Musical Instruments

SIC 3931

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing musical instruments and parts and accessories for musical instruments. The primary products in this category are pianos, with or without player attachments, and organs. This industry also includes string, fretted, wind, percussion, and electronic instruments.

Industry Snapshot

At one time, the ability to play a musical instrument was considered an essential part of a person's basic education. By the 2000s, however, electronic diversions like music-playback machines and video games, including the popular Guitar Hero and Rock Band series, made the effort of mastering an actual musical instrument somewhat less appealing. Nevertheless, more than 60 million musicians resided in the United States. According to the U.S. Census Bureau, musical instrument manufacturers shipped approximately $1.8 billion in products in 2008, a figure that had remained fairly stable since the early 2000s.

As part of the personal consumer durables category, musical instrument purchases depend greatly on consumer confidence. Such purchases are made with disposable personal income. In addition, in times of recession, discretionary spending for school bands and orchestras, personal music lessons, and high-end instruments become the first casualties of stripped down budgets. Reflecting a strong economy and low unemployment, production of acoustic pianos and school instruments decreased in the early 2000s, gained ground in the mid-2000s, then declined again with the economic recession of the late 2000s. By 2010, industry experts were looking for an upturn that coincided with the recovery of the economy.

In 20009, 1,800 establishments employed 17,500 workers in the manufacture of musical instruments in the United States. Total industry sales reached $1.3 billion in 2009. Massachusetts, California, and New York accounted for highest percentage of sales, with 33 percent, 16 percent, and 14 percent, respectively. California and New York also accounted for the most workers in the industry, with 3,663 and 3,090, respectively, followed by Pennsylvania (1,163), Ohio (1,060), and Mississippi (1,019).

Organization and Structure

While dominated by a few large manufacturers, the musical instruments industry has remained rather fragmented. Traditionally, the musical instruments industry has been dominated by the production of pianos, player pianos, organs (including electronic), and parts for those products.

While some automation had been introduced to the manufacture of musical instruments, the processes generally remained labor and materials intensive. The cost of building quality pianos soared during the latter half of the twentieth century. A good piano used more than 8,000 moving parts, many of which required rare super-quality materials like 10-grain-per-inch spruce and the highest-grade wool. Foreign competitors pushed into the market with innovative manmade materials and mass-production techniques that dramatically lowered the cost and increased the flexibility of the instruments.

Background and Development

The Victorian era (1830-1880) saw the enthroning of music, especially piano music, as an essential stabilizing element of society and, particularly, the family. In 1881, the Chambers' Journal reported, "In every house there is an altar devoted to Saint Cecilia, and all are taught to serve her to the best of their ability. The altar is the pianoforte."

The expected devotees of music were mainly women. In 1922, the Music Teachers National Conference noted that 75 percent of all concert audiences were women, and 85 percent of music students were female. In 1978, 57 percent of all music students were female and 79 percent of all piano students were as well. As early as 1840, the American "piano girl" was a recognizable stereotype; at the time, musical ability was thought to enhance a woman's social prestige.

The piano brought families together to play and listen, becoming the centerpiece of the Victorian family and an avidly sought-after item in the growing industrialization of hectic post-World War I America. The musical instruments industry sought to capitalize on that interest and place a piano in every parlor in the nation.

Before 1800, all pianos were grand pianos that required a lot of space, but that year saw the development of the John Hawkins' Portable Grand Piano, the precursor of the now-familiar upright piano. That innovation allowed the piano into the parlors of the middle class, a development paralleled by the refinement of the music box, particularly after 1815. This device provided good quality music without the needed effort of the piano or other instruments. These two trends in musical instruments continued throughout the century, with the appeal of passive listening becoming more important in twentieth-century America. The first electromechanical piano, the Telharmonium by Thaddeus Cahill, appeared around 1896.

Playing a piano well required effort and practice. Few could develop the talent to any great degree, a fact that prompted piano manufacturers to look seriously at self-playing pianos. These devices held the promise of combining the social values associated with piano ownership with the pleasures of passive listening. The French led the way in 1863 with a patent on music rolls but, like the German versions, they never worked well. The American Angelus player piano of 1897 achieved the first commercial success, followed by the Pianola in 1898 and the Apollo in 1900. By 1918, it was estimated that more than 800,000 player pianos were in operation in America east of the Mississippi alone, and 75,000 piano rolls were sold every month in Philadelphia. Most played popular ragtime pieces, but many delivered concert-quality renditions of classics "recorded" on cylinder by famous concert pianists from America and Europe. More than 100,000 coin-operated electric pianos produced by Wurlitzer and the J.P. Seeburg Piano Company were distributed throughout the country, and automatic self-playing pianos became common in many movie houses.

Despite manufacturer claims that anyone could play a player piano--even a child--proper operation required careful and consistent operation of the foot pedals. By 1923, player-piano sales peaked at 56 percent of all pianos sold. The automated devices could not compete with the growing popularity of radios and phonographs, however, which provided simple, reliable listening and took up far less room in the family parlor.

Faced with the evaporation of its market, the industry reversed itself, promoting active piano playing with National Music Week, which encouraged awareness of music in general and music lessons in public schools. In 1928, 358 schools provided piano lessons; that figure jumped to 2,004 by 1930. The National Piano Manufacturers Association, founded in 1901, stressed the joys of active piano playing and encouraged group instruction.

The industry also had to fight an image problem, as mass production techniques led to marketing abuses. The American industrial system of mass production and standardized parts, coupled with the expansion of the railroad transportation system near the end of the nineteenth century, sparked a realignment of the traditional piano craft shop. The corporation became the common business structure, and manufacturers often bought components to assemble a finished product without the need of a manufacturing facility at all. This was a similar development to what was happening in the automotive industry, with small firms becoming adept at supplying specific component elements to an assembly and marketing firm. The result, according to Frank L. Wing of Wing & Sons Piano Company, was the manufacture of the world's best pianos as well as the world's worst. Wing & Sons produced three distinct grades of pianos: professional instruments bought by wealthy middle-class clients for about $600 in 1916, commercial pianos that provided reasonable sound quality and durability for $400, and the low-grade "assembled" piano that sold for about $200. Many of the latter category were "stencil" pianos that did not carry the name of the manufacturer or assembler anywhere on the instrument. Dealers usually stenciled their own names onto the casings after delivery and often used names similar to those found on top quality instruments, such as "Baldin" for "Baldwin."

A major innovation in the production of the American piano was the introduction of the console piano in 1935. This smaller, more streamlined instrument fit better with modern American architecture, blending with the living room decor instead of dominating it. The console piano and the new electronic organ formed a major part of the rising postwar demand of the mid-1940s.

In 1969, Baldwin Piano executive Morley Thompson predicted piano sales would double by 1980, but instead they dropped by 30 percent, reflecting a nearly one-third decline in the birth rate from 1965 to 1975. The resulting decline in school-age children decimated the industry's core market. At the same time, high interest rates and rising cost of raw materials accelerated the decline of the market. Competition, both from other leisure and entertainment categories and from foreign manufacturers, whittled away at the domestic producers' share of the market. By 1986, imports had captured 43 percent of the U.S. acoustic piano market. In the late 1990s, the segment began to turn around, and Baldwin's sales increased 23 percent in 1997.

The electronic revolution had a great effect on the musical instrument industry. Between 1981 and 1986, the price of an acoustic piano doubled because of increasing labor and material costs, while unit sales dropped from 282,172 in 1978 to 166,555 in 1986 compared to a 40 percent increase in the sales of electronic keyboard instruments between 1985 and 1986. In fact, Americans bought twice as many keyboards in 1986 (206 million) than in 1985 and more than four times as many as in 1984. Sales of synthesizers jumped from 220,000 in 1985 to 350,000 in 1986. All that was driven by the increased power and flexibility of computer-assisted music production and a drop in the price of such electronic equipment. However, by the late 1990s, the segment had softened because consumers perceived that portable keyboards were of low quality. In 1999, Yamaha attempted to change that perception by introducing a moderately priced keyboard with such professional features as automatic accompaniment and sampled sounds.

Robert Moog introduced the synthesizer concept in 1964, but his company folded in 1977 and Moog moved to Kurzweil Music Systems Incorporated. The company's Kurzweil 250 used computer memory to reproduce the sounds of any musical instrument. The real breakthrough, however, came in 1983 with the musical instrument digital interface (MIDI), which allowed musicians and composers to connect synthesizers, instruments, and even computers together and have electronic signals successfully pass between them. Computer hardware and accompanying MIDI software sales jumped to $500 million in 1987. The computerized equipment allowed composers and musicians to master new instruments quickly and to develop new music faster and more efficiently. They also incorporated other, nonmusical sounds into their compositions and performances. The system broke down the barriers between composer, performer, music printer, and instrument builder, allowing the musician full control of the creative process.

The technology, however, brought a new set of problems. It allowed a musician to "sample" sounds from anywhere and anyone and then modify the sound to fit the need. Entire orchestras could be synthesized by one person, and other performers could be used to computer-produce totally new performances. This led to copyright battles and fears of lack of work for live-performance musicians. In addition, the old fear that plagued the piano industry during the heyday of player pianos--that the technology would displace the art--returned.

Introduced in the United States in 1989, acoustic/digital pianos offered the best of both worlds--for a price. The equivalent of a digital age "player piano," these instruments combined the traditional, full sound of a grand or upright piano with computer-driven options like automatic playback of famous performances, self-recording, and headphones for silent practice.

Another advancement in musical technology was the use of virtual reality. Peter Williams of Virtual S of London experimented with a virtual-reality keyboard in the shape of a checkerboard and bouncing ball. Each square could be a specific instrument or effect controlled by filters and other electronic controllers. The effect was a random music piece accompanied by the visual representation of the bouncing ball on the checkerboard. "This is one class of music programming that you couldn't do in the real world," said Williams in New Scientist. "We're not trying to replace violins and other instruments; this is a different way of doing it."

Other developments in the industry included a new process for making a plastic clarinet, which was developed by an English clarinetist and teacher along with an industrial designer. By fusing two molded halves instead of injection-molding a single piece, they eliminated the traditional tone problems of earlier plastic clarinets. Traditionally, clarinets were made from African hardwoods usually found in endangered rainforests. Consequently, the price of such wooden instruments was skyrocketing. The inventors hoped to begin using the same molding technique in the production of saxophones.

In 1997, production of acoustic pianos climbed after years of decline; the segment claimed 11.7 percent of market share on sales of $713.8 million. Production of school instruments also improved due to a good economy. Sales of school music products were $628.3 million. Keyboard instruments, which accounted for an estimated one-third of the industry's sales in the mid-1990s, as well as home organs, had lackluster sales in the late 1990s. According to U.S. Industry & Trade Outlook, consumers perceived portable keyboards as low quality and home organs as old-fashioned. In 1997, the industry sold $710.8 million of fretted instruments, $322.8 million of electronic music products, and $311.7 of percussion products.

Valued at $1.79 billion in 2000 and $1.82 billion in 2003, industry shipments of musical instruments remained relatively flat during the early 2000s. Manufacturers spent a total of $704 million on materials in 2000, which decreased to $606 million in 2003. The total number of industry employees also decreased from 15,279 in 2000 to 14,092 in 2003. Consolidation in the industry continued, and by the mid-2000s, only a few large companies still dominated in the United States.

In 2005, Americans were the biggest consumers of musical instruments by far, making up 42.7 percent of the worldwide market. Japan was second at 15.6 percent. Americans purchased 3.4 million guitars; the fretted instrument segment accounted for $1.4 billion in sales. Pianos followed with $1.1 billion in sales. Percussion instruments totaled $572.6 million in sales, wind instruments totaled $470.3 million, and stringed instruments such as violins and cellos totaled $68.4 million.

In the mid-2000s, more than half of U.S. households had at least one person who could play a musical instrument. The fastest-growing segment of musicians was between ages 18 and 34. The number of people participating in school instrumental music activities and private lessons also increased by 11 percent between 2003 and 2005.

In 2007, the State University of New York (SUNY) in Potsdam proved its devotion to music education with the purchase of 141 Steinway pianos for The Crane School of Music on its campus. The sale, the first major acquisition of pianos for SUNY Potsdam in 50 years, was the largest single purchase of pianos for the college as well as the largest transaction in the 154-year history of Steinway & Sons. The trend to use Steinways continued into the following years, and by 2010, 110 music schools, conservatories, and universities worldwide had become "All Steinway Schools."

Current Conditions

In the economic downturn of the late 2000s, the musical instrument industry, like many other U.S. manufacturing sectors, found itself struggling. According to Music Trades, in 2008 every category tracked by the publication's Quarterly Retail Sales Report saw sales declines in the double digits. By mid-2010, however, the industry seemed to be on the upswing, with pianos leading the way to a slow but steady improvement in demand. Although, as noted by Music Trades in May 2010, "There is hardly a consensus on the state of the music industry or the economy at large," music instrument retailers were reporting increases in sales in the first and second quarters of 2010.

Digital machines continued to vie for market share in the musical instrument industry. For example, Casio, a maker of a range of electronic products, introduced three new digital pianos in 2010 to commemorate the 30th anniversary of its first electronic music instrument, introduced in 1980. According to a press release published in American Music Teacher, Casio's new additions to its Celviano and Privia lines "make the most of Casio's highly acclaimed technologies for basic performance including the company's original Linear Morphing AIF Sound Source technology, which realistically reproduces the fine nuances of a grand piano."

Industry Leaders

Steinway Musical Instruments, Inc. of Waltham, Massachusetts, has two divisions: Conn-Selmer, the top manufacturer of band instruments, and Steinway, one of the top piano manufacturers. Established in 1853 in New York, the firm eschewed price competition, instead cultivating a top-quality image via international endorsements by concert pianists, sponsorship of national concert tours, and award-winning national advertising campaigns. According to a corporate profile, "More than 90 percent of all concert piano performances are on Steinway grand pianos." The Web site also stated that "over 60 percent of professional musicians and performing amateurs" use instruments with a Steinway Musical Instruments brand. With 1,746 employees, Steinway Musical Instruments had sales of $306.4 million in 2009, down from about $384 million in 2006.

The leader of the stringed instrument segment of the industry was Fender Musical Instruments Corp. Headquartered in Scottsdale, Arizona, privately held Fender was acquired by CBS Inc. in 1981 and taken private in 1985 by Bill Schultz and Bill Mendello. The new management reinvigorated the company such that by 1995, the company boasted almost 50 percent of the guitar market. By 2009, Fender manufacturing facilities produced about 1,000 guitars a day. That year, the company posted sales of approximately $600 million, up from $200 million in 2006.

Nashville-based Gibson Guitar Corp. can trace its origins to the 1870s, when company namesake Orville Gibson opened a mandolin shop in Kalamazoo, Michigan. Second to Fender in stringed instruments, Gibson also manufactures drums and accessories. The company acquired Baldwin Piano in 2001, which had been in business since 1862. Baldwin has the largest market share of grand pianos in the United States. Since 1988, it has manufactured Wurlitzer pianos and, since 1995, Chickering grand pianos.

America and the World

The United States imports and exports musical instruments in all categories. The main imports are pianos, guitars, and electric instruments. Japan, Korea, Taiwan, and China are the main suppliers and account for some two-thirds of imports. Chief musical instrument exports are parts (about one-third of total), high-quality guitars, and electric instruments. According to Supplier Relations US LLC, U.S. imports of musical instruments were worth $1.0 billion in 2009. Exports totaled $700 million.

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