The Fender Digital division continues with the strategy of “maintaining user engagement” to ensure a consistent market for its products. From some market research conducted some years ago, the Fender management came to the conclusion reducing the drop out rate of guitarists keeps market demand for their products strong and consistent. In order to achieve this during the last years, Fender has been looking at ways to keep guitarists inspired by producing a series of educational apps to help create awarenesses for how budding guitarist can play their favourite songs, and ultimately define their own unique sound.

Fender Songs another App to sit alongside Fender Tune, Fender Tone & Fender Play
A new APP –

Article fender-is-betting-on-machine-learning-and-apps-for-its-future Fender is reinventing itself for the future of music while holding onto its past
By Mike Murphy December 13, 2019

Gibson officially exits bankruptcy

Gibson is one of the oldest and most iconic guitar brands. It goes back to the origins of the electric guitar and has produced revered electric guitars such as the Les Paul, the SG, the ES-335, the Explorer & the Flying V as well as bass guitars and acoustic guitars like the J45, the J50, the SJ200 & the Hummingbird. These are some of the more well-known models behind the Gibson label but the Gibson Brand also has a number of other guitar and instrument brands under the Gibson Brands. Inc umbrella such as Epiphone, Kramer, Maestro, Steinberger, and Tobias,—along with the ownership of historical brands such as Kalamazoo, Dobro, Slingerland, Valley Arts, and Baldwin (including Chickering, Hamilton, Wurlitzer).

The guitar and instrument brands alone put the Gibson Brands. Inc, as a big organisation but in the more recent years, Gibson had been expanding into the electronics industry. Gibson offered consumer audio equipment devices through its subsidiaries Gibson Innovations (Philips brand), Onkyo Corporation (Onkyo and Pioneer brands), TEAC Corporation (Teac and Esoteric brands), Cerwin Vega and Stanton, as well as professional audio equipment from KRK Systems and TEAC Corporation/TASCAM.

Gibson Brands. Inc, also owned the popular DAW Cakewalk Sonar that was luckily retrieved by Bandlab before Gibson’s demise in Feb 2018… sonar acquired by bandlab

So what went wrong for Gibson in 2018?
Speculation over filling for Chapter 11 Bankruptcy protection

Since the advent of Gibson closing towards bankruptcy, there has been a lot of speculation as to why?

In interviews with the CEO Henry Juszkiewicz, it appears there was never much financially wrong with the Gibson guitar section but more that it was to do with unmeetable debts arising around certain newly acquired electronics companies namely the sizable Philips company.

Statistics of the top ranking music companies produced by the “Music Trades” show a major change in ranking and revenue for Gibson between 2014-5.

Gibson 2010 – World Rank 9 – Est 2009 Revenues $287,500,000 – 3100 Employees
Gibson 2014 – World Rank 4 – Est 2013 Revenues $735,679,000 – 3400 Employees
Gibson 2015 – World Rank 2 – Est 2014 Revenues $2,089,700,000 – 5,250 Employees (Gibson Guitars, Pro Audio, Consumer Audio)

The Gibson Brands adventurous attempts to expand in conjunction to Gibson’s newly purchased “consumer electronics” business showing a 25% drop in revenue became critical by early 2017. This may have been one of the main reasons to drive Gibson into bankruptcy.

During 2018 there has been a lot of speculation as to why Gibson filed for Chapter 11 Bankruptcy protection. Through all the banter what seems clear is even though Gibson may have been suffering in the hands of some bad management manoeuvres the guitar and instrument division though financially viable was brought down by a struggling consumer electronics division.

Court filings indicated that Gibson’s core musical instrument and pro audio businesses were financially viable unlike the struggling consumer electronics division, which operated under the Gibson Innovation banner. Gibson guitar revenues for the 12 months ended January 31, 2018 were $122 million, a 10% increase over the $110 million for the same period a year ago. The financial woes of Gibson’s consumer electronics business, which sells headphones, speakers, and a range of accessory products, became critical in early 2017. Due to a 25% drop in revenues, the company had its vendor credit lines trimmed by more than $100 million, significantly reducing its ability to secure inventory.

On May 1, 2018, Gibson Brands, Inc. (formerly Gibson Guitar Corporation) filed for Chapter 11 Bankruptcy protection.

GIBSON GUITARS officially emerged from bankruptcy October 1, after a judge approved the transfer of ownership to private equity firm KKR & Co.

The decision came after a monthslong legal battle for control of the guitar maker that pitted KKR against Blackstone, which pushed to have the company placed up for sale. The final bankruptcy settlement will increase recoveries for unsecured creditors to 10.8%, roughly twice what was offered under earlier plans. Henry Juszkiewicz and Dave Berryman, who acquired Gibson in 1986, have been removed from all management responsibilities and their stakes in the company have been zeroed out.

A new CEO has yet to be named, but Matthew Ross, the KKR director who led the buyout, and Nat Zilkha, who heads the KKR alternative credit unit, have been named to the reorganized company board of directors. Also set to join the board are Brian Kushner, a senior managing director at FTI Consulting, which has been advising Gibson in recent months, and Morgan Neff, who oversees some investments for Wilks Brothers, a large family office based in Texas. Zilkha told Bloomberg News, “I feel like I have a personal relationship with the product. This is a great American brand that sort of lost its way. It’s almost like a responsibility to try to bring it back to what it’s supposed to be.”

Prior to joining KKR, Zilkha performed and recorded with the band Red Rooster. Separately, Gibson named Kimberly Mattoon as its new chief financial officer. She joins the guitar maker after eight years with the luxury goods company Richemont, first as CFO of its Peter Millar and IWC Schaffhausen units and since last year as COO of Richemont North America. Richemont is best known for its Cartier watches and jewellery.

Fender address “drop out rate” with Fender Digital division

Can Fenders online education expand the guitar market?

Fender Digital is betting that with a team of 85 producing content designed to inspire and assist guitarists, it can keep them playing longer.

Fender’s market research claims 90% of first-time guitarists give up within a few months, putting their guitar in the closet.

Ethan Kaplan, General Manager Fender Digital has said “Ninety percent of people who pick up the guitar will drop out after one year, and we see Fender Play as a solution to that challenge. Our intuitive platform, whether used on its own or as a practice supplement to in-person lessons, allows first time players and beginners to get started.”

Andy Mooney, Fender CEO says that reducing that “drop out rate” by just 10% could double the sale of new guitars.

In addition to stimulating demand for guitars, he says the Fender Digital division can be a profitable business in its own right. He estimates that the money spent on guitar lessons and educational materials is about four times larger than the sums spent on new guitars.

Given the increased affinity for accessing information online, he sees a natural market or a digital offering, and a potentially meaningful revenue stream.

Can a high-quality online education program expand the market for guitars by inspiring guitarists of all levels to spend more time with their instrument?

Is there a profit to be made in online learning?

Fender Digital, the division of Fender Musical instruments, is attempting answer those questions, with a comprehensive suite of online educational materials launched in July 2017.

Fender Digital is an ambitious undertaking, backed by a significant investment. A team of 85 headed by Ethan Kaplan has been hard at work in Los Angeles for nearly two years, developing a guitar curriculum, creating online lessons and educational apps, and integrating them into the appealing, user-friendly “Fender Play” website. All with the goal of transforming the educational process and stimulating the market.

Accessible from laptop or mobile devices, Fender’s digital content is organized into two broad categories: Fender Play, which includes a constantly expanding library of online lessons, and Fender Tone, which serves as a gear reference, providing a wealth of information on amp and effects set ups and how to recreate specific artists’ sounds. Fender tone also includes useful tools like a free tuner.

Both the Tone and Play content are designed “so that they aren’t intimidating for the beginner, but aren’t so limited that an expert won’t use them,” says Kaplan. Full access will be offered for a $19.95 monthly fee. Ethen Kaplan is quick to point out that the Fender digital offerings have little in common with them multitude of free youtube instructional videos. “We are not using the ‘goPro and player on a couch’ approach,” he says.

Instead, a production team drawn from the ranks of local television and movie studios, using five cameras and high-resolution audio gear, has turned out educational videos with cinematic production values. From the performers to the script to the lighting, every facet has been calibrated to “address all the flaws in online learning,” adds Ethan Kaplan. In other words, Ethan is claiming Fender digitals approach to online guitar video learning is at a higher standard than average.

Multiple cameras allow for an unobstructed view of finger positions, and crystalline audio quality lets users really hear different techniques and tone settings. However, according to Ethan Kaplan, what truly sets the lessons apart is a carefully crafted song-based curriculum designed to get beginners engaged quickly. “Rather than scales or strumming techniques, we start you into your first song right away,” he says. “Within the first hour, we want the beginner to get that endorphin hit that comes when you play something that sounds like one of your favourite songs.”

The lesson site is organised by five basic genres: Rock, Pop, Folk, Country, and Blues. Within each genre, are discrete lessons on songs ranging from classics like Smoke on the Water to contemporary songs from bands like the national and Band of horses. An accompanying glossary Video section illustrates guitar terminology like “rosewood” or “humbucker,” and playing techniques like palm muting or arpeggios. The two sections allow a student to focus on a song without interruption, consulting the glossary when they encounter something unfamiliar or need a more in-depth explanation.

The Fender online offering also includes the recently acquired Riffstation, a unique digital application that allows users to import audio, learn basic guitar chords for any song, master riffs, and create custom tracks for jam sessions. The program is available in two versions. The free mobile app provides chords and play along functions for a large catalogue of popular songs. The desktop “Pro” version, available online for $34.99, has the capability of transforming any MP3 audio track into a powerful educational device. Within about eight seconds, the program can process an MP3 file and isolate the basic chords, thus helping beginners master their favourite songs. Vocal and solo tracks can also be eliminated, creating an ideal play-along backup. In addition, tempos can be altered without shifting pitch.

Kaplan says that Riffstation currently exists as an “island” within the Fender digital offerings, but will be integrated more fully into the system in the near future. Detailing Fender’s online offering is challenging because the content is being added almost daily. Plans are in the works to add worship and gospel genres, as well as lessons for bass and ukulele. In addition, the glossary section is updated every time Kaplan or one of his team members come across some guitar jargon that might need to be explained to a beginner. Whether targeted to a beginner, intermediate, or advanced players, each lesson has been scripted under the guidance of online learning specialists and accredited music educators.

“Online teaching hasn’t been done well or right,” says Kaplan. “We’ve analysed every aspect to correct what’s wrong and make something that really works.” He bases this boast on extensive field testing with absolute beginners. Working with a Fender online lesson, in most cases, they could play a passable rendition of one of their favourite songs in about 25 minutes.

There are guitar teachers in every market, not to mention enough existing instructional materials to fill several libraries. How then does the Fender online program make a material impact on the number of guitar players? Kaplan explains, “What we’ve found in our consumer research is that there are a lot of people who have played for a long time and still consider themselves beginners. Like a gym membership, they start in January and then quit by March. Then they lose their calluses and go through the pain of starting all over again. We think we can help keep these people going by giving them a realistic sense of accomplishment—learning to play their favourite songs, at the time of their choosing, like in a dorm room at 2:00 a.m.”

Unlike other online programs, Fender’s has the support of a wide range of notable artists who are excited about the prospect of their music being used to help launch a new generation of players. Kaplan says, “Every top act we’ve talked to, whether they’re 22 or 50, has vivid memories of being a beginner, putting a needle on record to decipher a riff, and struggling to master a song. They all see the potential of what we’re doing here, and are excited to be involved.” Fender’s management ranks are filled with guitar “geeks” steeped in the minutiae of pick-up windings, fret dimensions, and wood.

Developing an online educational program required a very different skillset, like the one Kaplan brings to the enterprise. As a teenager in Orange County, California, his free time was divided between playing in local coffee houses and writing computer code. While he was still in high school, his computer skills sufficiently impressed the management of the Orange County Register that they tapped him to develop an online version of the newspaper. Surreptitiously, he used the newspaper’s server to develop a website for his favorite band, R.E.M. the site quickly became a magnet for fans, brought Kaplan to the attention of R.E.M. and its management, and later led to a job offer from the Warner Music group. R.E.M.’s manager described him as a “geek who knows music.” At Warner, Kaplan developed a digital product division that presided over 600 artist websites, fan clubs, and a direct-to-consumer sales channel. He left Warner to head product, technology, and engineering at live nation Entertainment’s lab division, where he built an online platform from the ground up. “We offered more than just a ticket buying experience,” he says.

“We developed content that enhanced the fans’ concert-going experience before, during, and after the show.” Most recently, he served as senior vice president and general manager of Music at Gracenote, which provides video and music content and technology to top streaming services including iTunes.

Fender Digital represents the first time an instrument manufacturer has made a significant investment in online education. That doesn’t mean that new site is without competition: thousands of free online videos are also vying for the finite attention of players. Kaplan is confident that the linear curriculum, high production value, and absence of ads and filler, will make the Fender content a potent draw. “You can learn to do just about anything piecing together YouTube videos,” he concedes. “But, it’s hard to figure out where to start, what’s good, and what’s bad. We figure it out for you, giving you place to start and a curriculum that will take you where you want to go. It’s like you could buy parts and assemble your own Stratocaster, but it’s easier and more effective to buy one from us.”


OVER HALF OF ALL FENDER dealers in the U.S. offer some type of on-site lesson program. Fender CEO Andy Mooney says Fender Digital offerings represent a complement, not competition to these important efforts. To that end, Fender’s online learning program includes significant profit opportunities for retailers and instructors. Retailers will have the opportunity to bundle discounted Fender Play subscriptions with the sale of any Fender guitar. In addition to adding value to the instrument, Mooney says that the subscription sales also offer a “good margin” with no inventory commitment. The mechanics of the sale will be seamlessly managed by Fender Digital. In 2018, Fender Play will add an “Instructors Edition,” that Mooney describes as “closing the circle.” In-store instructors will be able to tailor elements of the Fender curriculum for their students and make use of tracking software to monitor their progress. Instructors who sign up for the program will have their bios and contact information listed on the Fender Play website. Mooney adds, “we want to share the financial success of Fender Play with our retail partners, and create a seamless learning experience for students either online or in person. We all share the same goal, reducing the abandonment rate to grow the entire industry.”

See Fender’s new online approach here…

See Fender’s news release…

Fender buy Sonic Ladder, makers of Riffstation

April 25, 2017 – Fender today announced the acquisition of Sonic Ladder Ltd., a software development firm based in Dublin, Ireland, which took effect April 2015. The strategic acquisition marks a significant milestone for Fender Digital, as the brand continues to take a leadership role in the evolution of its digital suite of products – designed to inspire and enable aspiring players on their musical journey.

Fender address “DROP OUT” rate – It is estimated 90% of all people who begin to play guitar give up. If this figure could be reduced to 80% it would double the size of the potential market! This is where in recent years Fender have been addressing a digital campaign to maintain guitarists engagement.

2015 Fender® employ first ever Chief Digital Products Officer

Ethan Kaplan to lead expansion into digital products and services


Fender acquire RiffStation 2017

Read more here…

Sonic Ladder – RiffSttion

Image above gives figures in millions of dollars, representing estimated retail sales volume in each region.

How the music industry looks today in 2014

One thing is for sure this competitive industry has ridden out the global economic downturn of 2009 and has continued to provide us with an ever exciting array of products with cutting-edge technology at reasonably affordable prices.

The following data compares the Global turnover of the top 10 companies in the Music Industry during the last 5 or so years. The tables below show how the company revenue & ranking may have fluctuated. Notice how Gibson has moved up, this may be to do with their purchase of certain audio companies during recent years.

Top Ranked Music Companies 2009
Rank 2009 Rank 2008 Company Estmiated Revenues 2009
1 1 YAMAHA $4,322,356,000
2 2 ROLAND CORPORATION $921,523,772
5 5 HARMAN PROFESSIONAL $493,000,000
7 7 SHURE INC. $395,000,000
9 9 GIBSON GUITAR CORP. $287,500,000
10 11 KHS/MUSIX CO. Ltd. $279,000,000
Top Ranked Music Companies 2013
Rank 2013 Rank 2012 Company Estmiated Revenues 2013
1 1 YAMAHA $3,755,767,000
2 3 ROLAND CORPORATION $783,600,000
4 7 GIBSON BRANDS $735,679,000
6 5 HARMAN PROFESSIONAL $672,805,000
8 8 SHURE INC. $462,000,000
10 11 MUSIC GROUP $340,000,000
Top Ranked Music Companies 2014
Rank 2014 Rank 2013 Company Estmiated Revenues 2014
1 1 YAMAHA $3,586,770,000
2 4 GIBSON BRANDS $2,089,700,000
3 6 HARMAN PROFESSIONAL $853,140,000
7 8 SHURE INC. $490,000,000
9 10 MUSIC GRUOP $365,000,000
10 2 ROLAND CORPORATION $357,240,000
Markets & Manufacturing

Just six or so countries manufacture close to 90% of the world’s music and audio gear. They are the United States, China, Taiwan, Japan, South Korea, and Indonesia.

Trading figures gathered by the World Trade Organisation (W.T.O.) produce an interesting outline of where the industry is most concentrated.

Top Countries
Country No’ of Companies Sales % Share of Global Sales
JAPAN 28 $6,505,467,634 33.42%
USA 81 $6,136,565,400 31.53%
GERMANY 19 $1,598,317,000 8.21%
CHINA 22 $1,249,711,901 6.42%
HONG KONG 4 $766,452,000 3.94%
TAIWAN 8 $502,225,000 2.58%
SOUTH KOREA 6 $367,950,000 1.89%

Lets get down to business…

What are the implications of the recent global economic effects on the World Market for Music Instruments?

IN 2009 THE GLOBAL ECONOMY SHRANK BY 2.4%, worldwide retail sales of music products declined 13.7% to 15.1 billion – most likely the largest decline since the early 80’s.

The World Trade Organization instituted standardized product codes two decades ago which has made it easier to track the global flow of imports and exports. This has made it easier to pinpoint and draw conclusions on World market behaviours.

The economic decline of 2009 left no part of the globe untouched but differed from country to country. In the United States and the United Kingdom, where home ownership and personal debt levels were highest, the bursting of the housing bubble prompted an immediate contraction, this lead to financially strained consumers stopping to buy musical instruments. By contrast in Europe, where consumers had accumulated more savings, the declines were smaller and more gradual. However in China, India and Brazil who at this stage had witnessed increases in personal income sales were spurred. Though these countries are large and avoided the global economic downturn their music markets are small in absolute terms.

In 2009 music products companies around the globe shared difficult operating environments, but the difference in the size of the markets remained enormous.

U.S. and Canadian citizens topped the charts, spending approx. $19 per capita on music products. Compare this to India, where per capita spending was six cents.

Gross national product per capita & median age – are the two key figures used to assess countries’ spending levels.

GNP per capita, or the size of the economy divided by the population, is a reasonably accurate measure of national prosperity.

The more prosperous a country, the more it typically spends on music products.
The music industry relies on the 12-to-28-year-old demographic for the majority of sales, this makes median age another critical barometer.

The intersection of GNP per capita and median age can be seen clearly when comparing the U.S. and European markets. The U.S. market with a low median age- 36.8 compared to 37.2 worldwide- and a GNP per capita that is 3.5 times the global average enjoys the means to spend on music and a disproportionately large group of younger buyers. Together these forces explain why the U.S. is such a rich market.

Now in 2014 music and music making have broad based appeal, but the industry’s largest number of customers still reside in the under 30-year-old age bracket. These are the primary purchasers of guitars, amps, drums, keyboards, and recording gear. And while the reverberations of the 2008 financial crisis were felt by all, they had a disproportionate effect on those 30 and under. A few key statistics illuminate the problem. According to the U.S. Department of Labor, only 47% of the 18-29-year-old age cohort holds a full time job, an all-time low.

The national unemployment rate stands at 6.8% at this writing, but it is 13% for the under-30 group. At a time when earnings opportunities seem to have declined, financial obligations have also increased. The treasury notes that college related debt has soared, rising 275% since 2003. Although hard to quantify, it’s beyond dispute that the financial stress of a key buying group has retarded industry growth.

The GNP in Europe is about 60% of the U.S. level, yet per capita Europeans spend only a third of what Americans do on music. Much of this can be attributed to demographics. A low birth rate in Europe during the last two decades has resulted in a smaller proportion of the younger population and consequently a reduction in the size of the industry’s prime age group.

Prosperous young people provide the raw material for a strong music market.

However, hard-to-quantify cultural factors also play a critical role. China’s remarkable economic growth during the last decade has created a gigantic middle class and turned the country into the world’s largest auto market. Chinese factories also lead the world in the production of most musical instruments and electronics. Yet, the growth of its domestic music products market has consistently lagged behind its larger economy. The best explanation for this disparity is a lack of music making tradition. For over 30 years after Moa took power, Western music was against the law. It is only now people are starting to turn to music as a source of enjoyment. But there is not a great deal of music teachers and few parents have the experience to guide their children into making music.

Contrast China with Japan, where a strong tradition of music making has countered the effects of unfavourable demographics. Japan has the world’s older population and a shrinking number of children, yet thanks to school music programs and widespread parental encouragement, per-capita music spending is over twice the global average.

Native English speakers represent less than 10% of the world’s population, but they have had a disproportionate impact on the global music scene. English-based rock, pop, country, and other genres are present on iPods around the world. No other popular music culture has a similar global reach. Explanations for this can vary from something to do with the centuries-old English folk music tradition, coupled with the way American pop has been a melting pot for so many other musical traditions. Some view this global popularity of English music with suspicion, as in France where state-run radio stations have strict limits on how much English music they can play, or in the Middle East where it’s considered blasphemous. If purchases are any indication, most seem to welcome it with open arms. The impact of this is best seen in the global popularity of the guitar.

Purchasing levels vary from country to country, but the type of products purchased is remarkably similar. In every country where sales statistics are tracked the guitar is the most popular instrument. National prosperity levels determine the best selling price points, but after that product preferences have become remarkably homogeneous. In any country around the globe, the top five selling brands in any product category are likely to be the same.