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Broker Face: why brokers and resellers cannot lose

Phil Ward goes gaga to discover how used equipment brokers and resellers find a niche in a market dominated by new product.

Let’s make an important distinction: a broker is an intermediary who buys and sells goods or stock for commission “without having title to the property”, according to most dictionaries. They do the negotiating, but they never own the stuff – and sometimes they don’t even see it.

For some, the differentiation is a defining one: a distributor would never be described as a broker, and in the case of Pete Brotzman’s London-based Crystal Pro Audio it’s enough to prompt the caveat “definitely not just an equipment broker” on the website – a pointed emphasis to distinguish his level of consultation, after-sales service, equipment guarantee and service backup.

That’s very typical, but it does not mean brokerage is in any way deficient in professional dialogue and reliable attestation. In fact, the main protagonists on the global scene today are industry pros with years of hard-won experience in logistics, transportation, maintenance and bargaining. The emergence of brokering coincides with the proliferation of systems on a rapidly expanding live scene and the break-up of the old studio network as the recording industry evolves, but the real specialists still number only a few.

Founded in Florida eight years ago, Gear-Source Inc quickly became a web-driven resource via – heralded as “the eBay of the production world” – adding reliable e-commerce, legal warranties, dealer discounts and other enhancements tailored to the industry. GearSourceEurope followed in 2005, but managing director Garry Nelsson is very careful with his definitions. “We are not actually brokering,” he points out. “We’re buying and selling on, while organising transport from A to B.” But there is another refinement that helps to portray this complex market: “Most of our customers are resellers, so our goal is never to compete with them. We’re not a conventional reseller with standard product lines. While all of our competitors chase the same business, we choose not to compete but to help them increase their bottom line.”

Established way back in 1965, MJQ specialises in studio property management and recording gear brokerage. Recent business has of course been driven by the closure of studios such as Westside, Mark Angelo, Videosonics, Eden, The Town House, Fleetwood Mobiles, CTS, Whitfield Street and The Sound Suite. Not surprisingly, real estate management has increased but Hamish Jackson, son of founder Malcolm Jackson, details a vibrant new market.

“A notable change has been the frequency at which whole inventories are being offered up more than piecemeal sales, usually to professional ‘project’ studios,” he says. “The locations change, but the gear remains intact. We’re now taking on properties in Europe as well, such as Jet Studios in Brussels. Sellers want to get rid of everything in one go, so we’re working to organise the capital that can buy it all up ourselves.”

MJQ recently opened Console City in north-west London (pictured), where a selection of used recording inventory from SSL and Neve consoles to tube mics, rack equipment and even vinyl cutting lathes is on demo display. Jackson acknowledges that eBay has had a big impact on the second-hand equipment market, providing a standard reference point for pricing, especially of smaller items. “We clear most of our small and obscure items through eBay as well as our own website,” he confirms. “European customers love British- and American-made gear and the euro is stronger for them now. Although some of the big studios on the Continent are beginning to fall, there’s a steady flow of customers from Portugal, Italy, Slovenia, Hungary, Greece and Poland, for instance. It remains to be seen how long it will be before we start selling to developing nations, but there’s plenty to be getting on with in the meantime!”

This includes foreign investors – even South African banks – looking to get involved with profitable UK music industry ventures; religious organisations looking to buy up recording studios “for a variety of reasons”; universities and colleges having to throw out perfectly decent equipment in order to buy in the same items just to spend the annual budget; and – most alarmingly – vinyl presses being purchased in Eastern countries in order to manufacture and sell music without paying royalties.

For the truest embodiment of the individualistic brokerage spirit you have to turn to Bob Kelly & Co. Once chief trucker for gear-laden prog show-offs ELP, Kelly now runs his global village corner shop from a farmhouse in south-west France. With years of sales and marketing experience – not least launching V-DOSC for L-Acoustics in 1993 – he draws on an unparalleled network of trusted contacts to move a growing population of used live gear from pillar to post.

“This sector is recession-proof,” he declares. “Right now I’m hitting the first generation of digital consoles as the new ones come to market, and they’re really holding their value. It’s extraordinary. I can always find customers for DiGiCo D5s, Yamaha PM1Ds, PM5Ds, M7CLs, Digidesign Venues. People are buying more compact consoles these days, but I can usually make a profit on what was previously considered ‘compact’, such as the M7CL. That said, analogue prices have plummeted of course – although Midas and Soundcraft desks always sell.”

Ditto loudspeaker systems; everything gets pushed down the food chain as this year’s model sets off down the catwalk. “V-DOSC is slightly different,” Kelly adds, “because the K1 has only recently come out to supersede it. But now that it’s here, I’ve got loads of V-DOSC on my plate! Some people will offload all of their old, accumulated inventory to buy the latest system, be it Martin Audio, Meyer Sound or whatever. Let’s face it, these guys in the R&D departments never stop…”

In a cutting-edge world of saturated production, some manufacturers are even resorting to buying back their own stock from the used market and using it to fulfil orders. In that maelstrom, the brokers and the resellers – whatever the precise invoice structure – surely cannot lose.