Gibson Price Increase 2015 and Other Derangements

Gibson has whipped the masses into a frenzy with the announcement of a 25% price increase in guitars along with a host of other changes you can read about on this page at Sweetwater.

This is the same deranged company who brought you the Firebird X; got into a scrape with the federal government and went all Tea Party on everybody; and came out with a Ralph Macchio Crossroads Tele.

And don't even get me started on their neck joints or their Bumblebee Caps (external link).

Now this: whopping price increases, min-Etuners, brass zero frets, holograms, etc. Why all this?

First is the simple financial reality of selling guitars in the US. The market is hyper-saturated. There are way too many guitars on the market and most are really high quality.

Firms will be biting the dust. It's just a matter of time. The economic recovery post-2008 is largely an illusion: the jobs that have been created are low-level dead end things for the most part and the stock market success is mostly driven by corporate buy-backs in the billions of dollars. That will come to an end sooner rather than later and we will see a major "correction" which means the market bubble will implode and, likely, we will see another breakdown in capital markets that shook up a lot of guitar companies last time (e.g., PRS).

Wages have stagnated for 44 years (in real dollars) and prices of guitars keep going up at the top end of the market and, accordingly, down in the bottom end of the market. Which means that, like the world of handguns and other superfluous items, there are fewer and fewer people every year buying this stuff but those who are buying are buying a lot of it.

This means that a company has to come up with new things to stand out from the crowd. What looks like "innovation" is really just market differentiation -- what sociologists call making distinctions.

Remember the wipers on Benz headlights some years ago? Yeah, like that. Pointless but memorable.
Read our article, The Difference between Making and Selling Guitars for more on "distinctions."

Gibson is making high end guitars in the US which means paying relatively high wages, being relatively regulated, and paying relatively high taxes (though, with all the loopholes that US firms have in the tax code, the corporate tax rate in the US puts them about middle of the pack, a far different reality than the propaganda foisted by Republicans).

In other words, props to Gibson for not simply moving all of their production to some hellhole where unions are formally outlawed, there are no regulations at all, no taxes, etc., and where workers are paid virtually nothing.

But just as America itself is devolving into a deranged and dysfunctional nightmare we should expect business in general, the guitar market included, to reflect the abandonment of the middle class, stagnation, austerity, and so on, for the biomass at the bottom of the social hierarchy, and weird, shiny baubles alternating with mythical golden pasts at the top of the market.