Are Enthusiast Products Expenses or Assets?
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Intro 2008 was a great year for me. I graduated 8th grade, played ~1000 hours of TF2 (I'm an accredited hat investor), and fell down the headphone rabbit hole.
As a 13 year old, funding was the major issue, and Head-Fi's Buy/Sell/Trade section was my solution.
Core Point Generally, enthusiasts do a good job taking care of their stuff, and Audiophile products don't really degrade. These factors produce an environment where secondary markets thrive. Products retain value, the buyers in that market have a good understanding of value, and a large percentage of buyers have also been sellers on that market.
After realizing I could buy a used DT880 for $200, use it for a few months, then reliably sell it for $190, my whole perspective on the hobby changed. Instead of my DT880 representing a $200 cost, now it was $10, all through the magic of reliable secondary market value.
The logical conclusion is that enthusiast products (that don't incur meaningful wear through use) are assets rather than expenses. After realizing this, I stopped buying cheap things and started investing in the "asset level" version of whatever product.
Implications This works great in the sense that I've probably saved a few thousand dollars by avoiding trash quality products, but it makes new hobby exploration difficult.
I look at EDC as an example, seems like a cool community, lots of neat stuff, but I can't think of too many situations where I'd utilize a pocket knife. I did a little reading, found most people recommend getting something cheap, carrying it for a while, and upgrading/abandoning based on much use it gets.
Seems logical, but I don't want to buy a $50 thing that I'll have to toss in a couple months if I decide to upgrade, but it's hard to get over the $200 it'll take to reach the asset level knives.
I think there's cool potential for a solution to this problem, a secondary market, based on trades, geared toward swapping asset level goods of one type, for similarly valuable asset level goods of another type.
Conclusion I've got five headphones at home, all worth ~$500 on the secondary market. I don't want to invest $200 in a knife that I'm not sure I'll find useful, but what if there was some easy way for me to trade one of those ~$500 pairs of headphones for a ~$500 knife? I don't have to shell out any cash, I get to try the new hobby, and I'm trying it at the quality level I'm interested in entering at.
Anyway, these are my thoughts, but what do you think? I'm curious to know how other people see this.
thumb_upSnadTheEgg, ChuckDee, and 2 others
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brendarooney
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Apr 26, 2020
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Freets
25
Jun 4, 2016
This is exactly the philosophy that l used (use) to justify my audiophile journey. Purchased most of my equipment "barely" used...have sold most for what I paid for it and keep what I love. Also scaled up in price and quality as my convenience grew in both my preference, tastes, equipment knowledge and ability to resell confidently (and more importantly my wife's confidence). My main rig retails for over $5K (CAD)...I paid $3k for all less than a year old equipment...confident I can resell for the exact amount if I choose over the next couple of years. So I do see it as an asset with a decent,shelf life.
Hey Gonzo,
No problem, I have a good time thinking about this kind of stuff, always fun to find someone equally interested in the discussion.
OCR stands for Optical Character Recognition, generally you'll hear it in reference to scanners that can turn written letters into editable text. While that's the definition and official use of the term, it's an acronym that gets thrown around whenever we're discussing software that recognizes specific objects/details within images.
In this situation, it would be something like, take a straight-on picture of the nib. Is it bent in a weird way? Are the tines split too much? The software would be able to recognize such things and either make or help inform a decision around condition grading.
On the whiskey front, not to get us on a new tangent, but I recently picked up some Yamazaki 12 and it's overtaken Glenlivet 18 as my favorite highland/smooth whiskey. Would recommend if you can find a reasonably priced bottle.
When will other communities get discussions? Not sure TBH, depends on the response we get in these communities. That said, if you want to make a case for a particular community, hit up my colleagues Kunal, Mike Wilson, and Alex Peterkin, their team owns this project : )
Best.
Armaegis
122
Jun 1, 2016
Hey guys, as fascinating as this talk is about "value validation" for secondhand products, logistic market matching, etc... and all the brainstorming that's being bantered about... you realize that an intermediary system is already in place for this sort of thing right? It's this funny thing called "money". Yes true, it's an extra step, but it simplifies the bartering system to a (admittedly arbitrary at times) shared commodity that is commonly valued by all parties involved.
GonzoTGreat
756
Jun 1, 2016
Hi @Will,
Thanks so much for your incredibly detailed and well-written response. I hope our exchange - out in the open - adds value to thread and the community.
Your post helped me see it's not nearly as complicated to set up an enthusiast barter system as I had imagined, though still a massive, daunting undertaking. This was definitely not something I figured was anywhere in anyone's todo list for the foreseeable future, but I figured I'd ask.
Also, what's OCR?
The JW example is appropriate. JW Blue is significantly better than Black (I also like my whiskey). I can tell the difference when drinking them neat, but less so as they are adulterated (with ice or mixers). JW Blue may have a unique subtlety. An attuned enthusiast could make an educated decision as to whether the price difference was worth it. The price difference is probably as a result of the difference in quality AND label color - blue dye costs so much more ;-).
If someone is perfectly happy their ballpoint pen, the smoothness of a fountain pen may be noticeable but not worth the price difference. And when we go beyond $1,000, we're talking about aesthetics and brand almost exclusively.
Cheers.
ps . When is this kind of discussion board coming to other communities (writing?).
Armaegis
122
Jun 1, 2016
Hey guys, as fascinating as this talk is about "value validation" for secondhand products, logistic market matching, etc... and all the brainstorming that's being bantered about... you realize that an intermediary system is already in place for this sort of thing right? It's this funny thing called "money". Yes true, it's an extra step, but it simplifies the bartering system to a (admittedly arbitrary at times) shared commodity that is commonly valued by all parties involved.
Hey Gonzo,
No problem, I have a good time thinking about this kind of stuff, always fun to find someone equally interested in the discussion.
OCR stands for Optical Character Recognition, generally you'll hear it in reference to scanners that can turn written letters into editable text. While that's the definition and official use of the term, it's an acronym that gets thrown around whenever we're discussing software that recognizes specific objects/details within images.
In this situation, it would be something like, take a straight-on picture of the nib. Is it bent in a weird way? Are the tines split too much? The software would be able to recognize such things and either make or help inform a decision around condition grading.
On the whiskey front, not to get us on a new tangent, but I recently picked up some Yamazaki 12 and it's overtaken Glenlivet 18 as my favorite highland/smooth whiskey. Would recommend if you can find a reasonably priced bottle.
When will other communities get discussions? Not sure TBH, depends on the response we get in these communities. That said, if you want to make a case for a particular community, hit up my colleagues Kunal, Mike Wilson, and Alex Peterkin, their team owns this project : )
Best.
Lots of questions, I'll do my best to give clear answers.
Does something like that (a p2p, barter focused, marketplace with value validation) exist today? Not that I know of. Nobody's really been in a position where it'd make sense to build such a thing. Medium of exchange is a pretty big thing that most business people have bought into, but as with all things, it was created based on certain requirements and assumptions.
Bartering was an inefficient way of exchanging value because there wasn't a good matchmaking system in place. If you have a heard of goats, and you want some bread to eat, you'd walk to the nearest town and hope the baker was looking for goat products. If the baker is not interested in goats or goat accessories, you're SOL because you can't spend two days walking to the next village on the off-chance their baker is interested in goat products.
Today, matchmaking can be solved via software. You have a $500 knife and you're interested in $500 headphones? Here are the first 10 people we found that have $500 headphones and want a $500 knife. EZ.
Logistics are solved by UPS/Fedex/USPS and Paypal/Venmo/Square. You were successfully matched with someone that's got a $500 headphone to trade for your $500 knife? NP, send money via internet, ship product via multitude of shipping providers, easiest day of your life.
The only remaining question is, how do we make sure folks are correctly representing the value of items they're trading? I think there's a clever solution based on a reputation system (misrepresent the value of a product and get shunned), some basic OCR, and a 2-3 person team to handle disputes when the scale gets large enough. It's a problem that lots of companies have already solved, with a slight additional twist.
Now, the question of "will Massdrop do this?" is not something I have the power to answer. I don't make choices for what we make or don't make for the website. Creating something like this would be a big undertaking, and we've got a long list of features and improvements to roll out over the course of this year. If it was something we were going to consider, that consideration wouldn't happen for some time.
For the question about Audiophiles, and the limit of "most consumers" ability to appreciate/hear the difference with high quality components, I think it's mostly psychological, consumers need guidance to be shown what to look for. Give a frat bro some JW Red, then give him some JW Blue. He'll probably notice the Blue is smoother, but if you asked him "How much more would you pay for Blue over Red?" his answer's probably not 1000%.
Now, if someone was there, explaining the nuance'd flavors of Blue, pointing them out to the frat bro, showing exactly how the experience is better, 1000% might not seem so crazy.
So the short answer is, unless you've experienced some serious hearing damage, I don't think you hit massively diminishing returns until you're past HD800s (~$1000), provided you love music and are willing to dedicate the time to pay it proper attention.
GonzoTGreat
756
Jun 1, 2016
Hi @Will,
Thanks so much for your incredibly detailed and well-written response. I hope our exchange - out in the open - adds value to thread and the community.
Your post helped me see it's not nearly as complicated to set up an enthusiast barter system as I had imagined, though still a massive, daunting undertaking. This was definitely not something I figured was anywhere in anyone's todo list for the foreseeable future, but I figured I'd ask.
Also, what's OCR?
The JW example is appropriate. JW Blue is significantly better than Black (I also like my whiskey). I can tell the difference when drinking them neat, but less so as they are adulterated (with ice or mixers). JW Blue may have a unique subtlety. An attuned enthusiast could make an educated decision as to whether the price difference was worth it. The price difference is probably as a result of the difference in quality AND label color - blue dye costs so much more ;-).
If someone is perfectly happy their ballpoint pen, the smoothness of a fountain pen may be noticeable but not worth the price difference. And when we go beyond $1,000, we're talking about aesthetics and brand almost exclusively.
Cheers.
ps . When is this kind of discussion board coming to other communities (writing?).
GonzoTGreat
756
Jun 1, 2016
You make some great points I hadn't considered.
Using a third party for evaluation of both items to be "traded" might be a good compromise. Of course, you'd have to find an entity that all parties trusted (the tricky part, I think).
Once you enter this realm, would the third party entity (TPE) act as a broker? In this case the swapping service would be just that: a service with its own costs etc.
I have no idea how the mechanics and finances of that would work. Does something like that even exist in an organized fashion online? If not, could this be an opportunity or a money sink when accounting for start-up, overhead, etc.?
Perhaps others have considered it and decided against it because they felt it was not feasible. Perhaps no one ever really considered it and this presents and amazing opportunity. Is this an offshoot direction Massdrop could (or would want to) go?
The idea of third party "value validation" is fascinating.
Hopefully, I'm not wandering too far afield as I ponder such things. Is this just an academic exercise or could this become a reality in some way?
Personally, I'd love to spend my time learning why different enthusiast groups are passionate about certain items.
I know a bit about stuff from the writing community and about what makes for (and bad) wet shaving gear. I'm learning about ties and am curious about watches.
A question for the audio file community (perhaps best as another thread): for about a dozen years I was a full-time freelance musician. I had the privilege of making three published CDs and, before changing my career path enjoyed a fair bit of success. I learned a TINY bit about audience engineering and producing and know that good professionals can hear minute differences in sound reproduction. At what point do the limitations of *most* consumers ears and hearing ability (I know way more about hearing than audiophile stuff) significantly diminish value of the super-fancy set-ups?
I listen to everything from classical (chamber and orchestra), jazz (big band to small combos), folk, rock and "world" music. I know my tastes. I don't care about a if thumping bass, but I can discriminate mid-levels (eg. I can pick out the violas in an orchestral piece).
Well, so much for staying on (one) topic. The first part of my response nose is relevant. The second may be better suited to its own thread.
Would love to hear your thoughts.
Lots of questions, I'll do my best to give clear answers.
Does something like that (a p2p, barter focused, marketplace with value validation) exist today? Not that I know of. Nobody's really been in a position where it'd make sense to build such a thing. Medium of exchange is a pretty big thing that most business people have bought into, but as with all things, it was created based on certain requirements and assumptions.
Bartering was an inefficient way of exchanging value because there wasn't a good matchmaking system in place. If you have a heard of goats, and you want some bread to eat, you'd walk to the nearest town and hope the baker was looking for goat products. If the baker is not interested in goats or goat accessories, you're SOL because you can't spend two days walking to the next village on the off-chance their baker is interested in goat products.
Today, matchmaking can be solved via software. You have a $500 knife and you're interested in $500 headphones? Here are the first 10 people we found that have $500 headphones and want a $500 knife. EZ.
Logistics are solved by UPS/Fedex/USPS and Paypal/Venmo/Square. You were successfully matched with someone that's got a $500 headphone to trade for your $500 knife? NP, send money via internet, ship product via multitude of shipping providers, easiest day of your life.
The only remaining question is, how do we make sure folks are correctly representing the value of items they're trading? I think there's a clever solution based on a reputation system (misrepresent the value of a product and get shunned), some basic OCR, and a 2-3 person team to handle disputes when the scale gets large enough. It's a problem that lots of companies have already solved, with a slight additional twist.
Now, the question of "will Massdrop do this?" is not something I have the power to answer. I don't make choices for what we make or don't make for the website. Creating something like this would be a big undertaking, and we've got a long list of features and improvements to roll out over the course of this year. If it was something we were going to consider, that consideration wouldn't happen for some time.
For the question about Audiophiles, and the limit of "most consumers" ability to appreciate/hear the difference with high quality components, I think it's mostly psychological, consumers need guidance to be shown what to look for. Give a frat bro some JW Red, then give him some JW Blue. He'll probably notice the Blue is smoother, but if you asked him "How much more would you pay for Blue over Red?" his answer's probably not 1000%.
Now, if someone was there, explaining the nuance'd flavors of Blue, pointing them out to the frat bro, showing exactly how the experience is better, 1000% might not seem so crazy.
So the short answer is, unless you've experienced some serious hearing damage, I don't think you hit massively diminishing returns until you're past HD800s (~$1000), provided you love music and are willing to dedicate the time to pay it proper attention.
ThatChocolateGuy
30
May 29, 2016
I feel you on this. I have a similar experience in the Audiophile world. Having started with my ATH-M50s, I decided it'd be a great investment to step up from an 8-year old 2.1 system from Radio Shack back in the day to a pair of Kanto YU2s (Bought for $250 CAD on MD) and a Polk Audio PSW10 sub.
Needless to say, you're absolutely right about second-hand​ value retention. After a year and a half of use, I sold those bad boys to a grateful enthusiast for $220 CAD. I can't think of a better return on any other Hobby :)
GonzoTGreat
756
May 29, 2016
@Will,
You pose an interesting question but, as you say in you OP:
(that don't incur meaningful wear through use)
The challenge in this particular example is that, unless it's put on a shelf, the knife will be used, the blade will be dulled and the value of the used item will change over time (unless you are able to keep it sharp and in the same condition as when purchased).
Otherwise, interesting food for thought.
SirCVA
13
Jun 8, 2016
This thread is really interesting but your scotch comment caught my eye. I've tried the Glen Livet 15, the Glen Fiddich 18 and the Glen Morangie 10 and the Morangie seemed to me to be the most "fun". I have to add more to my list of community recommended scotches and I see two here to add. Cheers!
On the topic of bartering there is still a major issue with global bartering as delivery costs and import taxes and duties (where they apply) really puts a damper on "value" for any goods.
GonzoTGreat
756
Jul 5, 2016
Hi Steve,
Thanks for the info about how this is expanding; I'm starting to see more communities with a dedicated forum. I agree wholeheartedly that slow growth with quality content is the way to go. I'm looking forward to when it reaches the writing community. In the meantime, I've noticed other nifty features to the website. The opportunity to introduce ourselves on our profile pages is a great addition.
Cheers!
Armaegis
122
May 25, 2016
I think in the general vein of the conversation, we are taking "asset" to mean an object that still retains (reasonably good) monetary value after purchase. For those of us who buy used and are able to sell again at zero/minimal loss, it's kind of like saying we're investing our money in gear rather than in the bank.
eunu
157
May 26, 2016
I understand most people in enthusiast communities prefer to see assets as objects that don't lose as much value as other things, but that sounds like a world where everything is expected to be worth less tomorrow than it is today.
With people experiencing negative interest rates at banks in some countries, that makes sense, and comparing money in the bank with money in gear is a fair comparison. But eventually monetary policy will make compound interest work again for people like us who don't use private jets like Uber.
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