Music Trade Review

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE MUSIC TRADE REVIEW,
AUGUST, 19U
19
Erlandson
Urges Reforms
in trade practices and suggests
methods of enforcement
At the open meeting for dealers dur-
ing the Convention of the National Asso-
ciation of Music Merchants in New York,
Ray S. Erlandson, president of the Music
Merchants Association of Ohio made the
following address:
"One of the major problems in the music busi-
ness is to build a new Code of Ethics which take
into consideration such iundamental questions
of ethical business conduct ethical advertising,
and the fair treatment oi ethical competitors. In
a real sense we are all partners in this business
oi selling musical merchandise to a nation and
a world that needs its cultural values desper-
ately. In the past, however, haven't we all been
lacking in faith in each other—chiseling, cutting
prices, trying to outsmart each other until there
is little left oi pride or profit?
"We are in that segment oi the business cycle
today known as the 'upswing'. Sales are easy.
Profits are good. Merchandise is increasingly
hard to get. Never in all the history of our busi-
ness is there a better time to survey the situation
as it really exists—analyze bur iundamental prob-
lems and set about to correct them. With an
aggressive leadership in our Association—with
an honest, sincere, constructive, and determined
leadership—we can eliminate those practices that
are wrong largely by our own efforts. A genuine
desire to cooperate on the part of the honest man-
ufacturers and wholesalers and retailers is today's
greatest need.
"Problems oi supply and demand are always
with us. Problems oi methods of merchandising,
training of salesmen, handling customers, adver-
tising, credits, collections, etc., never are finally
solved. This Convention will no doubt present
constructive ideas on these, and kindred matters.
But this Convention can, and will, go down in
history as one oi the great Conventions of all
times ii it iaces courageously the following prob-
lems, and sets about to take definite and positive
action on them.
The major problems facing our industry today
are the following:
1. The clear, definite understanding of the
functions of each of the three major divi-
sions oi production and distribution—
namely, the manufacturer, the wholesaler,
and the dealer.
2. The establishment and maintenance oi fair
retail prices on pianos, musical instru-
ments and accessories so that a legitimate
manufacturer, wholesaler, or dealer can
each make a fair profit, and so that the re-
tailer can be protected by fair prices in his
community and trading area.
3. The adoption and enforcement oi a volun-
tary Code of Business Ethics and Procedure
under the provision oi the Federal Trade
Commission's junction to set up fair trade
practices in industry.
. ,
4. The establishment of regional Associations
oi the National Association oi Music Mer-
chants with aggressive, determined, compe-
tent leadership to finance the enforcement
of State and National laws ior the protec-
tion oi our merchants.
*
"A major problem iacing industry today is that*
oi clariiying and defining the status of manufac-
turers, wholesalers, and retailers. When this has
once been done, we will have gone a long way
in improving our ethics.
FUNCTION OF A MANUFACTURER
"A manuiacturer's iunction clearly is to pro-
duce articles ior resale. His function clearly is
has been shown that these manufacturers yield
all too easily to the threat especially made by
so-called 'professionals' to go elsewhere, and
rather than lose the sale, cut prices far beyond
what a retailer can afford to do or wants to do.
"Many authorities believe that ii the music in-
dustry had a competent legal department that
action against many oi these practices could be
initiated under the provisions oi the Robinson-
Patman Act which is an Amendment to the Clay-
ton Act which eiiectively ejects governmental
regulation into the selling and distribution oi
goods. It has been asserted that this Law pro-
vides that where a manuiacturer or wholesaler
sells at both wholesale and retail, he MUST sell
at retail on an equal basis with its retail custo-
mers. He MAY NOT take advantage oi his status
to undersell and thus compete with retailers.
FUNCTION OF A WHOLESALER
"The iundamental and exclusive iunction of
a wholesaler is to sell for resale purposes to
established dealers. Ii he also maintains a retail
establishment, that operation should be operated
physically and financially independently of his
wholesale business. Too many manufacturers
greedy ior profit alone, have failed to protect
their legitimate retail accounts by selling to
pseudo wholesalers, who are not wholesalers in
fact but chiseling dealers—double chiselers, in
'act—chiseling against an honest retailer, and
supplanting a legitimate wholesaler. These
troublesome creatures exist in all sections of our
country but predominate rights here in New York
City, and in other metropolitan cities from the
Atlantic to the Pacific.
RAY S. ERLANDSON
not to manufacture for factory or warehouse sale
to ultimate consumers. His sole and exclusive
iunction should be to produce ior resale to whole-
salers or ior retailer establishments exclusively.
The violation oi this iundamental tenet in our
system oi merchandising' has been productive oi
some oi the major problems in our industry. It
is not fair to the retail dealers oi Cleveland, ior
example, to have a manuiacturer oi band instru-
ments, no matter how excellent their qualit/, ofie.
the products oi his production directly to the con-
suming public on any basis—and certainly it is
most uniair to sell them at a discount.
"Retailers do not believe it is a fair and ethical
procedure for such a manufacturer to sell directly
to school band leaders of either public or
parochial schools, to local, patriotic, or fraternal
organizations, at discounts which permit chisel-
ing or curtail the local retailing establishment to
exist. This practice can and should be eliminated
if the industry as a whole desires it. The matter
will be further discussed later in this article.
THE PIANO WAREHOUSE RACKET
"The existence of piano warehouses implying
that consumers are able to buy factory stock
direct, such for example is practiced by a Chicago
manufacturer, is equally vicious and harmful—
not only to the retailer but to the industry as a
whole. In New York a number of reputable man-
ufacturers of musical instruments sell directly to
the consumer, making no effort to maintain the
semblance of a retail shop—greatly to the detri-
ment of retail outlets. Time and time again it
"The number of violators are not large and for
the most part are known. There are legal and
lawful ways of proceeding against them. Perhaps
we should recognize the fact that they will not
or cannot wash their own linen, and legal efforts
should be invoked to clean up this situation.
FUNCTION OF A RETAILER
"The function of the retailer is of course clear
and definite. His business is to maintain a repre-
sentative stock of merchandise, a store to show
and sell the same, and to advertise and sell these
products to the ultimate consumer at a fair profit,
at the established retail price. In addiion. he is
expected to equip and maintain an adequate re-
pair and service department in order to keep in
repair the merchandise sold in his community.
His store, his personnel, his repair and service
department, constitute in addition to his invest-
ment in merchandise, an establishment which
in the music business cannot possibly maintain
itself at less than a 40% gross profit, and if he
combines with it a school of music, more nearly
a 50% gross is necessary. What right, then, have
manufacturers, wholesalers, or mail order houses
to invade his territory, disrupt his business by
uniair practices? None whatsoever!
"Not all dealers are ethical. I would fail to be
true to the cause which has interested me so much
unless I pointed out to our own group of retailers
or music merchants the fact, undeniable and
startling. We. too. have plenty of dirty, cut throat,
unethical practices to eliminate in our own group.
We have music merchants who cut prices ruth-