, demanding grit and innovation alike. While consumer interest is still there, hard work will be required to tease it into hard sales numbers. “The challenge is improving the instruments so they continually offer more,” Juszkiewicz says. There’s the completely divergent culture of today’s young guitarists to wrestle with, too: “They’re very different in the way they think, and they tend not to be traditionalists. We have a dichotomy where we have to satisfy those who are already with us and address a new generation’s needs.”
But Fender says it is doing better financially than ever, carrying less than $100 million in debt, and Gibson still sells 170,000 guitars a year across 80 countries. That’s not a bad starting line.