Reflections on the Industry amid the Aisles of AES
Sitting on an airplane from New York to Los Angeles (with the dreaded mandatory Detroit stopover) I wondered how different the Audio Engineering Society annual fall conference and trade show would feel from last year's conference. For those unfamiliar with AES, last year's conference was both held in NYC and delayed two months by the tragic events of 9/11. I like to think of 2001 as the AES “survival show”: All the New Yorkers showed up to prove we survived, besides, we had spent the money in advance. It was a small, quiet show of engineering, with a large helping of fear and solidarity. We all had recently suffered huge losses, both business and personal, yet none of us expected the economic slump and continued losses that made 2002 such a horrific year for the industry. Entertainment businesses took huge drops in revenue as clients slashed their budgets; freelancers, day laborers, and salaried employees alike witnessed massive layoffs and cutbacks, and finally we all felt empty pits in our stomachs as prices of stocks and securities tumbled our savings into the toilet. Only then could we add on our personal fear of national and worldwide terrorism. Suffice it to say, 2002 was not a good year for the entertainment industry. And unfortunately, every part of the industry was injured equally: television, film, legit theatre, commercials, industrials, regional and Off Broadway theatre. No one element escaped the wrath of 2002.
In the midst of an obviously crappy year, what could our industry to do to survive? At first, many businesses tried to do what their clients were doing: meticulously cut back, work longer hours, hoard every available resource, and hope for the best. Once it was clear that change in the industry would not arrive quickly, new tactics emerged. Businesses started to market widely and aggressively, develop cutthroat strategy and pricing to drive out competition, and create new products for the marketplace to try and increase sales. Did the situation change? You betcha!
By August I noticed a certain smell in the air: a ripe mail carrier. What does this matter? My sweaty mailman was carrying more direct-mail advertising of businesses that were trying to salvage their year with third — quarter sales and the new ideas hatched in the previous six months. “Prices Slashed!”, “New!”, “HUGE Savings!”, “No Payments for Six Months!” and similar slogans appeared on the direct mail I sometimes read before the circular file digested the piece. I was deluged with direct calls from salesmen I had done business with: “The fall is revving up, take advantage of our anniversary sale, and don't get caught in The Crush,” one hoarse salesman croaked on my answering machine. “Crush?” I thought, erasing the message, “who the hell is he kidding?”
Someone must have been listening to that particular froggy's song, however, as the phone also started to ring with new business offers and jobs, jobs, jobs. Not always great jobs, never ideal jobs, and jobs that in good years I might happily turn down, but they were work, nonetheless. In such an economy, no one can turn down any work unless they already have great work.
I really didn't think it was a crush, I thought it was a regular old rush — several people just happened to have ill-timed projects, so I had some coincidental conflicts. A couple of nice design projects, a few industrials, some consulting, several TV broadcasts, two dozen rock concerts, some theatrical work, a little location recording. They were jobs — all nice and well, as long as we can keep the money rolling in to cover the costs of the money going out. Well, at least we can start to make up a little of the huge debt we've incurred. The fact that every phone call was a personal recommendation must have sunk into my brain as I plodded along the crowded streets of New York, going from client to client and place to place. Why would anyone care? Because each dollar spent is being carefully considered as businesses and people try to rebuild and continue.
When, pray tell, and more importantly, how does that happy rush of work manage to become an all-encompassing and quite frightening business crush? You may notice when your weekly payroll exceeds your monthly receipts. You might get an uneasy feeling when your first-name-basis banker starts calling you by your last name again. Finally, when your business cash flow is so strangled you can barely afford to do the work you so desperately need to do to get out of the huge pit of debt you've accumulated — you are now officially in The Crush. Every major player I dealt with in the industry was suffering the same problems: cash flow, money management, too many projects with not enough small profits, not enough employees to cover all the existing work and too small a sales staff to return the prospective phone calls. The sad truth is, it takes money to make money and a lot of our industry is based on speculation and the outlay of a gross amount of financial resources, which has now become a major liability.
As I began working on my many projects, I noticed my clients had cash flow problems. Then I noticed that the terms on my sub-rentals were changing slightly and shipping costs had increased. I quietly noted when trusted key personnel had “moved on” or “gone independent” out of the blue. I finally got direct when I noticed either gear was late or not showing up at all, to find out that my suppliers had the same cash flow problems that my clients and I had. No one had any actual money in the bank to act as security while we are working like hell to survive the monthly bills. Suddenly the business of doing business was all business. After three good, solid decades of growth it was unusual for our industry to suddenly feel both hard and cutthroat, and finding some fun in the job required a lot of work for people who had automatically been having a lot of fun in their jobs for decades.
So it was with some relief I boarded my flight to this year's AES convention, expecting a chance to see several close friends and many of my left coast business contacts, a chance to relax and see what's new in sunny California. I was prepared for the size of the show floor but not the blocked path of attendees flooding the aisles, the uninhibited aggression each manufacturer would take in the determined marketing and the hard-selling tactics they would take in the person-to-person pitch of their products. The Crush had obviously hit them as well. Also noticeable were the same business cutbacks here; fewer featured prize giveaways and much less chit-chat. Instead of piles of swag at each booth, I noticed a marked increase in industry stars creating a sales draw while adding credibility and marketing hype to respective products. Football team — sized sales teams threw hardcore sales pitches, a lot of focus on advance orders, and strong competition among manufacturers with similar brands. Picky customers with highly specific needs quizzed equipment designers and manufacturers reps on their respective needs, be it high-resolution recorders, line array loudspeakers, conversion algorithms, or third — party software plug-ins. I strolled the quieter, yet still busy, side and rear aisles noticing the trend to revert to compact budget-minded booths, with many manufacturers even sharing space to save advertising dollars yet still maintain a show presence. Like a tornado, the Crush had hit everyone and the debris was evident. Everyone was responding by trying to make savvy decisions for their companies, buy the ideal gear at the right price, sell the new toys and technologies, and recover the losses of the previous 13 months. Yet, shockingly, people acted with a new generosity and kindness I had not previously witnessed prior to 9/11. After last year's “survival show,” it was a pleasant surprise to see people continuing to show a real concern for each other's well-being. Being a cynical New Yorker, I wondered how much concern was business-related, but my conversations with others made me recognize that everyone across the country has felt the effects of 9/11 in an uncomfortably close and personal fashion, leaving me with little doubt remaining towards the sincerity of others, and giving the entire conference an increasing sense of community. “How very un-LA,” I thought to myself, “yet very Californian.”
Within that suddenly caring community, the concern for self-preservation has made some interesting bedfellows. Not only have we seen more companies swallowed up by large corporations but the small- and medium-sized companies have found many ways to band together to consolidate resources, from sharing office space to complete business purchases to fit underneath a single roof. I have seen some combination of complementary services but I sense a greater trend in that arena for small to medium business. Speaking of trends, I constantly look for the current trends in hot products to find a plethora of trends, especially in speaker design, digital desks and recorders, new re-designs of classic equipment, and anything computer-related. The Crush has spawned a pile of me-products, second-generation products, and several potential holy grail products if tech-support can survive the onslaught of phone calls. [For a look at some of the new products unveiled at AES, see page 26.]
Shockingly, the packed aisles now hum harmoniously from The Crush of desperate people doing business in dangerous times. I found it impossible to stay aloof from the frenzy of the show and found myself five figures in debt and the proud owner of several new toys and technological devices with a long list of new business associates and even a couple of good potential clients. Not bad for a long weekend. It seemed like everyone was managing to do business and was determined to have a good time by the end of the second day. I summed up the show as I skirted the skirmish line of fans waiting to get autographs from guitarist Slash at the Gibson booth to see the orange sun setting though the LA skyline. If it's to be a Crush, then so be it. Make mine an Orange Crush. It was time to go back home to New York City.