Tuesday, February 27, 2007

Many Happy Returns

Or, I hope not so many returns, but when there are returns on rare occasions, our customers are happy and will still be willing to do business with us in the future and may recommend our products to family and friends.

Initially, we will probably only sell our products directly from our Website. That may change in the future if we can build an effective sales channel with distributors and/or dealers. When we sell direct to customers from our Website, we will need to meet their expectations regarding returns and warranty service. Since people won't normally have the opportunity to audition our products at a local dealer, we will need a fairly liberal return policy. However, if some people abuse this policy, we will lose potential revenue and may have to offset it with higher prices.

Quite a few years ago, I purchased the complete inventory of a high-end Hi-Fi dealer. Actually, they went bankrupt and I purchased their stock from the bank. I planned to keep a few items and knew that I could sell the other stuff and almost break even. Anyhow, it was my first experience with selling stereo equipment and I learned that the Hi-Fi business is not easy. I sold the stuff out of my basement or traded with real dealers in the area. I got to know a few of these dealers through my trading and learned just how challenging it is for them. Some of their customers take advantage of the dealer's return policies to the point where it becomes somewhat of a game. One of the people who was interested in a pair of my speakers asked me to deliver the speakers to his apartment because he didn't have a vehicle large enough to haul them. When I arrived at his place and carried them into his room, I learned that all the other equipment was on loan from other dealers. He explained that he had been auditioning equipment for over a year and didn't find the right combination to suit his tastes. The dealers told me that this wasn't really that unusual. Most of them limited the time period to a week or so, but there were some that allowed the customer to keep the equipment longer if they were confident that it would eventually lead to a sale. I've also read several comments on audio/video forums from people who like to audition a lot of different preamps, amps and speakers.

To be honest with you, the potential for abuse has me a little worried. If an item is returned, you can't sell it to someone else as a new product even if it still looks perfect. If the item is damaged, you may have other costs associated with refurbishing.

One of the most successful online companies, Dell, has a 21 day return policy for most of their products. For some items the return is limited to within 14 days and others go up to 30 days. On the Dell website it says you can return items for a credit or refund of the purchase price, less shipping and handling and restocking fees. If the product is not defective a restocking fee of 15% is applied. The items have to be returned in original packaging with all documentation, software, cables, etc. Another online company, Outlaw Audio, has a 30 day satisfaction guarantee. If the customer decides to return the item, he/she gets a prepaid shipping label and returns the product to Outlaw, who inspects the item to insure it was shipped back in original condition. Upon satisfactory inspection, the customer is given a full refund for the purchase price minus the original outbound freight cost. They don't mention what would happen if the returned items are not in the original condition, but I assume there may be other deductions for repairs. Another online audio company, Hsu Research, also offers a 30 day satisfaction guarantee. The customer has to get an RMA number and then pay to have it shipped back to Hsu. If the complete product is returned in "like new" condition, Hsu provides a refund of the purchase price minus the original shipping charges. If the product is not in "like new" condition, the return item may be refused or a 15% restocking fee might be applied.

Based on this limited survey, it looks like a 30 day return policy makes the most sense. By charging the customer for shipping, we may be able to discourage anyone who might otherwise take advantage of having free use of our products for a period of time, while still giving someone the opportunity to return it if it doesn't meet their needs or expectations. Maybe if the item isn't returned within this period they would be charged a restocking fee. And if the item is damaged, they might be charged for repairs.

Once a product has been opened, it cannot be resold as new, so obviously the price of these items has to be reduced. Dell has 3 categories of products they sell other than new: 'previously ordered new' are items that were never turned on and are in perfect condition (not sure how we'd determine this, except maybe with a sticker over the power socket); 'certified refurbished' are items that are retested and refurbished to original factory specifications; and 'scratch and dent' are items with cosmetic blemishes that do not impact performance. Outlaw doesn't apply any categories to their returned items, so you pay the same for a "B-stock" product with or without blemishes.

I'd like to get some feedback regarding different product return policies. What kind of return policy do you demand before you are willing to purchase from an online store? If you have any suggestions or questions, please leave a comment.

Monday, February 26, 2007

Lucas Cates SongSpot

I grew up down the street from Lucas' dad, John. I actually sang in a band with John when we were probably 10 years old. I don't remember how I got involved, but I think it was part of a class assignment or something because I don't think we would have done this on our own. Maybe John talked us into it. He was a pretty mischievous, assertive kid who grew up to be a trial lawyer. We performed in front of our whole grade at our elementary school in the talent show. The funny thing was, we held fake instruments and sang along to a Beatles tune. I don't remember the song, but I think it might have been 'I Want to Hold Your Hand'. We may have changed the lyrics. I was so scared I think I probably just mouthed the words. Anyhow, it's nice to see some of John's performance genes have exploded or blossomed with Lucas.

Thursday, February 22, 2007

DRM - digital rights management...

It's been in the news a lot lately. At least the online news. Browse Slashdot, Digg, Engadget or any of the other popular sites or services, and you'll see an article about DRM at least four or five times a week. The latest DRM news frenzy has been talking about the death of DRM. I don't have time to properly research all of my sources (so I'll speak out of my ass like the guys talking about sports in that ESPN commercial), but a lot of people have come out to say they think DRM is not working and we'd be better off without. A while ago, Bill Gates said people should just go out and buy CDs and rip the tracks to their computer instead of purchase DRM'd music from online stores. More recently, Steve Jobs, who's beginning to sound like the master of the obvious, wrote his "Thoughts on Music" open letter suggesting all the record labels should sell their music DRM-free. I agree, but don't quite understand why Jobs and Apple won't sell DRM-free tracks from willing indie artists on iTunes. Some say it will be too confusing for their pee-headed customers to deal with a mix of DRM and non-DRM tracks. So they want it to be really simple - if all of the tracks aren't DRM-free than none of them will be DRM-free. All they need is a simple icon next to the track to identify if it has DRM. Then the consumer will know before they purchase if the track is restricted in any way. Consumer choice is good. Those that don't like restrictions on the music they purchase will be able to avoid DRM'd tracks and purchase music from the indie artists that allow their music to go out DRM-free. That might even pressure the bigger labels to abandon DRM. This kind of reminds me of the concerns over bovine growth hormones (BGH) in dairy products. Some dairy companies labeled their products BGH-free. People that were worried about growth hormones in their food could simply avoid products that didn't have that label. Anyhow, it sounds like some other online stores are going to jump ahead and offer DRM-free tracks. The Canadian online music store, Puretracks, yesterday announced it was selling MP3 files from independent labels, including Nettwerk Music Group, Independent Online Distribution Alliance and England's Beggar's Banquet, without DRM. I'm sure more will follow.

I still get most of my music from new or used CDs, many purchased from 2thumbsupmall.com, Amazon or some affiliate, like Caiman.com who carries some of the older, more obscure music I can't find in the local stores. I then rip these CDs with the DRM feature disabled using lossless encoding to my media server. Even if iTunes goes DRM-free, I probably won't buy any music from them until they also start offering their tracks in a lossless format. I just don't like the idea of paying $.99/track for music that isn't at least as high quality as the original CD. I also think $.99/track is too much to pay for lossy compressed audio. It should be closer to $.25/track. Maybe the $.99 price is okay for lossless tracks especially if you still have the option of purchasing the full CD for $5. Since you don't get the physical disc, the jewel case and the insert, the prices should be lower. And I don't understand why back-catalog music isn't offered at a discount. I can accept paying more for recently released material, just like we do with DVDs, but why don't they offer some of the stuff that was produced in the 60s, 70s and 80s for much lower prices? Old guys like myself might like to replace some of our old scratched up vinyl if the prices weren't so darn high. Artists like Hatfield and the North, Brand X, or even King Crimson aren't benefiting from any current label promotions. I just don't understand why that stuff isn't available at a discount. I'd really like to hear from someone with a better understanding of the music business about this.

I've mentioned in previous posts the online music stores that offer lossless audio tracks. Magnatune offers both lossy and lossless compressed audio or uncompressed WAV files, all without DRM. MusicGiants also offers lossless tracks, but since they sell music from the major labels, they are forced to include DRM. Just recently, I discovered Linn Records (the same people that manufactured my wonderful turntable - the Linn Sondek LP12). In addition to lossless, Linn even offers 24 bit studio master quality for download. All of the music Linn sells is DRM-free. I'm always looking for more sources for high quality lossless music, please leave a comment if you know of any other online stores.

Tuesday, February 13, 2007

The Be Good Tanyas - this weeks SongSpot

Another Nettwerk artist in the Sonific catalog:

British Columbia's The Be Good Tanyas took their bluesy, north country folk to some fairly dark places on 2003's Chinatown, and while some of those shadows may have wandered into the studio during the recording of their third full-length collection Hello Love, the homespun Canadian trio seem bent on pulling the blinds up this time around and letting the world sneak back in. Frazey Ford, Samantha Parton and Trish Klein harmonize like opposing weather systems, they've all got the same goods but there's a little bit of pushback going on that helps keep things dangerous. For the most part, the ladies have chosen not to stray too far from their plainclothes rootsy sound, and while that may disappoint some fans, there's enough quality stuff here to light a fire in every train yard oil drum from Vancouver to Halifax. Hello Love works best when the whole gang pipes in, and a choice cover of Neil Young's "For the Turnstiles" delivers that effect in earnest. Tight, bluesy harmonies that are as spooky as they are lovely paint a picture of utter desolation that sounds as good turned up real damn loud as it does crackling through an old Victrola.

Review by James Christopher Monger (allmusic.com)

Monday, February 12, 2007

External Video Cards?

Everyone knows the advantages of using an external soundcard. The most obvious is the external soundcards have enough space on their chassis for higher quality 1/4" TRS or XLR connectors. This is especially important for recording studios that need to hook up a lot of different microphones or instruments. It's also nice for home theater setups where you have up to 8 channels of high quality audio output. It's kind of a shame to send the signals out tiny little 1/8" connectors, especially when each connector is paired so there are 2 channels per 1/8" connectors. There is also the argument that an external soundcard is going to sound better because none of the PC's components are going to add noise to the analog signal. Oh, and for very small form factor PCs, an external soundcard doesn't take up any valuable internal PCI/PCIe slots.

I just ran across an article in Ars Technica which speculates that we might see external video card solutions in the future. A new PCI Express standard has been approved by the PCI Special Interest Group (PCI-SIG) called the PCI Express External Cabling specification, which will support the development of external video cards. Since the latest and greatest video cards from NVIDIA and ATI/AMD generate a lot of heat, take up to 2 PCIe slots for dual SLI or Crossfire, and need a lot of power, maybe putting them in their own chassis outside the PC might be a good idea. Again, this would obviously work great for small form factor PCs.

What about a combination high performance audio/video box? If we added the necessary space and components to our product, we could have a pretty interesting new A/V product. Something to think about... However, since these video cards generate so much heat, they will need either big heat sinks or noisy fans. That defeats one of the advantages our product has in the market. Which is - our high efficiency amp modules don't generate too much heat, so we don't need massive heat sinks, like similarly powered Class A or A/B amps.

Thursday, February 01, 2007

Barenaked Ladies SongSpot!!

I'm a big BNL fan, so I was very happy when I read Gerd's (CEO of Sonific) post announcing an agreement with Nettwerk Music Group to include songs from Nettwerk artists in the Sonific catalog, including the Barenaked Ladies, The Format, The Be Good Tanyas, and The Submarines.

If you ever get a chance to see BNL live in concert, I highly recommend it. They put on a great show -- a lot of fun. Anyhow, I'll probably use a lot of BNL tunes in future SongSpots. I'll also check out some of the other Nettwerk artists and post their tunes from time to time. Hopefully, more of the Nettwerk artists will get added to the Sonific catalog in the future. Check out this user-submitted video for the song WIND IT UP off BNL's 'Barenaked Ladies Are Me' CD: