The San Francisco Bay Area – which, for the purposes of this feature, we are defining as essentially most of Northern California – is one of many areas struggling with the fallout of its own success. When thriving tech companies set up shop in a metro area and attract top-dollar talent, overall cost of living goes up, small businesses get squeezed out, and anyone not making at least six figures finds remaining in the region unsustainable.
As a result, MI suppliers – and more specifically independent retailers – also feel the crunch. Rising rents lead to the shuttering of venues, practice spaces, and a mass exodus of creative types whose incomes don’t place them in one of the upper tax brackets and such gentrified cities then struggle with the mass eradication of once-thriving arts scenes.
While not alone in facing the challenges of such massive wealth inequity, the Bay Area is certainly representative of the larger phenomenon. MMR recently spoke with a handful of prominent MI vendors and a few of the remaining dealers to learn about the enduring upside to operating in the area, the challenges faced and changes experienced in recent years, and thoughts on what the future may bring.
Saga Musical Instruments
Richard Keldsen
Founder and Owner
Setting up shop in Northern California had a lot to do with about 20 years of shoveling snow growing up in Northern Michigan. This area gives you choices between skiing or sailing during the winter, so choices like that were really attractive, too.
It’s no secret that a lot of businesses start out here. A good percentage of the residents come to California from somewhere else, and they come here with a dream. It’s nice to live in that kind of place.
There sure are challenges to operating in the area. The cost of living is about as high as it gets and real estate values are not for the faint of heart, but the benefits are there. In spite of the challenges Northern California offers many benefits, including access to a highly educated and talented workforce and proximate to a dependable shipping port.
Many prospective musicians picked up musical instruments during the COVID days… and as they progress they will find new, higher level instruments. We expect a good number of them will find Saga Musical Instruments as a part of the process.
Real Guitars
Chris Cobb
Co-founder and Co-owner
We’ve been here for 37 years, selling used and vintage guitars and, you know, bases, and amps, and effects. We hardly sell anything in new products. We started selling strings at one point because our customers said, “If you start selling strings we’ll buy ’em because we don’t want to go to Guitar Center.” If you walk into this store, you’ll go, “Oh yeah… I remember places like this!” You know?
This particular block has gone up and down over the years. It’s, gotten nice and then it’s gotten bad again. And it’s gotten nice and then in the last four or five years, or maybe even a little longer… I don’t know if you know much about the Bay Area, but we’re maybe 60 miles north of Silicon Valley, San Jose. And at some point, I guess, our mayor, this guy, Ed Lee, got contacted by all these billionaires in Silicon Valley and said, “You know, we love being billionaires and it’s just the greatest thing, but there’s nothing to do in San Jose.” And so, he offered them these like ridiculous sweetheart deals to move their businesses up to San Francisco.
Oddly enough they’re about a block and a half away from us here and, which is now called the “10th Street Tech Corridor “or something like that. So we’ve got Twitter, Uber, Square, and one other big one – I can’t remember – a block and a half away from here. So now it’s a mixture of bums pissing themselves on the sidewalk, and then 24-year-olds walking by, looking at their phones and making, you know, a quarter million bucks a year. A very interesting juxtaposition. The fact that it happened right here by our stores just blows my mind, you know.
We do the high-end vintage guitar thing when we can, but we’ve been a little bit priced out of that because the upper end of stuff is just… if somebody had a $70,000 instrument and they needed 50 grand for it, it would be hard for us to pull together 50 grand to buy it. The big thing is that there’s only two music stores left in San Francisco, anymore, and that’s us and Guitar Center.
Haight Ashbury moved out of here and a lot of places have closed down. I’m also a professional musician. I’ve been playing at bars and nightclubs since the mid-‘70s in San Francisco, and still to this day do it. I’m more of a light blues and R&B guy. I would say that I know a lot about the music scene because they all come here to buy their stuff. Besides selling the high-end stuff, we sell like, just used guitars, so we can supply players with stuff that gives them a good deal, so they have instruments to play. But the truth of the matter is that the reputation that San Francisco’s always enjoyed as a big music city, it’s really been dialed down. I wouldn’t say we’re not a music city anymore, it’s just like we’re not nearly the one we have always been thought of as being.
I mean, it’s almost impossible for people to live here. You know, there are just no bargains in real estate in terms of like rentals or whatever. There’s the whole wealth gap, you know, the inequity between how ridiculously rich “rich people” are and how the rest of us are just getting shoved down the drain, you know? And I would call myself middle-class, or lower-middle-class, and we’re struggling. But this is a very wealthy area, partly because of Silicon Valley down there and there a lot of people who want to go out and spend $5,000 a month on a two-bedroom apartment. It’s no big deal to them. You know what I mean.
So, your average musician who used to be able to rent a house and have four or five people living there – everybody throws in $300 or $400 a month, or whatever – those days are long, long gone. And a lot of that scene moved over to Oakland, but Oakland is now experiencing that, too. In parts. The other parts of Oakland that aren’t experiencing that are parts that I would be afraid to live in, I think.
ACE Products Group
Leah Murphy
Director of Marketing
A New York native, our founder Alan Poster traveled extensively as part of his early manufacturing consulting work, and it was love at first sight when he first visited the bay area. The weather was great, the landscape was beautiful, and there was a great sense of opportunity here. Eager to get out of New York, “The dream was to get to California” Alan says, and after purchasing the Ace Guitar Strap company, the chance came to make the move.
After settling in Marin, Ace quickly began to grow under Alan’s guidance and vision. Expanding from guitar straps into gig bags and other accessories, the company flourished, and eventually moved to Petaluma, where our headquarters still are today.
One of the key advantages of operating out of the Bay Area is the large and diverse community, and proximity to some of the top talent in the world. Beyond that though, it’s a naturally inspiring environment in which to work, with deep musical roots, and a thriving live music scene.
As wonderful as the Bay Area is as a whole, there are of course a number of challenges. We have an exorbitantly high cost of living, and a highly competitive business environment. The distance to other parts of the country also results in logistical challenges, and the need to centralize our distribution and warehousing facilities.
For Ace specifically, we recently moved into a new office space, including new dedicated photo & video studios for our product development and marketing teams. It’s been a big project, and we’re prioritizing getting all the final details dialed in. We’re also celebrating our 40th anniversary this year, so we’re looking forward to a few new product launches, along with continued strong growth through 2023 and beyond.
In our larger surrounding community, we’re optimistic for continued economic recovery for our retailers, local artists and business partners during the ongoing pandemic. Though the end may not yet be in sight, our hope is for the music industry to unite in collective support and healing through these challenging times.
Mission Synths
Brian B. James and Betsy de la Garza
Co-Founders and Owners
We didn’t really consider any other place as an option. We’re long-term residents of San Francisco and have been involved in Bay Area music scenes for around two decades. We are rooted here and love the music scenes here; there really wouldn’t have been any other better place for us to set up shop.
The key advantage in operating out of San Francisco and the Bay Area is the long history with electronic and experimental music, going back to the SF Tape Music Center in the ‘60s, morphing into the Center for Contemporary Music at Mills College. There is CNMAT at Berkeley and CCRMA at Stanford. Sequential and Dave Smith, Buchla, Cycling 74, Tiptop Audio, Dolby, Serge are all very influential companies with roots in the Bay Area. There is deep culture, lineage, and a thriving electronic music scene here. There are so many amazing parties, artists, and labels coming out of the Bay Area right as well, and there always have been. Not to mention the tech industry being located here… the area has historically been a hub for technology.
Being located on the West Coast, we tend to have higher overhead costs for shipping than other dealers. Sometimes there can be longer delays in receiving product, especially from Europe.
We expect the interest in electronic music and audio production hardware to increase in general. Music over time tends to constantly evolve as new technologies constantly emerge, shaping the way music is approached and created, this trend will continue onward. We hosted shop events on a more regular basis last year and expect that to continue in 2023.
Kala Brand Music Co.
Michael Upton
President
I grew up in The San Francisco Bay Area and live in the North Bay (Petaluma), so it was a natural place to set up Kala after I moved back to California from living in Hawaii. It is a beautiful area with a vibrant music community and a great place to have a musical instrument company – a real no-brainer for me in 2005 when I lay down Kala’s roots.
Some of my initial thoughts 20 years ago were that the ports of San Francisco and Oakland are close by to receive foreign shipments. It is a fairly easy place to find a talented workforce. It’s a very active area for music and arts and it is just such a cool place to live and work. Plus, so many of my friends and family are here that it was an easy decision.
[As for challenges specific to the area], fires, droughts, and earthquakes come to mind, but obviously it is one of the most expensive places to live and run a business in the country. But I’ll trade that off with the absolute natural beauty and abundance of activities available in the area. Yeah, and the weather ain’t so bad either!
I am hopeful that the big pendulum sales swings we have seen with the MI market over the last several years will even out eventually, but who knows? I see the current challenge of dealing with, and navigating, the seeming overabundance of inventory that both suppliers and dealers seem to have at the moment. It seems to be feast or famine. I think the high inventory levels have affected everyone, regardless of geographic location. It’s also a real challenge to continue to maintain certain pricing structures with ever-increasing inflation and the cost of doing business.
EMG
Rob Turner
Founder and President
I started the business in LA. I was in Long Beach, and that was in late ’75, early ’76. I had played in a band with my brother, and we had come through this area. We had come through Sonoma County and he ended up marrying a girl from Sonoma County. I didn’t really wanna stay in LA and my brother said, “Well, why don’t you just move the business up here and I’ll help you out? We’ll become partners.” And so that’s how we ended up here in Sonoma County, starting in 1978.
The Bay Area changed dramatically since then, especially North Bay. I mean, you have to think about the fact that Santa Rosa at that time was a town of about 100,000 – not very big. And it’s 160,000 now; the largest population in Northern California other than Sacramento. If you think about it, if you’re on the coastal side, so to speak, you don’t hit another civilization until Portland, Oregon. So if you’re into wilderness and you’re into having a good time outdoors and, you know, hiking and biking, and doing all that kind of thing, then this is a great place to be. After growing up in LA it was like, I was just tired of breathing smog and everything else. The air is clean, it actually rains here during the winter, and it’s just a beautiful spot, basically.
As for some of the challenges specific to the area, it didn’t used to be difficult to find labor, but now with California changing and getting a higher minimum wage, and property values going up all the time, it’s difficult to find a place where you can work, where people can actually afford to live.
That’s one of the main drawbacks. On the positive side, we’ve never had a problem finding labor, which is really good. If you’re in the city, and I don’t mean to say San Francisco, but if you’re in LA or any of the major cities, you can find inexpensive labor and it’s easier for people to sort of live with one another and do all of that, but up here it’s a little more difficult. There’s labor, but most of the people that have been with us have been with us for so long now – they’ve worked for us for 30 years or more, you know?
We’re about 50 miles above San Francisco, so it’s quite a distance. Here, there are a lot of inexpensive rehearsal areas. The other thing, too, is that there are a lot of venues. I mean, they’re everywhere. We have Live Oak, Hot Monk, we have the Mystic Theatre. And then we have professional venues. We have the Green [Music] Center. I caught Lyle Lovett at Luther Burbank a couple of months ago. Los Lobos played the other night, Rodney Crowell’s coming to the Mystic in Petaluma, Dave Mason played the Mystic.
The thing that’s interesting about it is, we’re about a 45-minute drive away from the city, maybe a little less, maybe 40 minutes. We can be at the Fillmore or any of those sort of places. But there’s also the big venues. You know, there’s the new Chase Center, which is the home of all the big shows. We are far enough away from the city where we have local promoters as opposed to the corporate promoter – the “big guys.” Let’s put it this way: it’s a very lively music scene.
We’re camped here. We’ve been here for a long, long time. Let’s put it this way. Bottom line, it would be nice to be someplace where it was cheaper to operate, where we could maybe have lower labor costs. But once you’re sort of entrenched and you’re in real estate, and you’re here to stay and your kids grew up here and all that… you’re not going anywhere. Once you become part of the woodwork, you’re part of the woodwork and I’m happy we are.
Gallien-Krueger
Robert Gallien
Founder and President
In the ‘60s when I started this company, the Bay Area was a hot-bed of great new music. Many bands lived and made their recordings in the area, which supported many venues, studios, and music retailers . Also the area was very friendly to electronics manufacturing businesses, and the cost of living was low. Most of the major electronic component distributors had warehouses in the area, which made material procurement convenient. The only drawback to the area was shipping and importing difficulties which were minor compared to the advantages. It also didn’t hurt that I was an engineer at Hewlett Packard in Palo Alto and was completing my masters in electrical engineering at Stanford.
Today there are few, if any, advantages to operating in the Bay Area. Most of the studios, music retailers, and venues have vanished. All the electronic distributors have moved out of the area and the cost of living has skyrocketed. The shipping difficulties have only gotten worse and California has definitely become an unfriendly business environment.
The cost of doing business in the Bay Area has skyrocketed since Silicon Valley’s tech boom starting in the ‘90s. Most challenges we face are due to the enormous rises in operation and production costs, making profitability more challenging, especially since the COVID pandemic. If I were starting this business today I would not choose the Bay Area to base my operations.
We have had major production delays the past few years due to the pandemic, so our main focus for the rest of the year is fulfilling back orders and getting our production timeline back on track. My operation is already here with a substantial investment in plant and equipment so I will remain here. I unfortunately do not anticipate any positive changes regarding the Bay area music scene in the coming months or years.
Universal Audio
Allan Timms
Senior Vice President of Engineering
Our roots in Santa Cruz – which is about an hour and 15 minutes from San Francisco – run deep. Our CEO and founder, Bill Putnam Jr. started Universal Audio in his garage on the west side of Santa Cruz in 1999. Our Custom Shop is located near the same location, where we still hand-build analog compressors and channel strips such as the Teletronix LA-2A and UA 1176. Our headquarters is currently seven miles outside of Santa Cruz in neighboring Scotts Valley.
Scotts Valley also has a rich history in the development of audio technology, having been home to an eclectic mix of audio companies including Antares and E-Mu. Santa Cruz and the surrounding are also has a huge amount of musical talent – it’s incredibly diverse and has one of the most vibrant music scenes I’ve ever lived close to.
One key advantage to operating in the area would be the rich combination of technology expertise and the incredible musical talent in the area, as well as our proximity to Stanford and CCRMA (Center for Computer Research in Music & Acoustics) is really all part of our DNA as a company. Some of the world’s foremost experts in DSP engineering, algorithms, analog hardware, and software design live here and work for UA as a result, and many of them are musicians or deep appreciators of music.
On top of that, the weather is awesome, and who wouldn’t want to live so close to the ocean? I can be in the ocean in 15 minutes and skiing in the mountains a few hours later. What’s not to love about that!
We’ve seen many challenges, not least of which is the downside of being so close to Silicon Valley. We constantly have to compete for tech talent against the likes of Apple, Google, Facebook, et cetera. The area also has seen the worst of the recent onslaught of climate change effects. In 2020, wildfires destroyed three employee’s homes, with UA HQ and many more employees having to be evacuated. Flooding and the growing extremes of the latest atmospheric rivers have stranded employees and washed away our roads.
Over the COVID era, our culture has incorporated a larger acceptance of flexible work arrangements, so our ability to react to external pressures and truly work from anywhere has helped mitigate some of these challenges.
Locally, the music scene and the community is bouncing back well from COVID, the fires, and the flooding nearly behind us (just one more atmospheric river to go, possibly…). The ocean and the mountains are just amazing in springtime!
There is also a lot to be excited about at UA. We’re going to keep growing, keep obsessing over the details, keep being creative and keep trying to surprise and delight our customers every step of the way. We have plenty of surprises in store, and we’ll keep putting out amazing products that creators will love, from bedroom producers to pro audio professionals. We have some really amazing things on the roadmap that will blow your mind. I could tell you what they are, but you know… just wait!
Guitar Center
Ren Stolze
General Manager of Guitar Center San Francisco
The San Francisco market was one of the first expansion markets for Guitar Center over 50 years ago. San Francisco has a really cool feel to it and it’s a true destination for the arts. The music scene here has always been very rich, going way back to the ‘60s. From The Grateful Dead, Jefferson Airplane and Santana, to Shelia E., Metallica, and Green Day decades later, to any number of indie, punk and metal bands, hip-hop artists, DJs, Latin artists, and much more. The Bay Area is one of those special places where all genres of music consistently happen at a high level.
And we are in a hub for all sorts of people and activities. We are talking tourists and transplants who move here, business and commerce, touring musicians, et cetera. It’s one of those places that I think everyone wants to come to, to experience something grand.
It is one of the most diverse communities that you can possibly get, and I see that as a major advantage. It’s a massive blend of different ethnicities and people of different backgrounds. You get to know every single type of person, which is really cool. For instance, I’m on a first-name basis with many well-known guitarists, metal legends, and famous DJ’s. And because it’s a really nice place to live, it attracts all sorts of musicians, celebrities and prominent business figures. Regarding advantages for our Guitar Center stores in particular, we get a lot of foot traffic from tourism. Before COVID, I know that nearly half of our store’s foot traffic was international customers, and that number is getting up there again now that things are getting back to normal.
I would also say that our team of associates and managers at the SF store are some of the best-in-class. I have worked at other Guitar Center locations and have spent a huge amount of time in music stores in general my whole life, and there is a special type of camaraderie here that you don’t necessarily find at just any music store, and I would say that results in a tighter operation and some of the happiest customers.
Additionally, we are located in close proximity to several live music venues and recording studios, and they often come directly to us for whatever they need. I’m pretty sure we’ve sold audio equipment to most of the music venues and studios in the Bay Area.
As to challenges specific to this location, the parking can be tricky. We have no parking facility per se – it’s all street parking. So sometimes that can require some special logistics when there’s a huge delivery or people want to make a large purchase, but we make it work and have everything ready to load in to the customer’s vehicle when they pull up.
Because of the high number of international travelers that visit our store, we try to staff the facility with multilingual employees to cater to that where possible. We are lucky to have some very talented Associates with multi-ethnic backgrounds who can communicate with lots of these international travelers.
Our community also has a very visible homeless population, which isn’t an issue in itself, and people who are based here generally treat them with a lot of grace and compassion, but occasionally it can catch customers off-guard, especially if they were visiting from places where the issue is not as prevalent.
We are seeing a lot more people traveling again, and that has led to more tourism and much of our old style of clientele returning to the store. We had the time to get very familiar with our regular customers during the pandemic, but now we have the tourist traffic again, which means creating a balance to service our full community again.
We also saw a lot of beginners who wanted to use their downtime during COVID to learn to play an instrument. Some have since dropped the new hobby, but a surprising number of them are sticking with it, which is wonderful to see! So, we expect to see lots of these new musicians come back to us as regular customers as they start discovering their sound.
Historically, the San Francisco store has also been a premiere destination for things like in-store artist clinic events, performances, meet-and-greets with fans, etc. Much of that went away during the pandemic, but we are starting to see these types of events come back as well.
Additionally, the City just finished a five-year construction project near our store, which included brand-new sidewalks, parking meters and a new Muni Stop that drops off passengers less than a block away from our front door, making shopping at Guitar Center San Francisco very welcoming and more convenient than ever!
