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THE MUSIC TRADE REVIEW
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Vol. LXXVI
NEW YORK, FEBRUARY 24, 1923
No. 8
THE FINANCING PROBLEMS OF THE RETAILER
BUSINESS in which "frozen credit" exists is likely to be in
bad condition, for, although fundamentally sound, it faces a
situation that precludes its development along normal lines. In any
industry where the bulk of the selling is done on an instalment
basis, as in the music industry, this danger of "frozen credit" is con-
tinually existent, and unless there is a thorough understanding of
financing methods that will free capital and permit of steady pur-
chases and rapid turnover business is likely to become stagnant.
There are a large number of successful dealers who have for
years understood properly the science of financing their businesses
in a way to keep their capital, sometimes rather limited, functioning
steadily. They have learned that no matter how good piano or talk-
ing machine paper may be it is likely to prove a millstone around
their necks if held in the safe, and even in the hands of ordinary
bankers it is accepted as collateral for loans so small that they are
out of all proportion to the security's value.
There are several sound ways of financing a business where
instalment accounts are in the majority—ways that provide the
dealer with cash for his paper and keep his capital comparatively
free for purposes of business development and expansion.
In The Review this week there appears the first of a series of
articles on financing the retail music business that are calculated to
show the way to the retailer who is suffering from "frozen credit."
The articles are authoritative and are based on the actual experience
of concerns in and out of the music industry which have success-
fully financed themselves and their dealers through the proper use
of instalment paper as a means for getting cash. There is no magic
to it, but simply sound business logic.
The dealer who finds his capital tied up and his business expan-
sion hindered as a result will find much material for careful thought
in the series of articles. An analysis of business successes in this
and other lines of industry will show that such success has been due
in no small measure to proper, intelligent and safe financing.
A
THE AGE OF THOSE WHO BUY PIANOS
' I ' H E piano is an instrument favored by those of mature years,
A while talking machines, records and band instruments appeal
most particularly to those on the sunny side of thirty. These facts
FEBRUARY 24, 1923
have been brought out as the result of an extensive survey made
under the direction of and published by the Photoplay Magazine to
determine the age factor in selling and advertising. Only 2 per cent
of piano purchasers are under eighteen years old, while, due prob-
ably to the popularity of the jazz band, 26 per cent of the purchasers
of wind instruments are under that age limit. On the other hand,
only 8 per cent of wind instrument purchasers are over forty-five
years old, whether due to lack of interest or lack of wind is not
stated. The Review, with the permission of the Photoplay Maga-
zine, presents the salient points of the survey elsewhere in this issue.
It is sufficiently authoritative to be of distinct interest and value to
those who have a penchant for classifying their customers.
IS THE INDUSTRY A REPLACEMENT BUSINESS?
WESTERN dealer declared not long ago that after making
A
a survey of his business last year, and taken as a whole
it was a good volume, he found close to 75 per cent of
his profits were tied up in his warerooms and in his ware-
house in the form of used pianos taken in exchange. In other
words, his business for the entire year has been chiefly one of
replacements rather than of outright sales, and the result was
that he worked for twelve months for approximately 25 per
cent of the profits that should have been his, judging from the
gross volume of the business.
This problem of the used piano is a very real one in the
industry and is growing rather than diminishing. In fact, it is
serious enough to demand the attention of those big minds of
the trade who see in discussions and conferences means of
getting at the root of the problems that keep the industry from
expanding as rapidly as it should.
This seriousness of the situation is realized when it is
understood that the bulk of these existent stocks of used pianos
have been brought into the warerooms and warehouses within
the past three, or at most four, years. During the late months
of the war when piano production was at low ebb, there were
sections of the country where anything that remotely resembled
or sounded like a piano was salable, and several concerns made
very substantial incomes by buying up used instruments, recon-
ditioning them and in turn selling them to dealers.
It might be well for local associations of piano dealers to
give thought to this matter, and it is even worthy of the con-
sideration of the National Association at its June conventions
in Chicago, if not before. If it is possible to decrease the num-
ber of replacements and increase the proportion of direct out-
and-out sales so much the better. If not, it will be well to
develop a definite plan for decreasing allowances on used pianos
to a point where it does not seriously matter whether they are
sold or given away. In short, if it is to continue to be primarily
a replacement business, let the margin of profit on such replace-
ments be sufficient to warrant the effort and expense.
THE POSITION OF THE SMALL-SIZED UPRIGHT
interest is being evinced in the trade in the progress
M UCH
of the small-sized piano, and the result has been a great
variance of ideas as to the future of that type of instrument,
although the consensus of opinion is that eventually it will go far
to supplant the larger and more cumbersome styles of uprights.
Those who have gone into the production of small pianos
on a consistent basis have found a sufficient demand for the
instruments from schools and also from homes to warrant their
optimism regarding the possibilities, but it is held by some of
the technicians that, in certain cases, the present success is only
temporary because many small piano scales are makeshifts and
represent adaptations of larger scales rather than the creation
of a distinct, new type.
It happens, however, that two or three of the manufacturers
at least have seen fit to build the small piano from the ground
up, as it were, having a scale drawn for the particular pur-
pose of meeting the requirements of the small case, and with
the idea of developing tonal qualities for which no apology need
be made.
Certain it is that the modern home, and particularly the mod-
ern city apartment, is so designed and built that the small piano
fits particularly well into the scheme of things, for space is at
a premium and the small piano requires little space.