Two large US-based music gear vendors – Guitar Center and PSSL – on the rocks after an incredibly challenging year for retail sales of professional music gear. The reality is that a lot of companies have suffered this year in our industry, and with incredibly small amounts of governmental assistance for individuals and small companies.
Guitar Center files for Chapter 11 Bankruptcy and what it means
You might have heard a strong rumor last month that Guitar Center was potentially going bankrupt. It’s not the first time either – having explored debt restructuring in 2017, completed a debt-for-equity swap in 2014, and nearly defaulting on their debt payments earlier this year. A big part of why the company operates with so much debt is because it moved from a publicly traded company to a privately traded one in 2007, when Bain Capital bought out every publicly-held share. Read more about that buyout transaction here.
It’s a bit of a double-edged sword for the DJ industry. Guitar Center absolutely provides two things that have a big value to DJs:
- the opportunity to try gear out in person (although not currently that reasonable with a global pandemic) before buying
- employment for instrument/DJ/production teachers (they also own Music & Arts, a private lesson provider chain in the US) as well as sales jobs for gear-knowledgable individuals
However, GC has also very much been the Walmart of the musical instrument industry in terms of the impact on “main street” small businesses that sell music gear around the country.
Ultimately, Chapter 11 doesn’t mean there’s a liquidation or going-out-of-business on the horizon. Instead, GC has found new ways to restructure their debts with massive support from private equity, something that’s nearly impossible for most small companies. The plan as presented in Chapter 11 court reduces debt by nearly $800 million and adds $165 million in new equity investments.
At the same time, we’ve seen PSSL (Pro Sound and Stage Lighting) also forced to close their doors due to the impact of COVID-19 “on the live event and hospitality industries”. CEO David Rice shared his dismay with the reality of the situation in the US:
We had hoped that our government would recognize the impact to not only our type of business but also individuals who have been left out of work by no fault of their own. I am personally disappointed that our Executive and Legislative branches of government could not act sooner to help people in need. Perhaps if a deal for a new stimulus is reached we will find ourselves back here to support you.
Just the beginning, and what DJs can do.
Here’s where we enter the much more subjective part of this article. My own opinion is that we’re just at the beginning of a long-tail impact on our industry – spanning every single part of the event and music performance communities.
At particular risk right now are music venues, many of which around the country are likely on the verge of financial collapse unless they get both support from local and federal governments and their landlords or banks. Even if venues were to open tomorrow “normally”, how many people would really go to one? I suspect the earliest things might feel even close to normal in a venue would be late Summer 2021.
Some retailers, particularly mega-retailers grounded in online sales, might be doing better this year. We’ve seen Amazon show record profits, for instance – but with questionable benefits for gear manufacturers, creators, and the industry as a whole.
My #1 piece of advice for DJs and producers right now who are entering this Black Friday/Cyber Monday week looking to buy gear:
Buy gear from a local or small store, not from Amazon
or a big mega-retailer.
If you have a local record shop or music gear store that you have a relationship with, message them or visit their website. These are the types of stores that can create real community in your city. If you’re not able to do that, find a small retailer online whose values you align with and buy from them. Yes, we’re one option, but there are others out there who do good work.
What’s DJTT doing to help?
But for the team at DJTT (a team of real DJs and producers), we put incredibly high value on music venues.
We are donating a percentage of our profits to help support independent venues who are struggling to stay afloat. When the global pandemic is over, we want to make sure there’s places for DJs and producers to perform. This has a huge impact on local economies – venues create jobs for service industry workers, creative professionals, and event organizers. They’re magical spaces where people share music with one another.
So yes, we’re running our normal Black Friday sale, but unlike in past years, some of the profits are going back to those venues in need. We are donating to the National Independent Venue Association’s Emergency Relief Fund, and every purchase with DJ Techtools will increase our total donation amount.