Key Question:
A: Don knew his business was going to change when the CD entered the marketplace.
Q: What happened to vinyl albums when Russell's invention landed in the hands of music lovers in 1980?
A: Vinyl fell out of favor as the mass market dropped it for the more convenient and durable CD. Rather than panic, Don started thinking and watching the marketplace. He watched some competitors move to CD manufacturing and he watched some close their doors.
Q: What strategy did Don take in the face of new technology?
A: He calculated that the CD would take over the mass market but that his high-end, demanding customers would not switch. Because he had always been the quality provider, he was confident that the new technology would not be embraced by his true-blue fans. Don not only stuck to vinyl, he improved his product and made major investments in new equipment.
Q: Was Don's decision to stick to vinyl risky?
A: Everything is a risk but we owners almost always base decisions on deep insight that comes from deep understanding of our customers. Don was never in mass production and he wasn't scared by a product that the regular Joe Blow music lover would migrate to. He was only thinking of his own customers and he knew them so well that he guessed right about what they would do with the CD.
Think about it
What technology or competitor do you see on your horizons? What changes do you need to make to get ready for what's out there?
Clip from: Record Technology
Camarillo, California: Meet Melody and Don MacInnis; they're "making it in America." They manufacturer and export to the far corners of the world because they are now known as the best record manufacturers - vinyl, phonograph, long-playing records -- on earth. Most kids today do not even know what what a vinyl LP record is. Most think it is a dead technology. But talk to any audiophile, and you'll hear them wax euphorically about the fullness of the analog quality of the sound.
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Record Technology, Inc.
Don & Melody MacInnis, Owners
486 Dawson Drive
Camarillo, CA 93012
Visit our web site: http://www.recordtech.com
Business Classification:
Manufacturing
Year Founded: 1992
Don't Panic -- Think
HATTIE: What were you thinking when the CD was so embraced?
DON: Well, initially, we were thinking, `Uh-oh, big, big trouble here,' that the vinyl business was going to disappear.
HATTIE: OK. So when you were hit--I mean, you guys were just hit with a bulldozer, your business was totally impacted by this new invention. And I think anybody watching this today, any small-business owner in any industry has to be ready, because there are new products coming out every day that will be the bulldozer to us, whatever that is.
DON: Well, yes, we saw what was happening to our competition and to other large record-pressing companies that weren't really in the same market that we were in, but they were dropping all over the place very, very quickly. So we certainly saw that happen. Fortunately, the philosophy of providing top-quality product here lessened the impact of compact disc for a while. It certainly started immediately upon its introduction, but it wasn't--it took a lot longer for the CD to affect our business than it did the typical record-pressing plant because of the niche that we had in providing the top-quality product. And that market still wanted our product.
HATTIE: OK, that market didn't embrace the CD as quickly as the rest of us did.
DON: Correct.
HATTIE: What is an audiophile?
DON: That's the name given to those who audio is their hobby, their very, very serious hobby. They--and in some cases, you could say it's their life. The typical consumer usually doesn't even see the type of equipment that the audiophile has because you have to go to specialty stores that handle this stuff. And you can find, for instance, compact disc players that cost $20,000. You can find phonograph turntables that are even more expensive. And that would not necessarily even include a tone arm and a cartridge; you would have to pay additional thousands of dollars for that. So they have the means to buy the good equipment, and they demand good software, as they call it, to play on this equipment--good performance, well-recorded, well-mastered, which is the transfer from the original master tape to the form of a disc and then a well-press vinyl LP. They demand that. Typically, the software of these phonograph records for the audiophile market retail at $25 or $30. So it's considerably more expensive
than a CD or than what the normal record would have cost, you know, back in its heyday.
HATTIE: So the audiophiles get out there, get their vinyl album, and they start talking about it, `Oh, you got to get this, oh, you got to get it.'
DON: Right, right.
HATTIE: And that's great strategy. What we're talking about here is withstanding the storm, or enduring the bulldozers of new products that come in to compete with us, and your strategy was to stay the same.
DON: Yeah, in the basic sense, to stay the same.
(Excerpt from rap music record)
