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The Sound of the Eighties: State of the Mart

Advent’s Bernie Mitchell on the health of the hi-fi industry and a future built on the linking of audio and visual

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There isn’t anyone in the high-fidelity industry who doesn’t know who Bernie Mitchell is. He spent the first part of the Seventies as director of marketing at U.S. Pioneer and eight years as president before moving to Advent in February as vice-chairman and chief executive officer.

Mitchell built Pioneer into the largest marketer of audio products in the country. To achieve major growth, he couldn’t rely on just selling more products through the company’s existing dealer network. He had to expand its distribution and product selection.

This created disturbances in a marketplace accustomed to a small group of manufacturers selling products to a small group of dealers on a friendly basis, usually offering exclusive rights to a line in any given area. When dealers complained that the added competition of Mitchell’s expanded distribution network could erode their profits, he cited fair-trade laws that allowed manufacturers to specify the retail prices of products. When those laws were rescinded in the mid-Seventies, it was open season on prices, and anybody with ill feelings toward Mitchell shot down Pioneer prices first. Pioneer sued dealers for disparaging its products in order to sell another brand, and won.

Mitchell is an audio democrat who says he wants to bring good music to all the people, and making hi-fi available through more stores accomplishes that goal. It accomplished his sales goal as well. When Mitchell took over the marketing reins at Pioneer, the company had sales of $2 million with seven products. When he resigned as president in January, sales were $238 million with 125 products. During his tenure, the company added seven subsidiaries, the most notable of which is high-end hi-fi manufacturer Phase Linear.

When we talked to Bernie Mitchell, he was just completing his fourth month at Advent, one of hi-fi’s oldest and most venerated names. Advent is a small company, with sales hovering around $38 million. But it has a reputation for technological innovation and manufacturing excellence.

The home-entertainment industry is now poised on the brink of change, and Mitchell appears to have put himself in a position to affect its direction. We wanted to know how things look from where he sits in Cambridge, Massachusetts.

The audio business has not been doing well lately. What do you think is causing the malaise?
I don’t know that I can accept carte blanche that the audio business is not doing well. I think dealers are selling inventory and not replacing it, so manufacturers’ business is down. But I don’t think the shortfall in their volume is a direct reflection on the reality of the marketplace. Manufacturers see the business picture as much more bleak than it really is.

So you believe that audio gear is still selling at the retail level?
I don’t think business is growing at retail, but audio is still selling. If there is any decline in dollars, it’s probably very slight.

For years, hi-fi was a booming business. Is this slow period indicative of a decrease in excitement among consumers?
There are two answers to that. I think we are about to enter a ten year period in which there will be fewer people between the ages of fourteen and twenty-five, as the baby-boom generation ages. So even if audio remains as exciting as it was in the last decade, sales will still be doomed to decline by almost one-third. We’re already seeing some signs of that. Also, I think we’ve failed to make audio exciting to people who have children and essentially think of hi-fi as a young people’s business.

There has been a great deal of talk in the industry about manufacturers and retailers becoming attuned to a broader audience. What can the industry do to convince people that hi-fi equipment is a good investment and an enjoyable possession?
One of the problems is that we’ve created the impression that hi-fi equipment is for playing music and television is for watching pictures. We have to convince the world that there is an experience at least as good as either one of those, and probably considerably better. By that, I mean harnessing audio and video together to deliver an enormously impressive sound, concurrent with the delivery of pictures. I think rock concerts on television are a good idea, but so far they haven’t worked, because a musical phenomenon through a three-inch oval speaker on a portable set is not much of a phenomenon. We can create a very powerful device for delivering not only music and movies, but all sorts of entertainment.

Television manufacturers have been trying to improve the quality of sound from their sets. How long do you think it will be before good sound in television is generally available?
I doubt that it ever will be. Audio output jacks, are terribly important. If you go from a three-inch speaker with two percent distortion to a five-inch speaker with one-and-a-half percent distortion, you’ve made an enormous improvement. But television manufacturers probably would be better serving their audience if they left the speakers out altogether and just put a tuner and output jack on the set and let people run the sound through their high-fidelity systems.

That’s not very likely.
It’s not likely because the television people have been unsuccessful in the hi-fi business. If RCA and Zenith had a piece of the hi-fi business, they would have an incentive to do that: it would help sell hi-fi and it would make a better product. But they’ve tried for ten years to make inroads in the hi-fi market.

There is some speculation in the industry that the videodisc will go a long way toward giving us better sound in television and spurring the marriage between audio and video.
There’s no question about that. I think it’s the catalyst. Over the next ten years, more than 40 million people will probably buy a videodisc device. They will realize it has the capacity to reproduce sound that is competitive with the best phonograph records. Television receivers are about to become merely one more part in a component industry that will consist of audio amplifiers, audio speakers, videodiscs, videocassettes, headsets, projection TVs and conventional nineteen-inch direct-view TVs.

Let’s go back to that audience the hi-fi industry has not been able to tap: the older audience. The industry expended a great deal of effort and money on that market. You were at the forefront of this at Pioneer, with groundbreaking ads in Time and Playboy that tried to reach out to people hi-fi had not touched. That’s been an unsuccessful attempt so far. Or do you disagree?
No, I don’t really disagree. Essentially, we went after those people, saying, “I will bring them up to the level of understanding that I have, rather than build my products down to the level of understanding they want.” I don’t think I would do that again. A lot of companies in the hi-fi business are now building respectable hi-fi equipment that is much easier to understand and to own. Advent is doing that. Pioneer is doing an exemplary job of that. A number of other companies are doing it. This will probably be more successful than all the ad money we tried to splash against them.

So you believe that this will be the successful way to bring high fidelity to more people?
I believe that with the combination of videodisc and projection TV, people will say, “Gee, now that I have the capacity to own all the rock concerts, all the operas, all the ballets, all the travelogues, all the movies that I want, I really want to back that investment not only with a good television set, like a projection TV, but also with a good audio system.” They still won’t get into microfarads of capacitance, but they’ll begin to select a respectable system that they can understand and put together without becoming experts in audio equipment.

This is an industry led by its technology. New products and technology create excitement. But people get a little confused by an industry that touted power for a long time and now seems to be touting lights and features. Has the industry been a little too involved with frills?
Probably not. When this hobby became an industry and began to throw massive doses of research against the problems of audio, we made major breakthroughs. We went from tubes to hybrid to solid state. That really was a revolution. Then the power picked up. Then we got distortion down so low that it was almost imperceptible. Then we began to get so good that it was difficult to come up with a revolution, so we started to invent revolutions. I don’t think that was hype; I think that was a very real response to consumer demand for better and better stuff. That is the definition of the hi-fi industry—a quest for perfection. That won’t stop until we make sound that is reproduced as perfectly as it was created by the original artist.

Given all of the products and model numbers and various selections available, how does one decide on home-entertainment equipment?
In the first place, it is very difficult not to get a good hi-fi system. There are darn few products on the market that have been around for very long that aren’t good. So the difference between good and better and best is somewhat smaller than it used to be. Pioneer, Kenwood and Sony receivers are all good. It’s probable that at any given moment Pioneer is a little better than the rest. It’s possible that at some other moment Sony is a little better. But nobody keeps that lead for a long period of time, and all those well-known and widely accepted products are mighty good.

What impact is the videodisc going to have on the potential buyer? What is he going to be faced with in terms of choices?
There are going to be three systems: the RCA capacitance system, the laser-optical system that U.S. Pioneer and Magnavox are promoting, and a system from JVC called VHD, which will come much later. In the first two or three years of that contest, there will be just one decision, and that’s between the capacitance system, which is low priced and not as good, and the laser-optical system, which is higher priced and better. The decision for the consumer is pretty easy: do I want a product that’s built to be low-priced and not very good, or do I want a product that is going to cause more of a financial sacrifice when I buy it but is better? I think I’ve watched consumers long enough to know how they will respond. I don’t think the public is going to be concerned that a laser-optical product costs a few hundred dollars more.

We’re talking about the videodisc being the real catalyst for the audio-visual marriage. What is the relative importance of hardware and programming in getting this marriage going?
There’s not enough software now to make the revolution even remotely begin to reach its potential, but I think the software offerings will pour out unlike anything you’ve ever seen. There’s no question at all that there will be movies in New York theaters on Monday that will go on sale as videodiscs in Des Moines on Tuesday.

How will all of this affect television broadcasting?
By 1990, almost every home in America will have cable TV, probably with twenty-four functioning channels, at least six of which will be on twenty-four hours a day. There will probably be a dedicated classical-music channel, a dedicated pornography channel, a dedicated rock & roll channel, a couple of movie channels, a news channel. This will have an impact on the growth of hardware and software. But everything is relative, and cable will mean instead of there being 98 million disc players by 1990, there will probably only be 40 million sold, which is still an awful lot of videodisc players.

All this speculation about integrated home-entertainment systems and the available options seems to suggest an almost Orwellian scenario, in which people are glued to electronic devices all day and don’t ever go out to a concert or play. Do you see that as possible?
That’s about as possible as when people said twenty-seven years ago that if Hugh Hefner were allowed to publish Playboy, people would read about sex so much that they wouldn’t want to do it anymore.

Good point. What sociological impact do you see the home-entertainment revolution having?
In my judgment, if we want Broadway theater on videodisc and videotape, we will have to give a lot more revenue to the Broadway theater to make it better. Videodisc will create more fans of that medium, so it will swell its audiences probably a hundredfold. When we put a full repertoire of opera on videodisc and videocassette, people will begin to understand it and not be turned off or intimidated by it, and they will start going to the theaters.

You spent many years at Pioneer building that company to its current elevated position in the industry. Now you’re at Advent, a much smaller company. You were part of a Japanese conglomerate, now you head a small American corporation. Do you see things differently now?
Oh, yes. It’s a different world, a different mission, a different mandate. Pioneer feels that its mission is to build great products at reasonable prices and to constantly widen the market for that kind of merchandise. Advent doesn’t have that kind of clout, stature or ability. We see our mission as being the revolutionary, the guy inside who keeps sifting what’s been done, and what’s been done wrongly, and grabbing hold of those things and redoing them, and reoffering new ideas to the public that have been missed, or ill-served. Advent is the company in the best position to be the catalyst for the audio-visual revolution that is about to come along. There are great hi-fi companies, like Pioneer; there are some great video companies, like Sony. But there are very few great hi-fi companies and great video companies that understand the interconnections between those two industries. I think Advent is one that does.

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