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THE Source for the Vintage Instrument World

Newsletter #33, April 2010: The Vintage Instrument Market
(Please browse our newsletter archives)

This newsletter is a seven-part series on the vintage guitar market, written in 1991. Needless to say, prices today are significantly different than they were then and the market has gone through many gyrations since these presentations were written.

Although these articles discuss vintage instruments, many of these same instruments are today fully twice as old as they were at the time the articles were written. The customers I had at that time are now much older and a new generation of customers has emerged.

While today there are numerous books devoted to the subject of vintage instruments, at the time these articles were written there were only a handful. Today we take the Internet, websites, and e-mail for granted, but at the time these articles were written, while a few dealers had computers, no dealers had a website, information was not readily available via computer access, and people were not communicating via e-mail.

Hindsight is always much clearer than prognostication, but I still find it interesting and informative to look back upon my thoughts of years ago and especially to analyze and compare the predictions I made in the past with the actual later outcome.

Please feel free to email me with any comments.

George Gruhn

Introduction

In 28 years of collecting and dealing vintage fretted instruments, I have observed radical changes in the economy, in society, in musical trends, and in the preferences of those who buy musical instruments-all of which affect the vintage instrument market. I have also heard an increasing number of statements that are inflammatory to my ears. For example, "Stratmania" is the result of dealers trading among themselves to artificially inflate prices; old instruments are as a rule overpriced and over-rated compared to new ones; collectors should be condemned for paying such high prices that quality instruments are unaffordable to musicians.

Such easy explanations, blanket statements and knee-jerk reactions are at best gross oversimplifications and are often misleading or just plain wrong. The vintage instrument business may be relatively young, about 30 years old, and it is still so small that only a handful of dealers make their primary income from vintage sales, but it is a complex, international business that cannot be explained in a single sentence or a simple allegory.

There are many forces at work that determine just what instruments are in demand and at what prices. I've organized them into the following areas:

The Vintage Instrument Market, Part 1: The utility market

When the vintage instrument business makes headlines, it's usually because prices have just skyrocketed (or plummeted) for '50s Stratocasters or a record price has been paid for a pre-war D-45. However, that's only one side of the vintage market - the high-end collectible side. As in any used goods business - automobiles, furniture, guns - there are two distinct reasons to buy a vintage instrument. One is for utility, to play it. The other is to add it to a collection, whether for investment purposes or personal enjoyment. The two reasons are not necessarily exclusive of the other, of course. You may pay a premium price for a collectible Corvette (pre-Stingray), but you may also drive it around town. Similarly, many owners of fine instrument collections, when asked if they actually play these instruments, will answer, "Every one of them." That doesn't mean you take chances with a valuable piece. You wouldn't park your vintage Corvette in a public parking garage every day, and you wouldn't take your mint condition Fender Broadcaster to your nightly gig at the local fightin' and dancin' club either. While the collectible side of the vintage market is the side that keeps dealers in business, the historical base of the market is on the utility side.

When I first started dealing guitars, during the folk music boom of the early '60s, it was the first time in American history when any musicians were interested in vintage fretted instruments. Prior to that they preferred new ones to used ones, and for a good reason-guitar design was evolving so fast that old ones couldn't compete with new ones in the music of the day. The evolution of Martin guitars from between 1925 and 1940 is typical. If you were buying an instrument in those years, this is what you would find:

1925: The new Martin is basically the same guitar your father or grandfather might have bought anytime after 1850. It has 12 frets clear of the neck, a slotted head, a pyramid bridge with a straight-across saddle running perpendicular to the strings, no pickguard, bar-type frets, and an ebony reinforcement rod in the neck. It was designed as a parlor instrument, so it has a small body (000 sizes were available but rare). It's strung with gut strings, so it has light bracing under the top.

Many Martins made in the previous 75 years would be suitable for the type of music you played in 1925, so there may well have been a demand for vintage instruments then. The trouble was, there was no supply. From 1850 to 1897, Martin made an average of only 125 guitars a year. From 1898 (when serial numbers were instituted) through 1920, the average output was only 341 a year. By the end of 1924, after 91 years in business, Martin had made a total of only 22,000 guitars (the same number they sold in one year in 1971), which hardly provided an ample supply of used instruments. This market condition would prevail through the first half of the century so that even if these instruments had not evolved, there were simply not enough of them in existence to provide a supply base large enough to seriously compete with the demand for new instruments.

1930: Your 1925 Martin, only five years old, is somewhat of a relic next to the new OM model. In response to the public demand for steel string guitars, Martins now have heavier top bracing. The OM has a 14-fret neck and a solid peghead with banjo-type tuners. It has the new "belly" bridge with the saddle slightly slanted for better intonation, and it has a small pickguard to protect the top.

1935: If you passed up the OM's innovations in 1930, you don't have much choice in 1935. The 14-fret neck and solid peghead are standard on Martins now. The fret design is new, with a rounded top and a tang into the fingerboard. To better withstand the tension of steel strings, the ebony neck bar has been replaced by a steel T-bar and the top bracing is heavier than it was in 1930. The small, OM-size pickguard is now full-size and standard on all Martin models. And with a compensating saddle slant, your new instrument plays more in tune than the old ones. The new right-angle Grover tuners make your OM's banjo style tuners obsolete. In fact, the OM itself is not just obsolete, it's discontinued.

If you're like a lot of players in 1935, you're looking for a guitar with a bigger sound, and you're going to move up to Martin's new dreadnought "D" sizes, which are larger than the 000-size or the OM. The Martin of 1935 is almost a fully modern instrument. Maybe you won't have to buy a new model in 1940.

1940: The model looks the same as it did in 1935 but it seems to play easier with faster action. That's because the neck is thinner. The bracing has changed again, and it's now a bit lighter with the X-cross moving farther away from the sound hole (a change some, including me, do not think was an improvement). The tuners are enclosed on some instruments now. Essentially the Martin of 1940 is fully evolved and will experience only a few small changes after that.

If your musical tastes ran toward popular or jazz music, and your guitar of choice was a Gibson archtop rather than the Martin flat top, you would still have been in the same situation. Gibsons went through similar structural innovations, although not necessarily in the same years, with truss rods, bridges, f-holes and body sizes, not to mention purely cosmetic changes in finishes and ornamentation.

In general, through the first half of the century, newer guitars were better suited for the music of the day than used ones, and furthermore, there was not a large backlog of used guitars competing with sales of new guitars. That changed by the early '60s. By then, if you wanted to buy an acoustic guitar, you had a viable choice between a new or a used one. There were a good many used guitars around that were suitable for the music of the day, since designs had not changed much in 20 years. (One exception is the Martin D-size, which didn't become plentiful until the '70s.) And since there weren't any vintage dealers yet, a used one was probably a lot cheaper than a new one.

While there has always been a small market of collectors who would buy old guitars either to play old-time music or to display as period pieces, once the supply of used instruments became plentiful enough as well as suitable for the music of the day, the vintage market expanded dramatically, and the vintage business was born. In an ironic side effect, some guitar manufacturers would find themselves with a formidable new competitor-themselves. As the Martin company freely admits today, their strongest competition in the market for new Martins is old Martins.

Electric guitars, which had barely been introduced by World War II, were a few years behind the acoustics in developing a vintage interest, but they followed the same evolutionary pattern. The main electrics of interest before WWII, Gibson's ES 150 and ES-250, had relatively noisy pickups compared to postwar models, and as hollow-body, non-cutaway, single-pickup guitars, they weren't in the same league with the revolutionary new solidbody electrics of the 1950s.

Fender and Gibson led the way in the early '50s. Fender debuted the Broadcaster (soon to be "No-caster" and then Telecaster) in late 1950, the Precision bass in 1951 and the Stratocaster in 1954. Gibson introduced the Les Paul in 1952, with three other Les Paul models soon to join the line. They all evolved quickly, and as the changes in the Les Paul show, there was good always reason to buy a new one. In 1952, the Les Paul Model had a gold-painted top, single-coil P-90 pickups and a "trapeze" bridge-tailpiece designed in a way that made it nearly impossible to dampen the strings with the palm of the hand. By late 1953, the stud-mounted bridge replaced the "trapeze" style. And very late in 1953 the newly introduced Les Paul Custom featured a tune-o-matic bridge and stop tailpiece. The goldtop Les Paul Model was given the same treatment in late 1955. In mid-'57 the P-90s on the goldtop model were replaced by the new double-coil humbucking pickups. In 1958, the gold top was discontinued and a new cherry red sunburst finish was introduced. Jumbo frets were introduced in 1959, and the neck was slimmed down for faster action in 1960. At the end of 1960 the single cutaway Les Paul Standard was discontinued and replaced by the new sharp-pointed double-cutaway body shape of the SG line. Although the SG guitars do not bring as much as the single cutaway Les Pauls in the vintage market today, they did sell very well as new instruments.

Not long after these instruments (both acoustic and electric) reached their evolutionary plateaus, another factor entered the picture-quality, or more specifically, decline in quality. As music took a greater role in our culture, instrument sales naturally increased. In my view, which is shared by many collectors and dealers, quality and quantity tend to be inversely proportional. Manufacturers in the late '60s and '70s found that they could sell virtually anything they cast out on the market, no matter what the quality. For some companies, collectors date the decline in quality to specific points in company history - the sale of Fender to CBS in 1965 or the sale of Gibson to Norlin in 1970 (if not the departure of Ted McCarty from Gibson in 1966). Other companies, like Martin, did not change hands but nevertheless began turning out inferior instruments in the late '60s and '70s (The year 1971 was, not coincidentally, Martin's record production year). In the acoustic market, the general perception is that the decline in quality began as early as the end of World War II. All three companies have successfully reversed that perception of their new instruments today.

Yet another factor has entered, or more accurately re-entered, the vintage market in the '80s. For the first time in at least 20 years, vintage guitars are missing some features that today's guitarists desire. "Old" (it's hard to think of instruments from the 1960s as being old) electrics do not have whammy bars with locking nuts and tuner adjustments at the bridge. They don't have super-sensitive, quiet pickups. They don't have new wiring schemes with choices of split coils, tapped coils, or pickups wired in series, parallel or phased. There is a definite youth market that wants guitars with these innovations, and vintage dealers do not see that part of the guitar-buying market in their stores. Nor are vintage acoustics safe from today's new models. Many new acoustic guitars - both steel- and nylon-stringed - are designed to be plugged into an amplifier or a P.A. system.

Musicians are still demanding a good natural acoustic sound, but now they want it to come through a pickup. In addition, like any performing musicians, acoustic guitarists want their instruments to look good, maybe even to match their outfits. With developments in electronics, natural acoustic properties are less critical than in years past, and the classic acoustic looks are changing in the areas of body shapes and finishes. A typical new acoustic might have an under-bridge pickup, slide controls (treble, bass and volume) on the upper side of the body, a sharp cutaway body and a rich red mahogany finish. It's undeniably more suitable for some modern sounds than its predecessors.

The Vintage Instrument Market, Part 2: How instruments are priced

People are always asking why a certain instrument is worth so much. Sometimes, they're not asking, they screaming. For example: "A mint condition '54 Strat is not worth $10,000!" I can sympathize, but the pure and simple fact is, a vintage instrument, or anything else for that matter, is worth whatever someone is willing to pay for it. If buyers are willing to pay $10,000 for that Strat, it is by definition worth $10,000, at least at that moment. That's not a totally satisfactory answer, though. What people really want to know is, what guidelines does a dealer use to establish price? The price on Strats has fluctuated wildly in the last year, but $10,000 is not an arbitrary price. There are, in fact, guidelines that dealers use, and the dealers who set that Strat price took various market factors into consideration before deciding they might be able to get that much. There are some obvious factors that determine the value of items in any collectors' market, such as rarity, condition and historical significance. All these factors and more enter into the vintage market, but in a different order of importance than in the stamp, coin, or gun markets. Utility value. The most basic level of value for a used instrument is its utility value. If there is a demand for basic, no-frills, single-pickup electric guitars and a new one costs $300, then any used guitar that fills those qualifications should have a similar utility value. The used instrument may be quite different from the new one, but a value based solely on utility can be established. Intrinsic value. In addition to or even despite an instrument's utility or performance value, it has a value based on the quality of the materials and workmanship that went into it. I call that intrinsic value, and I define it as the cost of producing an exact replica of the vintage instrument, with not only the same quality materials and craftsmanship, but with the same structure, function and visual appearance as well. Again, a used instrument that fits those demands should have the same intrinsic value as a new one. In the cases of many, many used instruments, there is no new instrument-even if it has the same model name-that is the equivalent. For example, the original Martin D-45 had many features which today would be viewed as custom, such as ivoroid bindings, but it also had features not offered at all today, such as wood violin-style purfling (the black and white lines around the abalone) which today are black and white plastic, even on custom order instruments. For electrics, the type of magnets, the type of wire used for winding the magnets, and the type of finish used on some vintage models are simply not available today, at least not from the manufacturer's custom shop. You simply can't get a varnish finish from Gibson that is like that of the old Gibson mandolins, nor can you buy a modern version of an Orpheum #3 banjo. It took a while for vintage prices to catch up with intrinsic value. In the 1950s, few vintage fretted instruments had any collectors' appeal whatsoever. They were in hock shops for 50 bucks. With the folk boom, acoustics appreciated at rapid rate, maybe 20% a year. Even at that rate it took several years for a $50 instrument to approach an intrinsic value that may be as high as $1,000. The electric market didn't begin to take off until about 1964, but it was a similar phenomenon. The concept of intrinsic value also helps to define the term collectible. For an instrument to be called collectible, it should have value in addition to its intrinsic value and thus sell for more than its intrinsic value. Otherwise it's a utility item. The market value of an instrument based on its intrinsic value can be undermined by a lack of utility value, as in the case of Gibson's harp guitars. With a 21-inch wide body, carved top, scroll body design and extra peghead support for its sub-bass strings, a harp guitar could easily cost $5,000 to build today, but with little current utility value, the average vintage Gibson harp guitar would be doing well to bring half of its intrinsic value. There is currently a small revival of interest in harp guitars - Michael Hedges has recorded with Dyer-brand harp guitars made by the Larson Brothers of Chicago and Jimmy Page has appeared on the cover of Guitar World with a harp guitar-so their utility value could rise if they should came back into vogue. The concept of intrinsic value can also be undermined by some unexplainable preference of buyers for one model over another. Stratmania is not the only example. A Les Paul sunburst with a curly maple top, for example, brings at least 50% more than one with a non-curly maple top. The difference in the intrinsic value of these two instruments amounts to pennies, yet their market values are thousands of dollars apart. Intrinsic value is probably the most stabilizing factor in the vintage market. Most guitars, even those with a modern utility value, bring less than their intrinsic value in the vintage market. Only a very few bring more than their intrinsic value, and those are the collectibles. Condition. In pricing a vintage instrument, the importance of an instrument's condition varies with the importance of the instrument itself. In the utility price bracket, $500-2,000, the difference between mint, excellent and very good condition does not make for any great disparity in prices. Performance - sound and playability - are greater factors than condition in the utility range. If a working musician has a choice between a very good condition instrument that sounds great and a mint condition instrument that doesn't sound so great, his choice is obviously going to be the one that works for him. And the price of the good sounding instrument may be higher than the one that only looks good. Starting at around $2,500 up, however, cosmetic condition becomes more and more a factor in the value of vintage instrument. In the $10,000-plus range, instruments become more like stamps, coins and guns, where a mint condition piece may bring double what the same model would bring in very good condition. There are a few exceptions, such as Gibson's Lloyd Loar F-5 mandolins or one-piece flange flat-head banjos, which are highly sought by working musicians as well as collectors. As a result of their extremely high utility value - they are considered the best of their kind ever made - a rough-condition Loar F-5 and RB-3 banjo (with the above specs) will bring almost as much as one that's immaculate.

Original price. Intrinsic value should not be confused with original price. Original list price really has nothing to do with the market value of a vintage instrument, except to the degree that some buyers have a hard time accepting a price on an instrument that might be anywhere from 10 to 100 times the original list.

It is, nevertheless, interesting to compare current prices to original prices, especially when the originals have been adjusted to reflect cost of living indexes and average wage figures. In addition to settling arguments, such as whether $200 for a pre-war D-45 was actually a bargain compared to today (it was) or whether $250 for a 1930 F-5 mandolin was a bargain (it was not), these figures can help determine whether the prices of modern replicas or reissues are truly accurate reflections of intrinsic value or whether an extra premium has been added to the price because of the model's popularity. For Gibson and Martin acoustics prior to World War II, the original list prices (adjusted for inflation) were significantly lower than current lists, but when the prices are figured relative to average wages of working class Americans, new instruments come out to be about equal or in some cases a bit of a bargain compared to their earlier counterparts.

Fender electrics show the same thing. A vintage reissue Stratocaster in the $800 range is relatively cheaper than the Strat was in 1955 at a list of $230-250. So is today's $500 Telecaster reissue compared to its $190 '55 version.

Gibson's new Les Pauls, on the other hand, listing at $1,700 for a gold top and $2,600 for a sunburst, are quite a bit more expensive than were the '58 goldtop at $247 or the '60 sunburst at $265.

List prices can also be deceptive when trying to predict which instruments will appreciate the most. The most expensive - which should indicate that they are also the best quality from any time period - have not always proven to be the best investments. Furthermore, original list provides no guide whatsoever in pricing a vintage instrument. In the vintage market, pricing is a function of supply and demand. While the cost to make a modern replica might be determined by taking original list price and multiplying by a factor, there is no such formula to determine the actual current market value of that instrument in the vintage collectible market.

Among the more recent and more obvious examples are the electric solidbody guitars of the '50s and '60s. "Cheap" models in the $100-$200 range when new, such as Kays or Silvertones, were not so cheap compared to Strats and Teles, which were only in the $200-$400 range when new. National's Res-o-glas map-shaped electrics listed as high as $295 in the early '60s, which was more than the Telecaster. Now, while Kays and Silvertones have a bit of collector's value (as much sentimental as anything else) and some of the map-shaped Nationals are beginning to bring several times their original list price, they haven't come near the 10- or 20-fold increase in the value of Strats and Teles.

Even within the Fender line, original list prices are no help in predicting or establishing values now. Strats and Teles were not top of the line models in the '60s. Jaguars were the most expensive (at almost twice the cost of Teles), followed by Jazzmasters, then Strats and Teles. In today's vintage market, the order is reversed, with Strats and Teles on top, then Jazzmasters followed by Jaguars. The Gibson line has similar examples. In 1958, a Les Paul Standard model listed for $247 while a Les Paul Custom was 50% more expensive at $375. Both have appreciated considerably in the vintage market, but while Customs may bring $2,500-$3,000, most Les Paul Standards will bring double that and one with a curly maple top will bring $10,000 or more.

The acoustic market is no different. Through the years, for both Gibson and Martin, archtop f-hole guitars have listed for more than flat-tops (because they cost more to build), but for many models today, demand has caused the reverse to be true. Consider Gibson's late '30s prices on L-5s and Super 400's - $275 and $400, respectively - versus the J-200, Advanced Jumbo or J-35, which listed at, $200, $80 and $37.50. The L-5s and Super 400s of that period are certainly collectible, bringing $2,000 and $3,000 now, but while they have appreciated to a little more than six times their original list price, the three flat-tops have left the archtops standing in the starting blocks. Same-vintage J-200 prices start at about 37 times original list, J-35 prices are now about 45 times original list, and Advanced Jumbos go for anywhere from 75 to 90 times their original list price.

Martin's pre-war D-45, a flat top acoustic, makes mincemeat in today's vintage market out of its most expensive competitor in Martin's line, the F-9 archtop. (The D-45 makes mincemeat out of all competitors, be they flat-top, archtop, mandolin, banjo, acoustic or electric.) The D-45 originally sold for $200, which was $75 less than the F-9. While the F-9 has appreciated by a factor of almost 10, the D-45 is today worth 100 times its original list price.

Mandolins and banjos have been just as unpredictable as guitars in the vintage market, based on their original list prices. Gibson's F-5 Lloyd Loar-signed mandolins which listed new at $200 in 1922 and were raised to $250 in 1923 have outperformed all other mandolins, leaving the F-4, which listed new at $165, trailing far in the dust in today's market.

Gibson's RB-3 banjo from the 1930s, the flat-head 5-string Mastertone with one-piece flange, is worth around $10,000 today. Few banjo buyers in the '30s, however, thought anything of the $100 Model #3. If they did buy a #3, they probably wouldn't have bought the 5-string, which was considered a country instrument, but rather the more respectable tenor or plectrum. The 5-string is now worth more than double what the tenor is, and the flat-head is worth several times more than the comparably-priced raised-head version. In terms of appreciation from its original list, that $100 Mastertone beats everything in its field, even such solid performers as Bacon & Day's Silver Bells and Gibson's Bella Voce, Florentine, or All American.

Today's instrument values relative to each other are not those of 20 years ago and will probably not be those of 20 years in the future. No one can predict with certainty what the market for specific instruments will be in 20 years, only that the market will be different, and that it will be driven by many of the same forces that drive it today.

Precedent. Prior precedent is obviously important in establishing a market value for a particular instrument. If a certain vintage Telecaster sold to a knowledgeable buyer for $1,000 yesterday, every Telecaster like it is going to have a market value of at least $1,000. If a dealer sells a Telecaster to a knowledgeable buyer today for $1,500, then the market value of other similar Teles goes up to $1,500. Until the buyers let dealers know otherwise, the market value of an instrument is always going to be at least as high as the price it (or one like it) last sold for. In the case of extremely rare or one-of-a-kind items; however, there may be no prior precedent. If a dealer knows of no similar item which has been sold in recent years, he will have to rely on other information or gut instinct to establish a value.

In the case of a destabilized, rapidly changing market, it can be very difficult to establish firm values. When a market falls, as the stock market did on Black Monday in October of 1987, traders had a hard time at mid-day establishing stock or option values. Similarly when an instrument market is rising rapidly it is also difficult to establish firm values. Due to changing musical trends, the recent reentry of electric buyers into the acoustic market and the reduced value of the US dollar, the current market has the stability of a shark feeding frenzy. In effect, buyers and sellers smell blood. In such a market, not only do prices rise, but new sharks keep entering, drawn by the smell of potential gain. Prior precedent is thrown out the window.

Rarity. Unlike some collector's markets, rarity is not necessarily a quality that contributes to a vintage instrument's value. There are many one-of-a-kind instruments that are custom variants of standard models, but they are often not considered to be as valuable as a pristine perfect catalog example. Conversely, the most valuable stamps and coins are the rarest. Aesthetics and workmanship are so irrelevant that mistakes can be valuable if they are rare. A stamp collector who discovers a mistake in a new stamp will immediately try to buy as many as the post office has. On the other hand, a guitar buyer who notices that Gibson inlaid its logo upside down on a headstock will be unlikely to snatch it up and then ask innocently if there are any more like it in stock.

The vintage gun market sits somewhere in between the instrument market and the stamp and coin markets. Firearms, like instruments, do have a utility value, although no one buys an old firearm to shoot it (one shot from a mint condition gun would drastically lower its value) and no one believes old guns work better than new ones. Firearms also have intrinsic values, and many are collectible because their workmanship and ornamentations is considered to be of higher quality than anything available in the new gun market. Like the stamp and coin markets, rarity brings a premium price in the firearms market.

The primary reason for the difference in the value of rarity between these markets and the vintage fretted instrument market is, in my opinion, the difference in the number of collectors as well as the utilitarian appeal of vintage fretted instruments as opposed to vintage stamps, coins or guns, which collectors may covet but do not use as utility items. The more collectors there are in a market - especially wealthy, stable, long-term collectors, such as there are in the stamp, coin and firearms markets - the greater the value that is placed on rarity. As more collectors enter the vintage market, rarity may play an increasingly important role in raising prices. Supply. The supply of vintage instruments is fixed since, by definition, vintage instruments are no longer in production. As time goes on the supply gradually goes down through loss and damage, although in general, the higher-valued models are better taken care of and thus do not suffer the losses of the lower-end models.

While the supply is fixed or slowly falling, the number of instruments in circulation varies. Instruments in a museum are not for sale and never will be, so they may be considered out of circulation. An undiscovered Martin D-45 in Aunt Millie's attic is out of circulation if it's not for sale and she has no idea that it's of value. She might neglect it and let it be destroyed by the elements because she thinks it's worthless, or it may be "discovered" and put into circulation. While the number of instruments in circulation affects the market price, the reverse is also true. When prices rise, instruments come out of hiding and onto the market. In theory, this increased supply should drive prices back down, but in reality, the supply of vintage instruments is almost never enough to meet the demand.

The Vintage Instrument Market, Part 3: The role of the collector

One of the loudest voices in the vintage instrument market is the one that complains about high prices. The person behind that voice is usually a musician and he's usually pointing a finger at collectors - people who buy instruments for reasons other than utility.

Obviously, some vintage instruments may be of little use to modern musicians, and their value is based more on their workmanship or historical importance. Many of the Martin guitars from the 19th century, while playable, are so different from modern instruments that they don't fill a large market niche for utility. And the early instruments made by Orville Gibson should only be played with great caution, if at all. The prime appeal in either case is not playability. If these instruments are priced high, it is because they are rare and old, the same as any other quality antique item. Few people in the vintage market have any problems with that.

The problem lies with the instruments that are playable but are collectible for those other reasons as well-rarity, craftsmanship and historical importance. A 1923 Gibson F-5 mandolin signed by Lloyd Loar, a pre-World War II Martin D-45, a Fender Broadcaster, an early Telecaster or Stratocaster - these are instruments that bring prices much greater than their modern day equivalents. Some of these prices have skyrocketed to the point where these fine, playable instruments are too expensive for many musicians to afford. Understandably, that makes musicians angry. A fine instrument should be played, they argue, and it's a crime for a rich collector to buy it and then put it in a display case. The argument between musicians and collectors is older by at least a century than the vintage market for fretted instruments. It started in the early 1800s over bowed instruments. The hated collectors were doing the same thing then-hoarding hundreds of fine old Italian violins, driving up the prices and taking them out of the hands of the musicians.

Time has changed our opinion of the violin collectors. It's a generally accepted opinion now that if the violins had all been distributed among musicians to be used - and likely abused - then there wouldn't be any left today, nor would there be nearly as much knowledge amassed about them. The musicians of that day often enough treated their violins the same way musicians treated their fretted instruments in the '50s and '60s. They customized them, refinished them, put their names on them, re-graduated the tops, etc. Many of these instruments weren't worth a great deal of money when they were new, and people don't treat things with respect if they're not worth much. If these instruments needed repair or restoration they were likely to be thrown away.

A good instrument treated with tender loving care can last 300 or 400 years, but if you beat it, it may only last 10. These old violins went through a very dangerous period when they were considered to be utility instruments of no special value. During that time collectors amassed large collections and, granted, they often didn't play their instruments much. "Held hostage" is a term used recently to express the musician's viewpoint of this practice, but from the collector's point of view, these instruments were in protective custody. Today we can thank all those so-called hateful collectors for the Stradivari and Amati and all the other fine Cremona instruments that are still in existence.

Even if an instrument is taken out of circulation by a collector, chances are that the collector will hold it for a maximum of 50 years and probably much less - not a long time compared to the instrument's potential life of 300 years. Collectors do not always hold onto instruments for their entire lifetime. If an instrument increases in value considerably over a short period of time, a collector may put it back into circulation-in other words, sell it for a nice profit-sooner than expected (although that sale may not put the instrument into the hands of a musician). That has been the case in the violin market through the years. Even when collectors do hold instruments until they die, the instruments usually then return to circulation. Those instruments, after 30 or 50 years in a sort of cold storage, may well emerge into a new world, where they are now revered, cherished, and properly cared for, and they may last another couple of hundred years.

As a dealer, I take a somewhat sentimental approach to fine instruments. I tend to run my business like an adoption agency-if you aren't going to give it a good home you don't deserve to have it. An instrument lasts longer than a human lifetime. They're not really alive, of course, but a good instrument has a sort of soul and personality. It's not just a dead piece of wood; it's a piece of history. I feel that you buy an instrument to become its custodian rather than its lord and master. I don't feel that it should be absolutely yours to do with as you wish, particularly if your wish is to customize it, refinish it, change pickups on it, etc. If you buy a Stradivari or Amati violin, you would legally own it, just as you would a Stratocaster that you have a receipt for. If you decide you want to paint your violin red and install tone and volume knobs in the top, you have the right to do that, but if you did you would hear an outcry in the violin market. You would be ostracized, and you'd find it hard to buy anything in the future. If you could afford to buy Vincent van Gogh's Sunflowers painting and if you thought you were a better painter you might try to customize it - add a couple of blue flowers and put your name on it, too. People would scream bloody murder, even though it would be a privately owned piece and you would have every legal right to do anything you want to it. In my opinion, a vintage instrument is no different. I feel that you are its custodian and as such have no more right to carve your name into it than you have to carve or tattoo your name into your child's back.

Collectors do more than just protect an instrument. Their activity often creates a heightened interest in instruments. They themselves generate many of the articles, books and other works that educate both the musicians and the general public on the subject of instruments. The two books by collector Akira Tsumura on his banjo and guitar collections, for example, have been derided by some as somewhat obscene displays of Tsumura's buying power, but the fact of the matter is, the quality photos and, particularly in the banjo book, the depth of Tsumura's research, have inspired people to root out more of these fine instruments. If not for collectors, musicians would not even know about, much less want, some of the instruments they complain about collectors depriving them of.

Collectors are also responsible for putting many instruments into circulation. Most collectors could be described as obsessed with finding certain instruments. They are constantly looking for more. Most collectors also have high standards for the instruments they add to their collections. As a result, in their searches through pawn shops, attics, yard sales, etc., for every instrument they find that is suitable for their collection, they may run across hundreds of instruments that aren't. The typical collectors don't just send these instruments back to the attic, rather they buy and sell them in order to help finance their collections. Consequently, most collectors end up putting more instruments into circulation than they take out.

Even when collectors do buy instruments to keep, their influence on the vintage business does not end there. Many instruments must be restored, and all must be maintained. Today, much of the interest, research and, most importantly, financial support in the field of restoration is a direct result of the activity of collectors.

Part of the case against collectors seems to be based on the belief that if it weren't for collectors and their inflated market, many more deserving musicians would have fine instruments to play. A few more, maybe, but not many more. One of the primary reasons the super high-priced items are super high-priced is that they are rare. Martin only made 91 D-45s before World War II. Gibson made even fewer Lloyd Loar L-5 guitars and only about 325 Loar-signed F-5 mandolins. Fender made less than 150 Broadcasters and less than 300 "No-casters." Even if they were priced at $25, everybody couldn't have one. There aren't enough to go around. Furthermore, at low prices, the chances are strong that the instruments would not get the respect and care that they do now. A high price is one of the best incentives not to abuse an instrument.

Yet another complaint against collectors, or at least against high prices, is the charge that guitars are not art. That may be true, at least to a degree. A Stratocaster, for example, is essentially a slab of wood cut according to a form and then bolted on to another piece of wood. The degree of craftsmanship required to build a Stratocaster is not nearly as high as that required to carve an arched top for an L-5 or to inlay the pearl around the borders of a D-45 or to produce the hand-made, custom-ordered instruments of a John D'Angelico or Jimmy D'Aquisto.

Those who would say guitars are not art point to the fact that guitars are catalog models, but antique firearms, antique automobiles, stamps and coins-all mass-produced items that bring art-auction prices-refute that argument. Furthermore, not all guitars are catalog models. There are many guitars that are custom-made and truly inspired works. Compare a custom-made guitar to a true piece of "art" such as a Ming Dynasty porcelain. Many Ming pieces are soup dishes or vases, which, while not catalog items, were made in large quantities and are less rare than many vintage fretted instruments. Compare guitars to Boehm birds, the limited-edition porcelain models which do have a catalog number, which are made from a mold and which are no more inspired than any production model instrument. Compare guitars to van Gogh paintings when he was in an asylum and painting a picture a day, or to Picasso's work when he was cranking out cubist paintings at a rate equivalent to a small production shop. In addition to what he actually painted, Picasso and others turned out lithographs and prints that could be produced at an assembly-line rate, and even these items bring astronomical prices today. Not every van Gogh or Picasso from those periods could be considered truly inspired, although the cheapest, least-inspired van Gogh or Picasso would probably bring as great a price as the most inspired guitar creation.

Even more significant than the inspiration behind certain instruments is their rarity. Stradivari violins, D'Angelico guitars and Fender Broadcasters are rarer than van Gogh or Picasso paintings. In contrast with van Gogh's and Picasso's rapid pace, a master luthier is seldom able to produce much more than one fine hand-crafted instrument in a month of labor.

Compared to art or violin prices, vintage fretted instrument prices are low. Paintings now sell for millions of dollars. By comparison, Stradivari violins selling for hundreds of thousands are bargains. Guitars, whose prices are just beginning to creep into the tens of thousands of dollars, are relative giveaways. They do not yet reflect the degree of art and inspiration involved in making a fine guitar.

There is no dispute as to whether violins and other bowed instruments are legitimate collectibles or not. While guitars are not yet in the same league, I say just give them some time.

The Vintage Instrument Market, Part 4: Fads

No market - vintage fretted instruments, art, gold, pork bellies, or any other - is any more stable than its clientele. And the vintage instrument market, being made up in a large part by musicians, has experienced some tremendous fluctuations due to the fact that musicians, in spite of all they say to the contrary, tend to be idol worshippers.

Certain players tend to be very influential on what other musicians play, and the most influential are not necessarily those with hit records. Chet Atkins is the most notable exception, having sold millions of records as well as thousands of Gretsch guitars bearing his name in the 1950s. Les Paul also had hit records and a strong influence on guitar sales in the '50s, but in the '70s and '80s, while Les Paul models still sell, I question whether many of the kids who buy them today have any idea who Les Paul is, much less how he plays.

One of the most influential of all musicians in the early phases of the vintage electric guitar market was not Atkins or Paul or anyone else with a hit record. He was Mike Bloomfield, best known for his work with the Butterfield Blues Band. Ironically, the continued popularity of the Les Paul model owes as much to Bloomfield (and later to Eric Clapton and Duane Allman, among many others) as it does to Les Paul.

When I first started dealing vintage instruments in 1963, there was an acoustic market in place, thanks to the folk boom, but there was no vintage electric market. In fact, there were hardly any vintage electrics, period. Guitars that are considered vintage today - a '58 Les Paul Standard sunburst model with humbucking pickups, for example - were only a few years old. A '58 "vintage" model is 33 years old today, but in 1963 there were no 33-year-old electrics in existence. The oldest would have been a Rickenbacker "Frying Pan" lap steel, and in 1963 the earliest Frying Pan would have been 31 years old. The first professional-quality electric Spanish-style guitar - the Gibson ES-150 - was introduced in 1936, and it would have been 27 years old in 1963. The solidbody models of Fender and Gibson were relative babies, having been introduced in 1950 and 1952, respectively. Electrics were relatively new and were evolving rapidly through the '50s.

In 1963, a used electric instrument with a good brand name brought a top price of about $100. I have very clear memories of going down to the pawn shops on 63rd Street in Chicago or looking through ads in the papers and seeing Les Pauls, Telecasters and Stratocasters for $50 to $75. Those were not bargain prices because those instruments weren't bringing anything. In fact, some musicians believed that the Les Paul had a faulty design. They had heard about Paul's auto accident, after which he had his broken arm set at an angle so he could play his guitar while wearing a cast. The rumor going around was that Paul's right arm ended up shorter than his left and thus the Les Paul guitar had been designed for a man with one arm shorter than the other. Not only that, it was also thought to be too heavy.

About this time, I first met Bloomfield. He had just graduated from the University of Chicago High School and he used to sit on the steps of Big Joe Willliams' music store on Wells St. playing old time blues. He played acoustic only. He didn't even own an electric. He wasn't the only one whose interest stopped at traditional acoustic ethnic music. At the time, I was a member of the University of Chicago Folklore Society, which sponsored concerts and a yearly folk festival, and the membership considered electric music an abomination. For many of them, their interest started with old time music and graduated to bluegrass, then to blues. From there, they eventually got into rhythm & blues, which was in their own backyard, and finally into acid rock.

Bloomfield followed the same progression up to the R&B stage. Around 1964, he joined the Butterfield Blues Band and, needing an electric guitar, he bought a '52 Telecaster with the black pickguard. Within months, those went from $75 to $600. By late '64 or early '65, he switched to a '54 Les Paul goldtop with a stud bridge and P-90 pickups. Right away the Teles went down-not to $75 but to $400 or less-and Les Pauls went from $75 to $600. I was as busy as I could be scarfing those things up on the south side of Chicago and taking them up to the north side where I could sell them. I found out soon after that I could send them to New York, to Dan Armstrong's store on 48th Street (later in Greenwich Village), and get even more.

Keep in mind that Gibson had changed the pickups in 1957 from the single-coil P-90s to the double-coil humbuckers, and musicians in the mid-'60s marveled that Gibson could be so stupid. The P-90s had a bite, they said, and the humbuckers sounded sweet and sickly by comparison. Also, they said, Gibson's new tune-o-matic bridge sucked up all the tone and sustain that were the old model's calling card. Then Bloomfield switched to a sunburst Les Paul model, with humbuckers and a tune-o-matic. Right away goldtops went down and sunbursts went up to $800. A year before, when I was looking for goldtops, I'd come across these yellow and red things with humbuckers and tune-o-matics and I'd send them to Armstrong. He'd say, "I can only get $250 for it. It's the wrong color." But once Bloomfield switched, within a matter of weeks, nobody could remember having criticized that model before.

There are those who will argue that Eric Clapton rather than Mike Bloomfield popularized the sunburst Les Paul, but before Bloomfield played electric guitar, there was no vintage electric guitar market. When he picked up the black-guard Tele, everybody wanted one. When he switched to the goldtop Les Paul, everybody switched. When he switched to the sunburst, that's what everybody wanted. Clapton was playing a sunburst at that time, but the demand shifted to sunbursts when Bloomfield shifted.

Bloomfield's influence was powerful but somewhat short-lived. Beginning in mid 1967, the driving force behind the Les Paul market switched from Bloomfield to Clapton and, shortly thereafter, to Jimmy Page. Although Clapton's guitar was a sunburst model, the demand he created was so great that, according to Dan Armstrong, Clapton devotees wanted any Les Paul Standard with humbucking pickups, regardless of whether the top was gold, sunburst or even if the guitar had been refinished.

Clapton later switched to an SG/Les Paul with a psychedelic finish, and he influenced that market, although SG/Les Pauls never achieved the popularity of sunburst Les Paul Standards. When he switched to a Stratocaster, he would do to the Strat market what Bloomfield had earlier done to the markets for Teles and Les Pauls.

The strongest influence of all - affecting not just a particular model but the entire vintage market - came in the early '70s from the group Crosby, Stills, Nash and Young. They brought acoustic sounds into the rock mainstream, which brought electric players into the acoustic market. Because they used vintage instruments - prewar acoustics and '50s electrics - the entire range of the vintage market got a boost like it hasn't experienced before or since. "Stratmania," the boom-and-bust market for vintage Stratocasters, has many of the same characteristics as the earlier Les Paul boom, but with Clapton instead of Bloomfield leading the charge. Strats had done quite well from their introduction in 1954 through the '50s, but in the '60s, they were being outshone by the Jazzmaster and Jaguar, which were Fender's high-end models at the time. Although most players today don't think of Jazzmasters and Jaguars as that great, they were the perfect instrument for the Ventures/Beach Boys surfing sounds of the '60s. I have a letter from the early '70s from Clapton asking me to find him a Jazzmaster.

To illustrate further the lack of respect given the Strat, in the mid-'60s, I paid $75 at a pawn shop on 63rd Street in Chicago for a 1958 Strat in immaculate condition, with not a scratch on it (of course it wasn't that old then). It was black, with a maple neck, of course, and gold-plated parts. No one wanted it. Strats were not in demand. They were not considered to be a good guitar. Everybody said Telecasters were better - Teles had better tone and better sustain, the Strat tremelo caused tuning problems and the Strat's three pickups made it harder to adjust the tone. Finally I found a guy who played in a rock and roll band in Chicago who had an early-'61 Les Paul Custom with triple humbuckers, one of the last before Gibson switched to the SG bodies. I finally talked him into trading even. Everybody I knew told me I had made a great deal. Today the Strat is worth at least twice as much as the Paul, so I'm a skeptic sometimes when musicians tell me an electric instrument is bad. Next year it may be good.

Clapton changed the status of the Strat. It started around 1970, when he appeared on Johnny Cash's network TV show, which was taped at the Ryman Auditorium (then the home of the Grand Ole Opry). I had just gone into business at 111 Fourth Avenue North, directly behind the Ryman. I met Clapton backstage and sold him several early Strats, possibly the first ones he owned. The Strat boom started within weeks of when Clapton started to play Strats and it finally peaked in early 1988. Although Jimi Hendrix was also famous for playing a Strat, he did not have the influence on the vintage market that Clapton did. Hendrix played new instruments that were custom-wired, and he played them upside down and in a musical style that very few players could imitate. Generally, the players who influence guitar trends play in a style that might be described as reachable or accessible to other players.

The rise of the Strat took several turns before reaching Stratmania. First the maple-neck strats brought more than the newer models with a rosewood fingerboard. Then in the early '80s, players began saying they liked the look, feel and sound of rosewood boards better than the '50s Strats. Then it switched back to maple board Strats. As Strats were growing in popularity through the '70s, Les Pauls were still bringing more money, thanks to the Paul-playing Duane Allman, Dicky Betts, Billy Gibbons and many other rock musicians.

The steady rise suddenly became a feeding frenzy. An article in Guitar Player warned that the market was out of hand, that no white Strat was worth the $4,500 someone had just paid for one, but rather than deter the frenzy, the article helped feed it. By January of 1988, reasonably nice but not mint Strats from the '50s were bringing $8,000. A really nice '54 (the first year of the Strat) was bringing as much as $12,000. Custom color models from the '60s were bringing $4,000-5,000.

Younger vintage dealers, like the younger stockbrokers caught up in the stock market crash of 1987, had not been around long enough to see the market fall as well as rise. By the time Guitar Player's Stratmania issue hit the stands in early 1988, there were already signs of a crash. The Strat market peaked at the Dallas guitar show in March 1988, and suddenly there was panic. Prices went through the floor and stabilized at about where they were before the mania.

In the first half of 1991, it appeared that Stratmania had returned. Strat prices took off like a rocket, reaching levels as high as those during the 1988 period. The 1991 fad, however, was not really a mania because the desire for Strats never reached the point where buyers wanted nothing else but a Strat. The market remained diversified, and in the past few months the demand for Strats seems to have stabilized. Interestingly, the feeding frenzy syndrome works in reverse when a fad like Stratmania peaks out. The same way people blindly buy, no matter what the price, they blindly dump when the fad is over.

A lot of dealers made a lot of money off Stratmania, enough profit to offset any losses they may have taken if they had found themselves with a surplus of Strats. Personally I was delighted to see the end of Stratmania because despite the chance to make a quick killing, this kind of fad is ultimately not good for a vintage dealer's business.

The vintage dealer is in an entirely different position from a manufacturer or dealer of new instruments. If there is a fad for a new instrument, the manufacturer turns them out in greater quantities and thus increases both his gross sales and his profit margin. The dealer of new instruments orders in higher quantities, thus getting a better discount and a better payment schedule, and on the sales end he doesn't have to mark the retail price down as much for an instrument that is in demand.

The vintage dealer is not so lucky, however. When a Stratmania hits, there's a limited supply of old Strats, and unlike the suppliers of new instruments, the suppliers of old Strats-the owners-want more money per unit, if they want to sell them at all. The effect of a fad on a vintage dealer is the opposite of that on a new dealer. The supply shrinks rather than expands, and the cost goes up rather than down.

That explains why prices skyrocket and it also indicates that vintage dealers can still make a nice profit out of a fad. The real problem with a fad like Stratmania is that it implements this philosophy: It is not enough that I win; you must lose. In other words, we want Strats and we don't want anything else. Granted, Strats sell like crazy, but they hurt the market for everything else in a dealer's inventory. Dealers have taken a lot of criticism for Stratmania. However, it should be noted that price is determined by supply, demand and prior precedent - not by the whims of dealers. While vintage dealers, like stock market investors, don't turn down the opportunity to make a quick killing, most would rather have their investments diversified in a steady healthy market than tied up in a volatile market like Stratmania.

The Vintage Instrument Market, Part 5: Market dynamics

The vintage market is not only relatively young, but relatively small compared to the gold, silver, diamond, stamp, coin, art or antique markets. Consequently, the vintage market can be destabilized by relatively small amounts of money, amounts that wouldn't cause a ripple in the gold or silver markets. Just as one ounce of boiling water added to a barrel of tepid water will not significantly alter the temperature of the barrel while the same ounce would dramatically raise the temperature of a teacup of tepid water, the vintage market can be destabilized by a relatively small number of buyers.

Paradoxically, the guitar market has historically been less volatile than most of these other, larger markets. If a guitar doubles in value within a year, it is considered a phenomenal increase, and if it falls as much as 25 percent in a year, that is considered a drastic loss of value. There are obviously forces at work that can help offset the effect of that ounce of boiling water and help stabilize the market. Those forces are the different kinds of values instruments possess that some of the other examples don't possess-specifically, intrinsic, utility and emotional values.

Stamps and base metal coins, for example, have little or no intrinsic value. Few cost more than a few cents to produce. Gold and silver have more intrinsic value, since production costs include the expenses of prospecting, mining, etc. Nevertheless, that value is extremely low compared to market value. When the price of gold was fixed at $35 an ounce, people still produced gold at a profit. When the market value of gold passed $800 an ounce, there was plenty of room for it to come down and still retain a value far higher than its intrinsic value.

A block of gold or silver has limited utility value. It could be used as a doorstop or paperweight but it doesn't have much utility value just as an ingot. In the vintage instrument market, the utility value is, for many models, close to the intrinsic value which is often close to the market value.

People can be passionately involved with a guitar, where the owner feels like the item has soul, as opposed to gold silver, where investment often is done on paper, where ingots are not ever in their physical possession. They have no emotional attachment. If they perceive the market being down, they just get rid of it.

Consequently we don't see guitars lose 25 percent of their value in a short time, like the gold, silver or commodities market.

Foreign buyers are currently functioning as that ounce of boiling water. Contrary to some people's perception, the vintage market is an international market, like that for gold or silver. No one is so naive as to think the price of gold or silver is determined in the United States; it's determined on a daily basis by worldwide bidding. Increasingly, the guitar market is becoming that way. No longer is the price of vintage American-made guitars determined in the United States, any more than the prices of fine Cremona violins are determined in Italy anymore.

Foreign buyers have been a significant factor since the early '70s. In the late '70s, the dollar was low, and foreign demand for American instruments was high. During the early '80s the dollar rose rapidly, resulting in higher prices for foreign buyers. Keep in mind that the market is affected either way. When foreign demand is high, prices rise. When foreign demand is reduced, overall demand is reduced, and during the early '80s, this absence of foreign demand caused a slowdown in sales, falling prices on some models and stagnation of values for many others.

There is also a psychological factor involved in currency fluctuations that complicates the issue. There seems to be a critical point, and if the dollar falls below that point, it's as if a big "buy" signal goes out to the market. Likewise, if the dollar rises beyond a certain point, a big "cease" signal goes out. The critical points differ from country to country and from year to year, depending on the economic changes in the foreign buyer's home country. The crazy thing is, the decision to buy or not buy seems to based not on price but on the relative currency values. When the dollar is low enough, they buy. Dealers may raise prices to compensate for the lower dollar. They may over-compensate for the low dollar to the point that the foreign buyer actually pays more than he would have when the dollar was high (within limits, of course). As long as the dollar is below the critical point, the buying continues. Needless to say, dealers here can make what may seem like an unscrupulous profit at those times.

Conversely, when the dollar goes too high, and the cease signal goes out, it seems a foreign buyer will not buy an instrument at any price, no matter how low (again, within limits).

The dollar peaked by early '85 and has since fallen very sharply. For many Japanese and European buyers, who were effectively frozen out of the market while the dollar was high, American products are now on a half-price sale. A D'Angelico, for example, that was $5,000 just three years ago may be $10,000 today, but the price has increased by 100 percent only if you're spending dollars. If you're spending German deutschemarks the price has only gone up 17 percent, and if you're spending Japanese yen the price has only gone up 8 percent.

Foreign buyers are now back in force with at least five years of pent-up demand to release from the period when the dollar was high. Their presence has increased the total number of buyers in the market as well as the total amount of currency competing to buy the relatively fixed amount of products. Obviously, the current market is unstable, and prices are rising.

There is some resentment among American buyers, and there is more to their complaint than rising prices. When foreigners buy American instruments, it's not the same as when they buy real estate. When they buy land, they end up hiring Americans and using American raw materials. They don't send all the profits home, because the dollar is devalued, and if the dollar rises against their currency, that real estate just might become American-owned again.

With instruments, unlike real estate, a foreign buyer can pack up his property and take it home. He doesn't take the instrument apart or misuse or abuse it, but many American collectors and musicians still don't like it because as far as they're concerned he's taking an instrument out of their hands. There is a hidden cost to the American dealer, too, that may offset the nice price he gets on a foreign sale. When I as a dealer sell an instrument in the states, it wouldn't be unusual for me to own the instrument five or six times through the years and make a profit on it each time it passes through my hands. If I sell it overseas, it might end up back here someday, but it is just as likely to stay in a foreign market.

Contrary to the complaints of many musicians, foreign buyers do not necessarily take instruments out of circulation, they only take them out of U.S. circulation. There is a strong utility market as well as a collector's market overseas, and an instrument bought for utility is still in circulation - international circulation. Sometime within the next few years, the market should reach a balance point of international distribution at which time instruments may start flowing back to the United States (but never in the volume in which they flowed out). In the long run this will change the approach of American vintage dealers. While many enjoy an international sales clientele now, they may find in the future that they must look to the international market for their supply as well as their demand.

The effect of today's foreign buyers is not without precedent. In the early '70s, it was the folk-rock musicians, under the influence of Crosby, Stills, Nash and Young, who had a similar effect. Prior to that, in the late '60s, the electric market and acoustic market were separate entities, and both were going up at a good rate. Then suddenly, with folk rock, a bunch of people who previously had no interest in acoustic instruments, but who had a lot of money, suddenly entered the acoustic market, outbidding, out-competing and pushing out of the market many American buyers who had up until then formed the basis of the market. Prices did skyrocket, maybe 30% a year, but by '75 or '76 folk rock had ended and a large percentage of these people pulled out of the market en masse. They left a void that caused acoustic prices to stagnate. It wasn't until '84 or '85 that acoustics started appreciating again.

People tend to be imprinted musically, as explained to me by Horace Ward, a 70-year-old plectrum banjo player. "We play the music and the instruments that were popular when we were of dating age," he said. Consequently, the vintage dealer can always expect (but not count on) a sort of delayed reaction, where today's music will likely be the driving force of the vintage business 20 years from now.

Today the largest segment of the vintage market is the post-war baby boom generation. Baby boomers were imprinted during a period when music was a strong social force and vintage instruments were part of that music. Music is still a strong social force to them and they still like the same kind of music. The only difference is that now they're more settled, with more leisure time, more hobbies and more money. Many of those amateur guitarists who gave music up when they started careers and families are now taking it up again. They're buying vintage guitars and all the other things they wished they had the first time around, as evidenced by the current demand for long-neck Pete Seeger style banjos, which a few years ago I couldn't give away.

The baby boomers are effecting more than the vintage market. Manufacturers of new instruments are reporting that for the first time in their history, the guitar market is not strictly a youth market. A major part of their acoustic market, especially for top of the line models, is made up of middle-aged buyers.

The imprinting phenomenon can be seen in the membership of the Fretted Instrument Guild of America. FIGA used to be a mandolin orchestra group, playing music that was popular in the period from 1905-21. Then, about 15 years ago, the focus of the group turned to tenor and plectrum banjo music of the 1922-28 period. The reason for the change is clear. The earlier members played the music they were imprinted with, and as they passed on they were replaced by younger members who had been imprinted with the music of a later period. (FIGA may well be doomed, because the instrument of the next period is the archtop acoustic guitar of the '30s, which is not so well suited for guitar-ensemble playing.)

Although I expect the baby boomers to be a major segment of the vintage market for as long as they live, I have no doubt that buyer profiles will continue to change as the music of the day changes. Many buyers who started out in rock and roll or other electric music come from a background in which Gibson or Fender are more respected names than Martin. For these buyers a Gibson Hummingbird, Dove or Everly Brothers model may have more prestige than a Martin herringbone D-28. Buyers with a blues background may prefer an old Gibson J-200 to a Martin dreadnought. To today's 20-year-old guitar buyer, an Ovation guitar with a built-in pickup and a fiberglass back may be just as traditional as a Martin is to a 40-year-old. While it's difficult for a veteran in the vintage business to imagine an Ovation or other modern guitar attaining "vintage" status 25 or 30 years from now, it would have been difficult 25 or 30 years to imagine that there would ever be a collector's market for a production-line solidbody electric called a Stratocaster.

Of all the factors that influence the market, the least influential but most-maligned is the dealer himself. At the Dallas guitar show in March of 1988 most of the sales movement appeared to be between dealers. Most of the people walking around at the show were dealers-the crowd was not by any means a cross section of the vintage market-but many of these "dealers" are really collectors who wheel and deal guitars to support their hobby. Many don't have an actual dealer businesses.

Some guitars at the Dallas show probably went through three or four dealers, but the reason for the buying and selling was not to artificially raise prices. Dealers buy an instrument because they think they can find a buyer who will pay more than they did for it. They're not going to pay $500 for a guitar unless they think there are buyers for that guitar at a higher price. That is not manipulating the market. That's basic business practice-in any business.

I don't believe there has been any conspiracy among dealers to raise prices. I don't think most vintage dealers like or trust each other enough to enter into a consipiracy. I know from experience that one dealer alone can not manipulate the market. When I priced something too high, the public let me know with deafening silence. On the other side of the issue, there have been numerous occassions when I stated that certain items - particularly Strats - were overpriced and that it was a stupid fad that would crash. I said I wouldn't participate in this Strat thing, and I missed out for a long time. I sold Strats for what I thought was a fair price and then watched other dealers make the killings. They sold those Strats for as much as they could get and buyers seemed eager to participate.

Granted, there are in this business dealers with poor ethical standards, but that is not unique to the guitar business. Nor do these dealers control either the market or prices. As in any open market, buyers control prices by either paying or refusing to pay what dealers ask.

That is not to say that one person can not wreak havoc on the vintage instrument market, but that one person is likely to be a buyer - a very rich one - rather than a dealer. There is not enough money to be made from dealing vintage instruments for any dealer to take over the market. It would be far more likely for a collector or small group of collectors to corner the market for a certain type of instrument. The total number of instruments in circulation of certain rare models, such as pre-war Martin D-45s, Gibson Lloyd Loar F-5 mandolins, Gibson All American or five-string Granada Mastertone banjos, or Fender Broadcasters, is so small that the sale of a very small number of instruments-as few as half a dozen-could greatly influence the market. Whereas you could go to 47th Street in New York and spend $1 million or even $10 million on diamonds and not cause an eye to bat in the diamond market, an instrument collector with a million dollars could easily corner the market on a rare and valuable model.

That market gets smaller and smaller as prices go higher. While there are millions of people worldwide in the market for a $500 guitar, I can often count on my fingers the number of potential buyers for a $10,000 instrument. The fact remains that the particular models that bring prices in excess of $10,000 instruments are so rare that demand still exceeds supply.

Certain instruments, like certain stocks, have prompted many people to say, "If only I'd invested $10,000 in that, back in 1980." On the surface the vintage market does appear to be much like the stock market and maybe even more appealing to an investor. Not all instruments have risen and fallen like the Strat; a few have risen dramatically and stayed high. The overall vintage market has shown some nice rises - 15-20 percent per year from 1964-70, for example - and although it has stagnated some years, it has never had a unilateral crash like the stock market has. Instruments that suddenly shoot up in value, like their stock market counterparts, are risky, but the investor who knows when to get out of a bull market (or a Stratmania) can reap considerable profits. And unlike a stock portfolio, an instrument collection can provide pleasure and, if you play well enough, extra added income while it's appreciating in value.

In theory, as long as the vintage market rises faster than interest rates, instruments would be good investments, and in fact the vintage market does rise whenever interest rates are low. However, there is more to it than that-specifically, more cost involved in collecting instruments than buying stocks. The instrument collector must store, maintain and insure his collection. And unless he is a veteran collector with the means to sell his instruments directly, he must sell through a dealer, either by selling outright or consignment. Either way, the dealer's percentage is going to be much higher than a stockbroker's percentage. Consequently, for an investor to make a profit in instruments, interest rates must stay low, and the market for his particular instruments must rise considerably.

Prices will probably continue to rise in the vintage market if for no other reason because there will be more collectors in the market through the next few years. Recent musical trends among those who play guitars, mandolins and banjos are toward more sophisticated music, which appeals to a more sophisticated listening audience. To the vintage dealer, the term "more sophisticated" will mean more educated and more money. If we see more people of any type-especially the more sophisticated type-in the vintage market, we will see prices escalating.

The Vintage Instrument Market, Part 6: The vintage dealer as trendspotter

Dealers of vintage instruments, ironically, have a much better view of sales trends of new instruments than most dealers and manufacturers of new instruments. When there's a demand the vintage dealer sees it instantaneously. Prices go up, and supply goes down. Some things come and go in a period of as little as three months.

It's harder for a manufacturer to feel or see changes so quickly. A manufacturer, even if he's carefully watching monthly sales printouts, even doing market analysis to the hilt, only sees a demand in terms of what dealers are ordering or not ordering. He's not selling to public directly and he's only making his own line. Fender makes only Fender, and Gibson makes only Gibson. From Gibson's point of view, if there's a sudden demand for Fender Stratocasters, how does Gibson determine that from its own sales figures? If all of a sudden the public wants an electric guitar with three pickups and a whammy bar, and a manufacturer only makes a two-pickup model without a whammy bar, they may see a gradual decline. They won't see customers switching from model to model since they have nothing like that in their catalog. From Fender's point of view, a big demand for vintage Strats may trickle over into new Strats a bit. But if the public wants a Floyd Rose tremolo, split-coil wiring, or some other kind of state of the art feature, they don't see that because it's not something they make. Their perspective is too narrow.

Retailers deal directly with public, but most dealers of new merchandise still don't have as good a grasp of what's going on as one might expect. They order from various companies and get stock models. If the public wants something that is none of the above, they often don't know it.

Many vintage dealers also do custom guitar work on non-collectibles. When people come in wanting a Strat with non-standard pickups or a non-catalog bridge, that is a leading-edge indication of a demand that many new instrument manufacturers are not easily able to see.

The information manufacturers get from dealer orders may not truly reflect trends until it's too late. Dealers can make mistakes in guessing what the market is going to be. The important figure is not what dealers order but what they re-order to replace sold merchandise. I've seen frequently dealers misinterpreting the market and continuing to order items that are dead. I've seen them be too slow to recognize and jump on a fad and too slow to jump off it when it's dying. For the manufacturer, relying on dealer orders to determine market changes is like trying to drive a vehicle that has a six-month response delay. To some extent it's like trying to drive forward with only the view through the rear view mirror. We know where we have been and perhaps where we are, but the future is a guess.

In the case of Gibson Les Pauls, the delayed response time was 10 years or more. Gibson quit making them at the end of 1960, and then Mike Bloomfield's playing created a demand for them starting around 1964. At the June 1968 trade show, Gibson announced a reissue of the late 1955- mid 57 goldtop model with single-coil pickups, stop tailpiece and tune-o-matic bridge. It was a response to a demand, but it was the wrong response. If Gibson had consulted any vintage dealer, they would have found that Bloomfield had indeed played a goldtop Les Paul in 1964, but since then he had switched to a later model, a 1959 sunburst with humbucking pickups and tune-o-matic bridge. That - not the gold top - was the model that Bloomfield's considerable legion of followers were buying at premium prices from vintage dealers. Gibson switched the pickups and finish by 1970, but it was 1980 before they made a true reissue of the guitar Bloomfield played. Gibson was responding to what they saw as a demand for Les Pauls without carefully researching what the buyers truly wanted. By 1968 Bloomfield was not as influential as he had been earlier, and many buyers of Les Paul guitars were not even very familiar with Bloomfield. The fact remains that he was the trendsetter and whether the buyers knew who he was, the demand was definitely for a mid 58-60 sunburst Les Paul Standard.

The same thing happened with Gibson's Flying V and Explorer, two models that did not sell well at all when they were introduced in 1958. By the early 1970s, however, they were bringing big bucks for vintage dealers. In 1976, Gibson came out with an Explorer "reissue," but it was made of mahogany rather than Korina as were the originals. Not until the '80s, with the Heritage series of reissues, did Gibson finally respond to a demand that had been clear, at least to vintage dealers, for a decade.

Gibson was not alone. Fender Stratocasters of the '70s, with the "bullet" truss rods adjustable at the peghead and three-bolt neck fastening system, were not what players wanted, as vintage dealers could clearly see. There was a demand for the earlier styles, but Fender didn't respond with vintage reissues of Strats and Teles until the '80s. Then they sold like crazy.

Martin, the most venerable of instrument manufacturers, has always been the slowest to respond to obvious demands. Where Gibson responded to the growing number of steel-string players by installing adjustable truss rods as early as 1922 (and Epiphone did the same in the '40s, as soon as Gibson's patent ran out), Martin held off until the '80s. Since 1959, there has been a clearcut demand for vintage pre-World War II Martins, but Martin did not reissue its famous herringbone D-28 (now called the HD-28) until 1976. Now Martin's custom shop is enjoying great business on instruments ordered with vintage characteristics.

Blindly copying vintage guitars is not the answer for the future. There are new innovations not available on vintage guitars, but most vintage dealers do repairs and custom work and thus see those demands, too. For example, the current demands among acoustic players include: good intonation and in some cases compensating saddles; fast action necks; wider necks than those on '60s and early-'70s models; truss rods that really work; and synthetic materials for better stability. They want the best of all worlds when it comes to sound. They want their guitars to ring and sustain as well as go boom. Those who play in the studio as well as onstage want balance and accurate intonation plus a sound that records well. In general, today's buyers are concerned with quality of workmanship. Unlike the '70s, when the market was more youth-oriented, many of today's buyers are older, more sophisticated, better educated, wealthier and more demanding.

On the electric side, Stratmania is dead and gone, which means there's once again a diverse demand. People still want Strats (just not Strats only, and not at the prices of a few months back) but there has been a considerable increase in popularity of hollowbody and semi-hollow electrics. There has been a real revival of interest in the market niche that used to be occupied by Gretsch's thin-body electrics and is now vacant. I see it not only as a jazz market, but a rockabilly-type market as well. Gretsch was a significant force in the '50s and '60s with a sound different from the two main schools of electric guitar thought, Gibson and Fender. Today there are demands for Gibson, Fender and a lot of newer guitar sounds, and those demands are being filled by manufacturers.

There is also a clear demand for Gretsches, but that demand is being filled only by vintage dealers. One market trend evidenced by the very presence of vintage dealers is the continuing popularity of the guitar. Looking only at the recent history of dealers of new instruments, it would appear that the guitar, especially the acoustic guitar is dead. The guitar boom of the '60s brought in a new era of music stores. A higher music consciousness in our society resulted in more stores in general, and the type of music resulted in stores whose inventory was, for the first time, primarily guitars and other fretted instruments. Up until then, a music store was either piano-organ or "full-line," which included pianos, organs, band instruments and maybe a few guitars. A guitar store was thought to be too specialized to succeed.

That changed in the '60s and '70s however, as evidenced by the record production years Gibson and Martin had during that time. Gibson's output peaked with 102,000 instruments sold in 1966. Martin sold 22,000 acoustics in 1971. Vintage instrument stores appeared, handling used fretted instruments, which was unheard of in past. In early '80s, trends changed back to keyboards, and dealers, hoping to keep up with the music of the day, switched back to full-line stores, the new version of which has a heavy inventory of synthesizers, "sound reinforcement" equipment (amps, PA systems, outboard effects units) and lighting systems.

In the early '80s, guitars appeared to be a dying breed in the face of rapidly improving keyboard technology. While keyboards have gained a sizeable percentage of instrument sales and thus changed the face of the full-line music store, the guitar, as any vintage dealer can tell you, is coming back strong. You don't have to be a vintage dealer to see the reasons. One, musical tastes are tired of everything sounding like a Yamaha DX-7 and the pendulum is swinging back toward more traditional sounds. And two, while the elecronic keyboard's musical versatility may rival that of a guitar, the keyboard has not been made yet that looks as sexy as a guitar, is as portable as a guitar or can synthesize the sound of a strummed guitar.

Ironically, it is the vintage dealer and not the manufacturer or new instrument dealer who is in the best position to see demands that can be filled. Manufacturers and dealers of new merchandise don't recognize this demand, but they could hardly be expected to. They don't see their sales fall or rise because they don't make any models in that niche. The vintage dealer, however, does see that market.

The Gretsch-type ornamentation is a case in point. Nobody currently makes it so they don't know if it sells or not. I see it, though. That's not to say that everybody wants an exact copy of an old Gretsch. The neck-set angle was not good, the bridge was unsuited for the light-gauge strings preferred by most players today, and the switch system was less versatile than Gibson's. Nevertheless, there is a definite demand for the Gretsch sound and the Gretsch look that no manufacturer is currently filling.

Most manufacturers are not in a good position to recognize such a market void. They see only sales and market trends of their own product, and they see it after a six-month delay reflected by their dealers' orders, which may or may not be right. It can take manufacturers years - 10 years in the case of Gibson and the Les Pauls - to figure things out. A dealer can tell which Martins are selling, but if none of the current ones are selling, the only thing a dealer can report is that there's no demand for Martins, at least not for the Martins currently marketed by Martin. A vintage dealership has a much more diversified "line." His line includes (though he won't have them all in stock) any instrument anybody ever made - ever. Therefore the vintage dealership is a much more sensitive instrument for measuring market trends than a new instrument dealership.

The Vintage Instrument Market, Part 7: Instrument sales and musical trends

The success of any instrument dealer or manufacturer depends to a considerable extent on his ability to recognize and react quickly to new musical trends. As many dealers have found out the hard way, a palm reader or a ouija board may be as accurate in predicting long-term future trends as record sales and concert attendance figures. But whether they realize it or not, dealers of both new and vintage instruments do, in fact, have a highly accurate, leading-edge indicator available to them. Figures are readily available to dealers both from examining their own sales and talking to other dealers and suppliers. Sales figures - particularly taking into account the grade of instruments - can be used to determine whether a musical style is currently in good health or whether hard times are ahead.

The key to this sales-health connection is the fact that for a style of music to truly thrive, it must be accessible not only to the average listener but to the average player as well. One can judge the health of a particular market segment by breaking instrument sales down into four basic categories:

1. Student grade, introductory instruments that a non-player buys because he wants to learn how to play.
2. Intermediate grade, for amateurs who enjoy playing but are not super serious, better than beginner category, but not professional.
3. Utility grade, stage-worthy professional instruments, such as new Gibson and Martin guitars, Stelling and Deering banjos, not cheap but not necessarily collectible.
4. Collectibles, instruments that may be played but that have value and appeal beyond utility.

As a style of music rises and then falls in popularity, sales of instruments tend to go step-by-step through these categories. The most important market indicator of the four categories is the student grade. If they're selling well and products like audio tape lessons, songbooks and video lessons are also selling, then the market is healthy and in rather good shape. Regardless of concert attendance, record sales and radio airplay, if student-model instruments are selling, the market is healthy and growing. If sales of instruments at the intermediate level are healthy, I also feel good.

Sales of professional-grade instruments reflect a more mature market, and there obviously must be sales of those for the market to be healthy. But if there is a market, for example, in which categories 3 and 4 are selling but the others have slacked off, this is a sign of a real problem. If student sales drop, I see a leading-edge indicator of trouble. If intermediate sales also start slowing, then there is deeper-seated problem. If only category 4 is selling, I'd say that the market has already died. The style of music may still be selling records, but I'd classify it with the walking dead. There are several reasons why sales trends come and go, among which are: the state of the musical art and musical imprinting and re-entry patterns.

These patterns appear to be constant through many musical styles. Although rock and roll in general has remained consistently strong, its sub-styles are constantly changing. The trend toward acoustic instruments in the early '70s, the move to synthesizers and drum machines in the early '80s, the current interest in the "Big Chill" soul music of the late '60s and the folk music of the early '60s all follow similar patterns. Clearly-defined styles, such as bluegrass or old-time music, in which the audience doesn't overlap so much with other forms, provide the clearest examples.

This method of analysis indicates that bluegrass music may be encountering some difficulties. While professional-grade instruments, such as Gibson RB-3 and Granada banjos and F-5 mandolins, are still selling, sales have slowed on student- and intermediate-grade banjos, mandolins, fiddles and resonator guitars. Further evidence, in this case, can be found in the parking lots of concerts and festivals. In years past, there was as much or more picking in the parking and camping areas than there was on stage. In Union Grove, NC, and Galax, VA, there wasn't even any paid entertainment, only contests, and people came from a thousand-mile radius not just to watch an event but to be a part of it, not just to listen but to play. Crowds reached as high as 30,000, and the music was certainly thriving and healthy. From my standpoint - a dealer's standpoint - it was wonderfully healthy in the parking lot. Everybody had an instrument in the trunk of his car, and I could buy, sell and trade like crazy. There was a lot of real action and interaction going on.

Over the years the trend I've seen at some of these is that there's been more onstage and less offstage action-music as well as dealing - which I see as a sign of ill health. There is a great deal of truth in the words of longtime Opry manager, George D. Hay, the "Solemn Old Judge," who constantly admonished the performers to "Keep it down to earth, boys." He was right. One of the reasons fewer people are buying bluegrass instruments is, ironically, that the style has become so sophisticated in the hands of some musicians that the music is less and less accessible-melodically and rhythmically-to the average listener or amateur player. For bluegrass to thrive, there may well have to be a backlash movement, a sort of back-to-basics trend similar to the one country music has been through in the past few years.

Bluegrass is still popular enough that it's hard to imagine it dying out, but styles can die. An example is the Fretted Instrument Guild of America and the sales of tenor and plectrum banjos in the U.S. Fifteen years ago I used to sell all categories of tenor and plectrum banjos. Then I started seeing a drop-off where the student instruments disappeared, followed by a drop-off at the intermediate level, followed later by the professional models. The collectibles are now the only category that sells, but I feel fears of what's going to happen.

The U.S. market for tenor and plectrum banjos seems pretty dead (interestingly enough in Switzerland and Germany we're still selling in all four categories). The basic reason for that is well-illustrated by FIGA. Twenty-five years ago FIGA was almost exclusively devoted to mandolin orchestra music. Then about 15 years ago it switched, and became dominated by plectrum and tenor banjo players.

FIGA also illustrates the phenomenon of musical imprinting. "Imprinting" is a psychological term first introduced in the '30s by the noted German animal behavior specialist Konrad Lorenz. He found that in newly hatched geese, the first moving object that they saw was "imprinted" as a mother image. Normally this would be a mother goose. If, however, the first animal they saw in the first few hours of life was a person, they'd follow people and identify with people for the rest of their lives. Similar phenomena held true for other species. The concept is that there are formative stages in which a lasting imprint is made. Animals can learn at many stages in life, but this learned behavior differs from imprinting, which produces permanent patterns of preference.

We tend to become imprinted with the music that was popular when we were of dating age, from age 14 up through our early 20s. Then many tend to drop out of the music scene. They acquire an expensive wife, expensive children, an expensive house and car, upward mobility and lack of free time. They can re-enter the music scene in two phases of their life. One is the phase that the postwar baby boomers are in now, where their upward mobility and their job has stabilized and they have money and leisure time to once again pursue their hobbies. We're seeing a folk music resurgence. I now have numerous requests on file for Pete Seeger-style, longneck banjos, whereas five years this was a dead item. Seeger was never all that great a banjo player but he reached out and touched a lot of people. He and Earl Scruggs are the two men who, more than any other, got people to play banjo. While Pete's musical style hasn't gone on to be as influential as Earl's, his influence in getting people to play banjo was every bit as strong as Earl's.

We're now seeing yuppie musicians, baby boom folk players. That's the music they liked when they were growing up, and they're taking it back up with a vengeance now. This doesn't mean that they're taking it up in exactly the same format as when they were kids. They're older, more mature, more educated, and they have more money and more stability. They're able to buy more expensive instruments and stereo systems, and they're more sophisticated. Instead of playing folk music and protest songs, they may be listening to Windham Hill recording acts or Tony Rice, but it is still acoustic music and it's a direct offshoot of something that was happening when they were dating age.

There is a second wave of yuppie musicians about four years behind the first. They are rockers - the people who listened to the folk in the early '60s and the Beatles and Rolling Stones in the mid- to late-'60s and then dropped out of the scene. I expect them to follow the same re-entry pattern as the folkies. The baby boomers are a good example of musical imprinting and the first phase of re-entry into the music scene. FIGA members illustrate the second re-entry phase, and that is at retirement. At retirement they no longer have upward mobility, they have plenty of leisure time, and the hobbies they drift to are often the ones they had back at dating age.

Twenty to twenty-five years ago, FIGA was made up of people who played mandolin when they were of dating age, between 1905 and 1921. As the mandolin players passed on, the FIGA membership moved gradually into a group who were of dating age in the '20s, when banjo was the instrument to play. Not surprisingly, FIGA became a banjo-oriented group. They don't like to hear this, but the next group is the crooners and the big bands, and while you can have 100 banjo players playing "Yes Sir, That's My Baby," you can't do it with archtop guitars.

What happens to people when they retire? First, they all of a sudden have a lot of leisure time, and if they've provided well for themselves they have a goodly amount of money. So one of the first things they do is to start getting into their hobbies, which are often strongly influenced by their earlier imprinting, musical or otherwise. If these hobbies have been neglected, then they have a sudden outburst of buying, taking music lessons and getting involved in these hobbies. Five to ten years after they retire, they become less acquisitive. They already have their collections. They no longer need student instruments. Then it gets to a point where they realize they're not getting any younger, and they're getting physically weaker, they can't get around as well, they're children and grandchildren aren't interested in their instruments, they are either too feeble to participate or dead and buried.

We are now faced with an interesting phenomenon in the wealthy industrialized countries in which for the first time in human history the teenage population is outnumbered by the 65-and-over population, and in which the 40-year-old or baby boom age bracket is the majority of the population. The birth rate is down and the death rate is down. People live longer and reproduce slower in the same countries where guitar sales are a strong factor. The youth-oriented market is no longer the biggest segment either in numbers or in buying power.

That will be good for the market in the long run. Now that we have an aging population, while the initial phases in musical trends may not last any longer than they used to, the re-emergent markets-the results of imprinting-are not only big, but they last a long time. The original folk boom, for example, only lasted from 1959 through 1963, but its impact via the baby boomers is likely to be profound in size and duration.

One of the things that we see in the market today and in the foreseeable future is that often enough it will be the second and third phases that will sustain music manufacturers and concert promoters through the long run. These people re-entering the market will buy instruments in categories two and three (intermediate and professional grades), whereas young people usually buy from category one (beginner grade) or two, or occasionally, if their parents have the money, category three. Older people - people at the second re-entry phase - tend to enter the market with instruments from categories two or three. The people at both re-entry phases are the ones who sustain the biggest part of category four instruments and a good part of category three.

In addition to recognizing trends before they hit (or leave), we can also do things to keep music healthy and vibrantly alive, to prolong the life of a form we appreciate. Not only does music have styles or trends that come and go, but the popularity of music per se goes up and down. In the period of the folk boom, music was enormously important as a social phenomenon as well as an art form. Everybody was listening, more so than before. This continued on through the rock boom of 1963-70 and the folk rock boom of 1970-75. After that and continuing on through the 80s, music was less important. That was a period when for the younger generation, the idea of a good time was to go to the video arcade. For the older folks, it was propping up in front of the tube with a six-pack. Music was not as much a part of everybody's leisure time from about 1976 to 1983. Music now is coming back, and we need to encourage anything that encourages music per se. That means instruction and contests.

We can start in the schools. Manufacturers of brass instruments have been aggressively promoting band music since before the turn of the century, and they are still at it. They don't wait passively for musical trends to popularize instruments. The fretted instrument business had its strongest parallel in Gibson's mandolin orchestra promotions during the first two decades of the century and during the banjo boom of the 1920s. Up until World War II, Gibson's catalogs and promotional literature offered instructional materials as well as instruments. However, since World War II there has been virtually no educational and instructional effort on the part of fretted instrument manufacturers. Certainly there is not currently any shortage of teaching materials, in terms of audio tapes, video tapes and books. Past experience shows us the greatest amount of teaching material was available toward the end of any particular boom. Trends never died because of any lack of instructional books. On the other hand, what we see today is that there's not nearly enough money available for teachers. The public school systems are cramped for funds and many have eliminated music teaching programs. Private schools often enough have shortages of funds and skilled teachers. Teachers who are available are classical or band/orchestra only in their orientation, as opposed to pop, rock, folk or other styles that may motivate children. Music stores in the past devoted a large part of their business to lessons, rather than the supermarket approach of stores with discounting and mass marketing rather than service. Therefore anything we can do to promote teaching, in schools or in stores, will be most beneficial-not just to any one particular style, but to the concept of playing music in general.

Promoters of events can plan them so that impromptu jam sessions are encouraged. The parking lot picking was for many festival goers as big an attraction as the scheduled performers. At weekend or weeklong festivals, where name acts would be booked to perform for several days, those performers could usually be found between shows out in the parking/camping areas jamming. Lately, however, it seems that the venues hardly allow for that kind of activity. One-night shows at auditoriums, or acts which are booked for one show and then are back on the road, discourage the picking which is at the basis of the music's appeal. People should be encouraged to bring their instruments and pick and jam and have a good time. The performers should be encouraged to get out in the audience and get out and pick and jam with these people. And the events should be planned so that there is time and space for everyone to pick.

Promoters can also encourage jam sessions onstage, putting people together in interesting combinations. It used to be done at many festivals and it resulted in spontaneous live music that was not what you hear on the record. It was something that was really exciting to the audience. That's the kind of thing that makes people want to play and listen as well.

Another valuable promotional tool is a contest. Contests tend to get people fired up. In Japan, Yamaha sponsors successful contests in all sorts of music. Needless to say, it would be good to involve media promoters and manufacturers of musical products in the sponsorship of those events. All too often organizations like NAMM opt for a slogan campaign, like "The fun is in the playing." While that is certainly a true statement, it is hardly as strong an enticement to learn to play an instrument as a contest would be. In addition, a contest would probably be less expensive to produce and more likely to attract media attention. We need to focus media and public attention to playing, not just seeing.

One does not have to be an industry giant like Yamaha to promote a successful contest. On the retail store level, Skip's Music in California has been running regular contests for quite a few years which have been very successful in building up store business. All too often, kids who like to play don't have any outlet. When contests come out they bring enormous numbers of folks out of the woodwork. Look at Union Grove, Galax or any of the other old-time and bluegrass festival-type events based around contests.

Contests pay off for the promoters as well as the winning contestants. If they're run well they're not just a money drain, but they can actually generate income. In addition, if done right, they can be newsworthy media events that the media will cover without necessitating large advertising expenditures. Media advertising is expensive, and the average guitar manufacturer grossing five, ten or twenty million dollars a year can't afford a national promotional campaign. We're in an industry that's small enough that we have to rely to a considerable extent on staging media-worthy events. We can't possibly do like Ford or IBM and buy media space. We have to rely on our wits. Contests are something that we really can do and absolutely are known to work. They bring a lot of result per dollar spent. We need to promote a variety of different types of music, not just rock or bluegrass or country.

It's virtually impossible to promote something that's truly a dying art form, nor do we want to put our eggs all in that basket. We don't want to have the sort of image of being overly conservative or so rooted in the past that we reject new movements. We need to recognize that trends come and go and certainly there is change. To prosper we need to endorse change. We can realize that any one type of instrument can be used in numerous forms of music. The guitar has been versatile enough over the years. Banjo and mandolin have been less versatile in this regard, although we can see evidence in the new acoustic music that they are quite capable of holding their own in forms that are far afield from bluegrass. One of the challenges for banjo and mandolin manufacturers will be to break this image and to actively promote new music and a new image for their product. We need to recognize and utilize the enormous influence of MTV and other cable type media. In the past, music has basically been spread about by live performance, radio or records and some TV coverage, but not anywhere near the kind of extensive coverage we see on MTV. MTV emphasizes the visual aspect of music in a manner more intense than has ever been done before. With radio and records you could hear, but not see, the musician, and those media didn't always influence instrument sales (or clothing sales, for that matter). On MTV the performers are often lip syncing or play-syncing, or even using instruments that may have no relationship at all to the ones they recorded with. A prime example is ZZ Top sawing the heads off some cheap guitars and gluing fuzz on them. The instruments weren't playable. Nevertheless, people see these things and want to buy them. MTV obviously has had a profound impact. At present, MTV is having a disproportional impact because it pushes a certain type of music. Other types are not getting anywhere near the play that hard rock gets on MTV. Other cable networks have recently been formed - VC-1 (MTV's adult contemporary spin-off) and a country cable network. It will be important for NAMM members and manufacturers to take advantage of the impact that these networks will have.

I have felt the impact of cable music channels in my business as it involves European markets in the past few years. Up until quite recently, Spain and Italy were not good markets. The Spanish played Spanish music, and the Italians played Italian music. They weren't into the international rock scene, or jazz or blues. The good markets were the ones influenced by Armed Force Radio. However, in the last couple of years, there have been European super cable network systems that have hooked up into Spain and Italy, and soon after these cable networks hit, there was a major impact on the people wanting to buy guitars. It behooves NAMM and the manufacturers to do as much as they can to take advantage of these new marketing tools.

Manufacturers can also take an active role in shaping their markets by carefully choosing musicians whom they wish to sponsor or obtain endorsements from. They should look for musicians who are reaching out and grabbing the public - not necessarily those that sell records, but those whose music is at a down-to-earth level melodically and rhythmically, a level that inspires others to go out and buy an instrument. Virtuosity is not the issue here. Popularity is. A great example is my own father. Back in the '60s he used to like to listen to Perry Como. I would say, "Perry's not all that good." He'd say, "I know that, but he sings tunes I know and identify with, and I can sing along. I'm comfortable with him, but when they get into opera and sing over a four-octave range in languages I don't know, it makes me uncomfortable."

In bluegrass, for example, Bill Monroe, Earl Scruggs and Josh Graves, even though highly innovative, nevertheless played styles that technically were within the comprehension of the average amateur listener. Their special touch-the finer points of their styles-is the part that's so difficult to master, not just the notes.

Even with musicians playing inspiring melodies, promoters encouraging parking lot jam sessions and manufacturers sponsoring contests, we still can't really fully control musical trends. We can't erase musical imprinting. We can't keep older players from dying, taking their favorite musical styles with them to the grave. On the other we hand, we don't have to take a fatalistic attitude. We've seen that Gibson and other manufacturers in the past have taken very active roles in shaping trends and in doing so, shaped their own destiny. We can help prolong trends by active promotion and musical education. And with the best leading-edge indicators already at hand, we can recognize and take advantage of new trends.