WEBVTT - Why did Gibson Declare Bankruptcy?

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<v Speaker 1>Get in touch with technology with tech Stuff from how

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<v Speaker 1>stuff works dot com. Hey there, and welcome to tech Stuff.

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<v Speaker 1>I'm your host, Jonathan Strickland. I'm an executive producer and

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<v Speaker 1>how Stuff Works and I love all things tech. And

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<v Speaker 1>in the last episode I talked about the founding of

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<v Speaker 1>the Gibson Guitar Company, and that yet about how Orville

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<v Speaker 1>Gibson kind of sort of founded the company that bore

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<v Speaker 1>his name. I say kind of sort of because he

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<v Speaker 1>was a luthier, someone who makes mandolins and guitars, and

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<v Speaker 1>sought out the help of some businessmen in Calamazoo, Michigan,

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<v Speaker 1>after he started getting more requests for his work than

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<v Speaker 1>he was able to provide for it was it was great,

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<v Speaker 1>his work was in demand, but he wanted to to expand,

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<v Speaker 1>so he got together with a group of businessmen who

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<v Speaker 1>all made a business that they called a the Gibson Company,

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<v Speaker 1>um specifically the Gibson Mandolin Guitar Manufacturing Company, and Orville

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<v Speaker 1>was not a partner in that company. Instead, he sold

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<v Speaker 1>a patent to the group and he got a kind

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<v Speaker 1>of a pension from them, but other than that he

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<v Speaker 1>was not heavily involved in the business. After a couple

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<v Speaker 1>of years. I also talked about acoustic guitars and how

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<v Speaker 1>they work. I talked about electric guitar pickups and how

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<v Speaker 1>they work, as well as the evolution of Gibson in

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<v Speaker 1>its first six decades are so arguably seven decades depending

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<v Speaker 1>upon how you're counting. Now today we're going to look

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<v Speaker 1>at how Gibson has changed hands over the years leading

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<v Speaker 1>up to the company declaring bankruptcy in two thousand eighteen.

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<v Speaker 1>So what happened and is Gibson alone in this or

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<v Speaker 1>are other major guitar brands also facing financial difficulty? Well, first,

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<v Speaker 1>we have to backtrack just a bit. So in the

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<v Speaker 1>last episode I ended by talking about what was going

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<v Speaker 1>on in Gibson in the nineteen sixties. But earlier, back

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<v Speaker 1>in nineteen Gibson's ownership changed hands. A company called Chicago

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<v Speaker 1>Musical Instruments or c m I acquired Gibson, and the

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<v Speaker 1>founder of c m I was a guy named M. H. Berlin.

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<v Speaker 1>Berlin was born in eighteen ninety five in Romania, and

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<v Speaker 1>his family immigrated to the United States in the early

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<v Speaker 1>nineteen hundreds. They moved to Chicago. Berlin attended school through

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<v Speaker 1>the eighth grade and then left school to work at Wurlitzer's,

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<v Speaker 1>a retail store in Chicago. After serving in the U. S.

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<v Speaker 1>Navy during World War One, Berlin would return to the

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<v Speaker 1>United States and, after working for a musical instruments company

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<v Speaker 1>as a salesman, would eventually be the founder of CMI

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<v Speaker 1>in nineteen twenty. In nineteen forty four, only one of

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<v Speaker 1>the original five Kalamazoo businessmen who founded Gibson was still alive.

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<v Speaker 1>That was John Adams, not the president, and he was

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<v Speaker 1>eighty five years old. He decided he wanted to sell Gibson.

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<v Speaker 1>C m I had own into a successful musical instruments

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<v Speaker 1>distributor company, and Berlin's company bought out Gibson. For the

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<v Speaker 1>next two decades, Gibson performed well in the market and

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<v Speaker 1>introduced numerous innovations in their products. In nine, an odd

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<v Speaker 1>merger happened. C m I, the parent company for Gibson,

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<v Speaker 1>would merge with a company called E C L. Well.

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<v Speaker 1>What was e C L It was a brewery and

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<v Speaker 1>concrete company in Ecuador? What the what? Well? It was

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<v Speaker 1>a company that was founded in Ecuador. Uh was had

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<v Speaker 1>several different interests there, including concrete and cement as well

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<v Speaker 1>as a brewery, So the board of e c L

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<v Speaker 1>were really the owner of e c L. Purchased publicly

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<v Speaker 1>available stock in c m I enough of it to

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<v Speaker 1>assume control of the company. This is technically what we

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<v Speaker 1>would typically call a hostile takeover, the idea that you're

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<v Speaker 1>going through shares of stock rather than talking with leadership

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<v Speaker 1>about a transition from one style of company to another.

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<v Speaker 1>The chairman of v c L was a guy named

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<v Speaker 1>Norton Stevens, and the new merged company was called Now Orleans.

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<v Speaker 1>And Now Orland came from combining the first three letters

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<v Speaker 1>of Norton Stephen's first name with the last three letters

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<v Speaker 1>of MH. Berlin's last name, No Orlan. No Orlean had

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<v Speaker 1>three main businesses. One was brewing, one was musical instruments,

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<v Speaker 1>and the third was somewhat vaguely defined as technology. There

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<v Speaker 1>are some accounts from Gibson employees dating around this period

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<v Speaker 1>that suggests their new peers, their new business owners, were

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<v Speaker 1>more focused on maximizing profits than on building high quality

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<v Speaker 1>instruments for musicians. And it wasn't that they wanted to

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<v Speaker 1>make substandard products, but rather they just didn't have an

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<v Speaker 1>understanding of what it takes to make a good music instrument.

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<v Speaker 1>They weren't Louthier's, they weren't even musicians necessarily, and according

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<v Speaker 1>to Stan Rendell, who was serving as the president of

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<v Speaker 1>Gibson at the time, the new way of doing business

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<v Speaker 1>ended up hurting Gibson and included a fundamental change in

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<v Speaker 1>the way the company approached products. Before the acquisition, Gibson

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<v Speaker 1>had a single customer that was c m I. Gibson

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<v Speaker 1>didn't sell directly to people. Gibson sold their products to

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<v Speaker 1>their parent company, c m I, which was a distributor.

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<v Speaker 1>So here's how it would work. Gibson would manufacture musical

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<v Speaker 1>instruments and then essentially would sell them to c m

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<v Speaker 1>I at a profit. So whatever it cost Gibson to

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<v Speaker 1>make the musical instrument, they would mark that up a

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<v Speaker 1>bit so they can see see a profit sell that

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<v Speaker 1>to c m I. C m I would distribute those

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<v Speaker 1>musical instruments at a marked up price to make their profit.

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<v Speaker 1>So each stage, the price of the guitar or whatever

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<v Speaker 1>it may be, it was a mandolin or avenge or

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<v Speaker 1>whatever would go up. So from Gibson to c m I,

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<v Speaker 1>price goes up. From c m I to say a

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<v Speaker 1>retail store somewhere the price goes up, and the price

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<v Speaker 1>goes up a little bit more to the end customer,

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<v Speaker 1>the musician. So that explains partially why these guitar prices

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<v Speaker 1>would get pretty high eventually, because you're talking about several

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<v Speaker 1>different middlemen that have to get their cut before it

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<v Speaker 1>ever gets to the customer. If Gibson were selling directly

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<v Speaker 1>to the customer, the prices might be a little lower,

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<v Speaker 1>not necessarily significantly lower. Because Gibson was always in the

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<v Speaker 1>business of making high end guitars. Their guitars were known

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<v Speaker 1>as UH some of the flagships in especially in electric guitars.

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<v Speaker 1>It was essentially Gibson and Fender were the two big names,

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<v Speaker 1>and so they could charge a premium because they were

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<v Speaker 1>selling the premium products. Everyone else was kind of selling

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<v Speaker 1>either slightly lower cost, lower quality ones or knockoffs, and

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<v Speaker 1>that was about it. Well, the Gibson would take the

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<v Speaker 1>profit that they made by selling to c m I

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<v Speaker 1>and they would use that money to fund research and development.

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<v Speaker 1>They would give raises to people who were innovating a

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<v Speaker 1>musical instrument design, they would improve manufacturing processes. Essentially, they

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<v Speaker 1>would reinvest their profit back into the business, back into

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<v Speaker 1>the people in the business, and it was a good

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<v Speaker 1>way to create an incentive to do good work. However,

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<v Speaker 1>upon normilists becoming the new reality, things would change. Nor

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<v Speaker 1>Leists operated Gibson as a cost center, meaning normilists would

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<v Speaker 1>just pay the bills as Gibson incurred them. So instead

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<v Speaker 1>of Gibson trying to balance everything by taking the revenue

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<v Speaker 1>it got from c m I and then paying off

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<v Speaker 1>whatever bills it had and investing in the business wherever

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<v Speaker 1>it needed to, nor Less would just say, oh, well,

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<v Speaker 1>if you incur age expense, we'll pay it. There was

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<v Speaker 1>no profit model for Gibson to pursue anymore, and according

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<v Speaker 1>to Randell, this removed any incentive to innovate and work hard.

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<v Speaker 1>He said, if your bills are being paid, whether you

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<v Speaker 1>work hard or not, your inclined not to work very hard.

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<v Speaker 1>So that was kind of an interesting point. Now, I

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<v Speaker 1>will say that that doesn't necessarily hold true in all

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<v Speaker 1>venues where if your bills are paid, you aren't inclined

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<v Speaker 1>to work hard. But that but if it's if it's

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<v Speaker 1>a thing where uh you know, in this particular arrangement

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<v Speaker 1>that Gibson had with new or Less, essentially that does

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<v Speaker 1>seem to be one of the reasons why quality started

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<v Speaker 1>to slip, but the company did soldier on. It produced

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<v Speaker 1>a few instruments in that era that we're not praised

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<v Speaker 1>very much, possibly due to the new focus on the

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<v Speaker 1>streamline manufacturing process to maximize output. Some employees later expressed

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<v Speaker 1>opinions that this was at the cost of build quality.

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<v Speaker 1>Others would say, no, we made good guitars, they just

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<v Speaker 1>they just weren't the best, most innovative designs. But things

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<v Speaker 1>really took a downhill turn in the eyes of guitar

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<v Speaker 1>lovers in the mid to late seventies. That's when Gibson

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<v Speaker 1>began producing guitars that got what we'll call a mixed reception.

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<v Speaker 1>That's being kind. There are certainly some fans of Gibson's

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<v Speaker 1>guitars from this era, but there are a lot of

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<v Speaker 1>outspoken critics as well. In fact, I say that the

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<v Speaker 1>critics far outnumber the fans. So let's take the Marauder

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<v Speaker 1>as an example. Gibson introduced this line in nineteen seventy

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<v Speaker 1>four and went into mass production the following year. It

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<v Speaker 1>was a departure for Gibson designs as it featured a

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<v Speaker 1>bolton neck Gibson guitars up to that point had been

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<v Speaker 1>set in neck joint guitars being the next would slot

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<v Speaker 1>into the body of the guitar and then would be

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<v Speaker 1>secured by glue. So if you remember in the first

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<v Speaker 1>episode I talked about the anatomy of a guitar, you

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<v Speaker 1>have the body, that's the part that has the sound

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<v Speaker 1>hole in it. For an acoustic guitar. You have the

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<v Speaker 1>neck that's the part that joins onto the body, and

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<v Speaker 1>it's the part that the strings are are strung against

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<v Speaker 1>and have frets where you can press the string against

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<v Speaker 1>the frets to make different notes. And then you have

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<v Speaker 1>the head of the guitar. That's where these strings attached

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<v Speaker 1>to the tuning bags and you can tune the strings.

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<v Speaker 1>So where the neck and body would meet, you could

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<v Speaker 1>do what is called a set in neck joint, where

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<v Speaker 1>it has sort of the seamless look to it, where

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<v Speaker 1>the neck of the guitar sets into the body of

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<v Speaker 1>the guitar. But the Marauder was different. It was a

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<v Speaker 1>bolt on, which is what it sounds like. Once you

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<v Speaker 1>fit the neck to the guitar body, you secure the

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<v Speaker 1>neck to the body with screws or bolts, so Fender

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<v Speaker 1>guitars were frequently bolt on neck guitars and Gibson had

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<v Speaker 1>usually opted for set in neck guitars, so the Marauder

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<v Speaker 1>was a new direction. Some people said, oh, they're kind

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<v Speaker 1>of copying Fender, and some guitars said that it actually

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<v Speaker 1>sounded more like a Fender guitar than a Gibson guitar,

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<v Speaker 1>which was due to the difference in the pickup that

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<v Speaker 1>they used. So if you remember in my last episode

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<v Speaker 1>I talked about what a pickup is. I'll talk a

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<v Speaker 1>little bit more about it again in a second, but

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<v Speaker 1>Gibson pickups have sort of a more mellow sound to

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<v Speaker 1>them typically than Fender ones do. Fenders have a little

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<v Speaker 1>more not not twangy, but there's a little more of

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<v Speaker 1>a metallic sound to Fender pickups. And it's not that

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<v Speaker 1>one is better than the other necessarily. They give off

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<v Speaker 1>different qualities of sounds, So it all depends upon what

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<v Speaker 1>kind of sound you want to go for, what is

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<v Speaker 1>the tone that you're looking for, and that would help

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<v Speaker 1>determine which pickup you would most want to go with.

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<v Speaker 1>It's not necessarily that the Gibson model was superior Defender.

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<v Speaker 1>It was just different. But the marauder was also a

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<v Speaker 1>bit of a Frankenstein's monster. The marauder had the body

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<v Speaker 1>of a Less Paul edition Gibson guitar, so it was

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<v Speaker 1>shaped in the same way as a less Paul Gibson,

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<v Speaker 1>but the head at the end of the neck was

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<v Speaker 1>not from a Less Paul Asian guitar. It was from

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<v Speaker 1>a Flying V guitar, so it was a different style

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<v Speaker 1>head than what you would normally see with that style

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<v Speaker 1>of body. And the guitar had a pair of humbucker pickups. Now,

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<v Speaker 1>I mentioned the humbucker in the last episode, but I

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<v Speaker 1>did not go into much detail. So let me give

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<v Speaker 1>you a quick rundown. Now, as I said in the

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<v Speaker 1>last episode, electric guitars have at least one coil of

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<v Speaker 1>conductive wire, typically wrapped around a permanent magnet, and the

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<v Speaker 1>strings on electric guitar are ferromagnetic, and the area above

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<v Speaker 1>the picnic pickup gets magnetized just through proximity. So because

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<v Speaker 1>those strings are close to a permanent magnet, they get

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<v Speaker 1>a little They're magnetized to a small degree, and as

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<v Speaker 1>those strings vibrate, they create a fluctuating magnetic field over

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<v Speaker 1>the coil of conductive wire. That's inside the pickup. This

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<v Speaker 1>induces a change in voltage and thus current to flow

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<v Speaker 1>through this coil of conductive wire. That current can be

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<v Speaker 1>sent out to an amplifier and then two speakers to

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<v Speaker 1>produce sounds. You can also do lots of effects on

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<v Speaker 1>the signals and create all sorts of different things like

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<v Speaker 1>distortion and stuff. But what does that have to do

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<v Speaker 1>with a humbucker. Well, I'll tell you in just a second,

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<v Speaker 1>but first let's take a quick break to thank our sponsor.

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<v Speaker 1>A humbucker is a type of a double coil pickup

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<v Speaker 1>in which you have one coils magnets with their north

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<v Speaker 1>poles pointing up towards the strings, and the other coils

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<v Speaker 1>magnets have their south poles facing up towards the strings.

0:13:36.320 --> 0:13:39.120
<v Speaker 1>So that's where we get the double coils. Now, you

0:13:39.120 --> 0:13:43.200
<v Speaker 1>can have multiple magnets within the coils, but you only

0:13:43.200 --> 0:13:46.240
<v Speaker 1>have two coils, but the two coils connect together out

0:13:46.360 --> 0:13:49.200
<v Speaker 1>of phase. So why would you do this? Why would

0:13:49.200 --> 0:13:53.240
<v Speaker 1>you have one set one coils magnets with the north

0:13:53.240 --> 0:13:55.880
<v Speaker 1>pole facing up one coils magnets with the south pole

0:13:55.920 --> 0:13:58.600
<v Speaker 1>facing up, and why the heck connect them out of phase? Well,

0:13:58.600 --> 0:14:01.280
<v Speaker 1>as it turns out, can act of coils aren't just

0:14:01.480 --> 0:14:04.120
<v Speaker 1>good at picking up magnetic fluctuations. They are good at that,

0:14:04.160 --> 0:14:06.719
<v Speaker 1>but they're good at other things too, Like they're good

0:14:06.720 --> 0:14:09.120
<v Speaker 1>at being antenna in general, and they can pick up

0:14:09.120 --> 0:14:11.760
<v Speaker 1>all sorts of stuff which can produce a hum in

0:14:11.800 --> 0:14:14.880
<v Speaker 1>an outgoing signal from the guitar. So you could have

0:14:14.920 --> 0:14:19.080
<v Speaker 1>a guitar plugged into an amplifier and you can hear

0:14:19.120 --> 0:14:21.520
<v Speaker 1>a hum from the guitar even though you're not doing

0:14:21.520 --> 0:14:25.160
<v Speaker 1>anything with the guitar. There's that sort of distortion that's

0:14:25.200 --> 0:14:28.080
<v Speaker 1>coming in this little signal, and it can interfere with

0:14:28.160 --> 0:14:30.640
<v Speaker 1>the sounds you want to create with your guitar, because

0:14:30.680 --> 0:14:34.040
<v Speaker 1>once you amplify a signal, that hum becomes audible, and

0:14:34.440 --> 0:14:36.480
<v Speaker 1>chances are it's not what you want people to hear.

0:14:36.880 --> 0:14:41.840
<v Speaker 1>The humbucker, as the name implies, bucks the hum by

0:14:41.880 --> 0:14:44.720
<v Speaker 1>putting those two connected coils out of phase. Now allow

0:14:44.760 --> 0:14:48.080
<v Speaker 1>me to explain. By connecting the coils out of phase,

0:14:48.120 --> 0:14:53.000
<v Speaker 1>the two coils can eliminate incoming distortion signals. Now, this

0:14:53.080 --> 0:14:57.680
<v Speaker 1>is sort of how noise canceling headphones work. Visualize a

0:14:57.840 --> 0:15:00.760
<v Speaker 1>sound wave with peaks and val so the way we

0:15:00.800 --> 0:15:04.000
<v Speaker 1>typically think of sound waves where we've plotted against an

0:15:04.160 --> 0:15:07.840
<v Speaker 1>x y axis, and we've got those nice smooth curves

0:15:07.880 --> 0:15:13.040
<v Speaker 1>that represent the amplitude of the uh. The height represents

0:15:13.040 --> 0:15:16.480
<v Speaker 1>the amplitude of the sound wave, and the length of

0:15:16.560 --> 0:15:19.320
<v Speaker 1>that represents sort of the well the wavelength and then

0:15:19.480 --> 0:15:22.640
<v Speaker 1>ultimately the frequency if you have any sort of designation

0:15:22.680 --> 0:15:26.160
<v Speaker 1>of time on there. So visualize the sound wave with

0:15:26.600 --> 0:15:29.680
<v Speaker 1>peaks and valleys. That's a really steady tone, so it's nice.

0:15:29.800 --> 0:15:33.320
<v Speaker 1>And even now imagine you have a second wave identical

0:15:33.360 --> 0:15:35.480
<v Speaker 1>to the first. It's got the exact same wavelength, that's

0:15:35.520 --> 0:15:39.640
<v Speaker 1>got the exact same amplitude. But now imagine you offset

0:15:39.680 --> 0:15:43.080
<v Speaker 1>it so that if you overlay the second wavelength or

0:15:43.400 --> 0:15:47.200
<v Speaker 1>second wave on top of the first wave, the peaks

0:15:47.240 --> 0:15:50.280
<v Speaker 1>of one match with the valleys of the other, and

0:15:50.400 --> 0:15:54.160
<v Speaker 1>vice versa. So where wave one is at its highest

0:15:54.200 --> 0:15:57.360
<v Speaker 1>most point, wave two is as lowest most point, and

0:15:57.520 --> 0:16:01.920
<v Speaker 1>vice versa. These two waves cancel each other out. The

0:16:02.040 --> 0:16:04.680
<v Speaker 1>dips of one wave match the peaks of the other wave,

0:16:04.760 --> 0:16:07.760
<v Speaker 1>and you end up with a straight line. Mathematically speaking,

0:16:07.800 --> 0:16:10.720
<v Speaker 1>and in fact, as far as actual sound is concerned,

0:16:10.800 --> 0:16:13.440
<v Speaker 1>they cancel each other out. You you wouldn't hear anything,

0:16:14.040 --> 0:16:18.120
<v Speaker 1>so any incoming distortion signal would be picked up by

0:16:18.200 --> 0:16:21.800
<v Speaker 1>both coils. And you have one that's with these magnets

0:16:21.800 --> 0:16:23.960
<v Speaker 1>facing north and one that's with the magnets facing south,

0:16:24.720 --> 0:16:28.840
<v Speaker 1>and the two coils are connected out of phase. So

0:16:28.920 --> 0:16:33.280
<v Speaker 1>once the connections come in, you get these the noise

0:16:33.360 --> 0:16:35.800
<v Speaker 1>canceled out. So why doesn't the humbucker do the same

0:16:35.840 --> 0:16:38.120
<v Speaker 1>thing to the signals it picks up from the strings.

0:16:38.720 --> 0:16:41.840
<v Speaker 1>It's canceling out noise. Why doesn't can't Why doesn't it

0:16:41.920 --> 0:16:45.800
<v Speaker 1>cancel out the actual playing? Well, this has to do

0:16:45.840 --> 0:16:49.520
<v Speaker 1>with that old Star Trek trick of reversing the polarity.

0:16:49.560 --> 0:16:55.680
<v Speaker 1>So for the purposes of just eliminating distortion, the north

0:16:55.760 --> 0:16:59.040
<v Speaker 1>south designation of the magnets doesn't matter so much. That's

0:16:59.040 --> 0:17:01.040
<v Speaker 1>not really what's important. What's important is the fact that

0:17:01.080 --> 0:17:04.200
<v Speaker 1>the two coils are out of phase. But in order

0:17:04.240 --> 0:17:07.840
<v Speaker 1>to actually get sound from this electric guitar, that north

0:17:07.920 --> 0:17:11.840
<v Speaker 1>south orientation matters a lot. So one coil has the

0:17:11.880 --> 0:17:14.800
<v Speaker 1>north pole orientation towards the strings, one coil has the

0:17:14.880 --> 0:17:18.080
<v Speaker 1>south pole orientation towards the strings. That means the direction

0:17:18.280 --> 0:17:22.040
<v Speaker 1>of alternating voltage of one coil is opposite that of

0:17:22.080 --> 0:17:25.400
<v Speaker 1>the other. Coil, but you've connected the two coils out

0:17:25.400 --> 0:17:29.720
<v Speaker 1>of phase, so this effectively flips one signal so that

0:17:29.760 --> 0:17:34.119
<v Speaker 1>now you have an additive output rather than a canceled one. So,

0:17:34.160 --> 0:17:36.879
<v Speaker 1>in other words, all those peaks and valleys I was

0:17:36.920 --> 0:17:40.560
<v Speaker 1>talking about before they line up as opposed to offsetting

0:17:40.600 --> 0:17:42.919
<v Speaker 1>each other, they they are set up so that they

0:17:42.960 --> 0:17:46.479
<v Speaker 1>are directly lined up with one another because of that

0:17:46.560 --> 0:17:50.359
<v Speaker 1>out of phase connection. That's what flips that last switch

0:17:50.680 --> 0:17:53.399
<v Speaker 1>to make sure that they're lined up properly. This dramatically

0:17:53.440 --> 0:17:57.359
<v Speaker 1>improves your signal to noise ratio. You reduce hum and

0:17:57.400 --> 0:18:00.959
<v Speaker 1>you hear the signal much more clearly. So the humbucker

0:18:01.200 --> 0:18:06.840
<v Speaker 1>was a really clever UH innovation, and it wasn't necessarily

0:18:07.160 --> 0:18:10.280
<v Speaker 1>it wasn't just developed at Gibson. It's that Gibson really

0:18:10.720 --> 0:18:14.439
<v Speaker 1>um adopted the humbucker as their approach to pickups, as

0:18:14.440 --> 0:18:19.200
<v Speaker 1>opposed to something like the Fender Stratocaster line, which used

0:18:19.200 --> 0:18:22.800
<v Speaker 1>a single coil pickup. The position of the humbucker on

0:18:22.840 --> 0:18:26.240
<v Speaker 1>the body of the guitar also matters. Many guitars will

0:18:26.240 --> 0:18:30.400
<v Speaker 1>actually have multiple pickups. They'll have them positioned at different

0:18:30.560 --> 0:18:34.280
<v Speaker 1>points along the body of the guitar. Underneath the strings.

0:18:34.640 --> 0:18:38.200
<v Speaker 1>Typically you might find one with two pickups. One would

0:18:38.240 --> 0:18:41.080
<v Speaker 1>be positioned closer to the neck and one closer to

0:18:41.119 --> 0:18:44.000
<v Speaker 1>the bridge, And those guitars typically have a switch or

0:18:44.000 --> 0:18:46.800
<v Speaker 1>a knob that allows you to go from one or

0:18:46.840 --> 0:18:50.000
<v Speaker 1>the other, or even blend the two together, and you

0:18:50.040 --> 0:18:53.080
<v Speaker 1>get a different quality of sound that way. So if

0:18:53.119 --> 0:18:55.280
<v Speaker 1>you switch it to the neck, you're gonna be able

0:18:55.280 --> 0:18:57.840
<v Speaker 1>to tell the difference than if it were at the

0:18:57.840 --> 0:19:00.400
<v Speaker 1>bridge before. And of course there's some that even three

0:19:00.440 --> 0:19:03.520
<v Speaker 1>pickups where you've got one in between those other two,

0:19:04.080 --> 0:19:06.720
<v Speaker 1>and you can get all sorts of different combinations, and

0:19:06.760 --> 0:19:10.159
<v Speaker 1>it all ends up affecting the tone of the of

0:19:10.200 --> 0:19:12.359
<v Speaker 1>the sounds you're making. You're still creating the same notes,

0:19:12.840 --> 0:19:17.760
<v Speaker 1>the frequencies you create remain the same, but the actual

0:19:17.920 --> 0:19:21.440
<v Speaker 1>tone the feel of the sound changes, and it's very

0:19:21.480 --> 0:19:23.719
<v Speaker 1>hard to put it into words. It's much easier if

0:19:23.760 --> 0:19:26.679
<v Speaker 1>you go and find videos where people are showing the

0:19:26.680 --> 0:19:31.120
<v Speaker 1>difference between the different pickups, then you can really perceive

0:19:31.160 --> 0:19:33.159
<v Speaker 1>it much more easily. It's a lot harder to just

0:19:33.200 --> 0:19:37.440
<v Speaker 1>put into words. Anyway. Back to Gibson's guitars, the marauder

0:19:37.480 --> 0:19:39.159
<v Speaker 1>was what we were talking about a second Ago. But

0:19:39.240 --> 0:19:42.320
<v Speaker 1>in addition to the Marauder, Gibson released guitars like the

0:19:42.359 --> 0:19:46.000
<v Speaker 1>Gibson S One, which had a single coil pickup made

0:19:46.040 --> 0:19:49.400
<v Speaker 1>it sound more like a Fender Um. Then you also

0:19:49.400 --> 0:19:52.760
<v Speaker 1>had the Gibson Corvus, which is a hard one to

0:19:53.040 --> 0:19:56.199
<v Speaker 1>describe physically. The body of the Corvus was meant to

0:19:56.240 --> 0:20:00.359
<v Speaker 1>look like a bird. Corvus actually means crow in Latin,

0:20:00.800 --> 0:20:03.800
<v Speaker 1>but a lot of musicians had trouble visualizing the crow

0:20:03.960 --> 0:20:07.399
<v Speaker 1>from the guitar design because it's somewhat abstract, So instead

0:20:07.440 --> 0:20:10.960
<v Speaker 1>they referred to this guitar as Gibson's can opener because

0:20:10.960 --> 0:20:13.600
<v Speaker 1>I had kind of a hook look to it, which

0:20:13.640 --> 0:20:16.680
<v Speaker 1>made it look like an old fashioned manual can opener.

0:20:17.520 --> 0:20:18.760
<v Speaker 1>You need to look at a picture of one of

0:20:18.800 --> 0:20:20.640
<v Speaker 1>those to kind of get an idea of why they

0:20:20.680 --> 0:20:23.720
<v Speaker 1>called it this thing. Again, this isn't to say these

0:20:23.720 --> 0:20:26.560
<v Speaker 1>instruments didn't have fans. There are some people who love

0:20:26.680 --> 0:20:31.080
<v Speaker 1>these guitars, but the general consensus was that Gibson was

0:20:31.160 --> 0:20:35.280
<v Speaker 1>losing its way, and Gibson was not unique in this position.

0:20:35.359 --> 0:20:39.879
<v Speaker 1>In the nineties sixties, electric guitars were incredibly popular. The

0:20:40.040 --> 0:20:44.320
<v Speaker 1>music of the time was very heavily skewed towards electric guitars.

0:20:44.320 --> 0:20:47.439
<v Speaker 1>You had a lot of different genres that were UH

0:20:47.480 --> 0:20:50.080
<v Speaker 1>that were becoming very popular and some that were emerging.

0:20:50.200 --> 0:20:54.000
<v Speaker 1>So you had rhythm and blues, you had UH, you

0:20:54.080 --> 0:20:57.240
<v Speaker 1>had the early rock and roll guitars, you had surf rock.

0:20:57.320 --> 0:21:00.040
<v Speaker 1>You had all these sort of genres coming up and

0:21:00.040 --> 0:21:02.520
<v Speaker 1>and electric guitars took front and center and most of

0:21:02.560 --> 0:21:07.320
<v Speaker 1>those genres. So it became an attractive asset for larger

0:21:07.359 --> 0:21:10.240
<v Speaker 1>companies that were looking to diversify their holdings. They were saying, hey,

0:21:10.280 --> 0:21:14.280
<v Speaker 1>you know, the electric car electric guitar craze is crazy,

0:21:14.400 --> 0:21:18.399
<v Speaker 1>Let's let's invest in that. And so with Gibson, you

0:21:18.520 --> 0:21:23.280
<v Speaker 1>had this brewery in Ecuador that swooped in to purchase CMI.

0:21:24.240 --> 0:21:28.359
<v Speaker 1>Leo Fender of Fender Fames sold his companies to the

0:21:28.440 --> 0:21:34.880
<v Speaker 1>Columbia Broadcasting System better known as CBS in nineteen sixty. Epiphone,

0:21:34.920 --> 0:21:38.240
<v Speaker 1>which was another musical instruments company, was purchased by Chicago

0:21:38.320 --> 0:21:41.600
<v Speaker 1>Musical Musical Instrument Company in nineteen fifty seven c m

0:21:41.680 --> 0:21:45.520
<v Speaker 1>I that was the parent company of Gibson. UH. So

0:21:45.760 --> 0:21:49.200
<v Speaker 1>CMI buys Gibson N four, they buy Epiphone in nineteen

0:21:49.240 --> 0:21:52.359
<v Speaker 1>fifty seven, and originally the two businesses were kind of

0:21:52.440 --> 0:21:55.440
<v Speaker 1>kept separate from each other under the ownership of c

0:21:55.640 --> 0:21:59.440
<v Speaker 1>m I, but Epiphone would gradually end up building more

0:21:59.480 --> 0:22:03.520
<v Speaker 1>and more um musical instruments that were based off Gibson designs,

0:22:03.560 --> 0:22:07.520
<v Speaker 1>but at a lower cost point, using lower quality stuff

0:22:07.560 --> 0:22:11.119
<v Speaker 1>maybe or maybe not as precious materials. Maybe that's a

0:22:11.119 --> 0:22:14.520
<v Speaker 1>better way of putting it. They were frequently considered a

0:22:14.560 --> 0:22:17.400
<v Speaker 1>sub brand of Gibson and sort of looked at as

0:22:17.440 --> 0:22:21.359
<v Speaker 1>the entry level for guitars that followed the Gibson style,

0:22:21.520 --> 0:22:24.040
<v Speaker 1>so that maybe you would want to go and get

0:22:24.040 --> 0:22:26.639
<v Speaker 1>an epiphone before you went and got to Gibson, because

0:22:26.680 --> 0:22:31.480
<v Speaker 1>Gibson's really expensive and epiphones were less so. But there

0:22:31.480 --> 0:22:34.280
<v Speaker 1>are plenty of electric guitar experts who feel that this

0:22:34.359 --> 0:22:38.080
<v Speaker 1>era led to some really bad decisions among major electric

0:22:38.119 --> 0:22:41.760
<v Speaker 1>guitar companies, not just Gibson. They point to cost cutting

0:22:41.800 --> 0:22:44.720
<v Speaker 1>measures that were meant to bring down the manufacturing expense

0:22:44.720 --> 0:22:48.040
<v Speaker 1>for guitars, to make them easier to produce in larger numbers,

0:22:48.320 --> 0:22:52.600
<v Speaker 1>and to make them less breakable. Uh really, they were saying,

0:22:52.680 --> 0:22:56.360
<v Speaker 1>why what can we do to make these cheaper? To produce,

0:22:56.960 --> 0:22:58.959
<v Speaker 1>make it easier to produce a lot of them, and

0:22:59.040 --> 0:23:02.840
<v Speaker 1>to try and reduce the number of customers who bring

0:23:02.960 --> 0:23:06.000
<v Speaker 1>back these instruments that are under warranty and then we

0:23:06.040 --> 0:23:08.760
<v Speaker 1>have to replace something. And the way you do that

0:23:08.840 --> 0:23:12.280
<v Speaker 1>typically is that you start cutting back on features. You

0:23:12.320 --> 0:23:16.920
<v Speaker 1>start simplifying the guitars so that there are fewer things

0:23:16.920 --> 0:23:19.800
<v Speaker 1>to break, and it's faster and easier to make them.

0:23:20.280 --> 0:23:25.320
<v Speaker 1>And you might take some liberties when you're making your designs,

0:23:25.400 --> 0:23:28.640
<v Speaker 1>things that a luthier would not have considered. The most

0:23:28.640 --> 0:23:31.000
<v Speaker 1>frequent way I saw it referenced during my research was

0:23:31.040 --> 0:23:34.480
<v Speaker 1>that the design of instruments was taken away from luthiers

0:23:34.480 --> 0:23:38.199
<v Speaker 1>and musicians and handed over to accountants and beam counters.

0:23:38.960 --> 0:23:42.400
<v Speaker 1>For Gibson. This era stretched into the early nineteen eighties,

0:23:43.000 --> 0:23:47.600
<v Speaker 1>when two companies called Rooney Pace Group and Piezo Electric

0:23:47.680 --> 0:23:51.600
<v Speaker 1>Products moved to make a hostile takeover of New Orland.

0:23:52.240 --> 0:23:55.800
<v Speaker 1>Rooney Pace Group was a brokerage and private investment firm

0:23:56.080 --> 0:23:59.320
<v Speaker 1>with a specialty for helping companies preparing to hold an

0:23:59.359 --> 0:24:01.960
<v Speaker 1>initial pub like offering or i p O. That's when

0:24:02.000 --> 0:24:05.879
<v Speaker 1>a private company turns into a publicly traded company. Piezo

0:24:05.960 --> 0:24:08.760
<v Speaker 1>Electric Products was a growing company that just held its

0:24:08.800 --> 0:24:11.800
<v Speaker 1>own I p O and was looking for an acquisition target.

0:24:12.200 --> 0:24:15.119
<v Speaker 1>And so they joined forces and started looking around, and

0:24:15.119 --> 0:24:18.119
<v Speaker 1>they settled on now Orland. Now, the management in no

0:24:18.200 --> 0:24:21.480
<v Speaker 1>Orland was not keen on this idea. They attempted to

0:24:21.560 --> 0:24:24.880
<v Speaker 1>fight it off. They tried to get an injunction with

0:24:25.080 --> 0:24:28.800
<v Speaker 1>the courts, but the courts denied them this and ultimately

0:24:28.840 --> 0:24:31.679
<v Speaker 1>no Orland would lose this fight and ceded to the

0:24:31.720 --> 0:24:36.880
<v Speaker 1>two partners on August nine. Norton Stevens, who had been

0:24:36.880 --> 0:24:38.880
<v Speaker 1>the head of no Orland, was bumped down to vice

0:24:38.920 --> 0:24:42.480
<v Speaker 1>president and the founder of Rooney Pace, which was a

0:24:42.480 --> 0:24:46.280
<v Speaker 1>guy named Randolph K. Pace, became the new chairman of

0:24:46.280 --> 0:24:48.800
<v Speaker 1>the company, and one of the first things that he

0:24:48.800 --> 0:24:51.800
<v Speaker 1>said he wanted to do was sell Gibson from the

0:24:51.800 --> 0:24:56.480
<v Speaker 1>company's holdings, which they eventually did in January nine six.

0:24:56.520 --> 0:24:59.280
<v Speaker 1>There was actually danger of Gibson just going away if

0:24:59.320 --> 0:25:01.960
<v Speaker 1>no one stepped to buy them. Before I continue on

0:25:02.000 --> 0:25:04.720
<v Speaker 1>with Gibson, a few more words about Pace and this

0:25:04.760 --> 0:25:08.240
<v Speaker 1>hostile takeover business. Now, in the nineteen eighties, there were

0:25:08.280 --> 0:25:11.800
<v Speaker 1>a string of hostile takeovers, which at the time were

0:25:11.800 --> 0:25:15.240
<v Speaker 1>generally considered a legit strategy, but the takeover of No

0:25:15.359 --> 0:25:19.600
<v Speaker 1>Orlan would later be viewed as damaging, expensive, and indicative

0:25:19.680 --> 0:25:23.760
<v Speaker 1>of a complete lack of competence. Hostile takeover fiasco's would

0:25:23.840 --> 0:25:26.240
<v Speaker 1>lead to the development of new strategies to prevent such

0:25:26.280 --> 0:25:29.000
<v Speaker 1>things from happening so readily in the future, such as

0:25:29.040 --> 0:25:32.520
<v Speaker 1>poison pills. Now I talked about poison pills in an

0:25:32.520 --> 0:25:35.399
<v Speaker 1>earlier episode of Tech Stuff. It's just a measure that

0:25:35.480 --> 0:25:39.440
<v Speaker 1>companies will take in order to discourage hostile takeover attempts.

0:25:39.680 --> 0:25:42.960
<v Speaker 1>At Pace himself would later plead guilty to charges that

0:25:43.000 --> 0:25:47.040
<v Speaker 1>he had secretly manipulated a brokerage firm called Sterling Foster

0:25:47.520 --> 0:25:51.399
<v Speaker 1>that had been involved in securities fraud shenanigans, and uh

0:25:51.440 --> 0:25:54.159
<v Speaker 1>and to the tune of like two million dollars At

0:25:54.200 --> 0:25:56.439
<v Speaker 1>that point. Pace was sentenced to pay more than a

0:25:56.480 --> 0:25:59.600
<v Speaker 1>hundred thirty million in restitution to investors and he got

0:25:59.680 --> 0:26:03.120
<v Speaker 1>sent of eight years four months in prison. So things

0:26:03.119 --> 0:26:06.520
<v Speaker 1>did not end well for Mr. Pace. As for Gibson,

0:26:06.880 --> 0:26:10.720
<v Speaker 1>big changes continued to happen at that company. Around that time,

0:26:10.760 --> 0:26:16.320
<v Speaker 1>Gibson shut down its historic Kalamazoo, Michigan manufacturing facility, the

0:26:16.359 --> 0:26:21.240
<v Speaker 1>home of Gibson shifted from Kalamazoo to Nashville, Tennessee. It

0:26:21.359 --> 0:26:24.439
<v Speaker 1>had a second manufacturing facility there, and that became the

0:26:24.520 --> 0:26:28.080
<v Speaker 1>new headquarters for Gibson. The new owners of the company

0:26:28.280 --> 0:26:32.919
<v Speaker 1>where David Berryman, Gary A. Zabrowski, and Henry Jessica Witz.

0:26:33.440 --> 0:26:35.720
<v Speaker 1>More on them in just a second, but first let's

0:26:35.720 --> 0:26:46.680
<v Speaker 1>take another quick break to thank our sponsor. Gibson's new

0:26:46.760 --> 0:26:51.359
<v Speaker 1>owners bought the company for the princely sum of five

0:26:51.680 --> 0:26:56.240
<v Speaker 1>million dollars. Consider for a moment that some Gibson guitars

0:26:56.240 --> 0:27:01.360
<v Speaker 1>have been auctioned off for near a million dollars each. Now, granted,

0:27:01.400 --> 0:27:04.199
<v Speaker 1>those are guitars that were played by famous musicians like

0:27:04.359 --> 0:27:07.080
<v Speaker 1>Eric Clapton, but still it's tough to think of a

0:27:07.080 --> 0:27:10.920
<v Speaker 1>company that sold premium guitars for thousands of dollars of

0:27:11.000 --> 0:27:16.240
<v Speaker 1>guitar selling for five million dollars itself. In addition to Gibson,

0:27:16.480 --> 0:27:21.040
<v Speaker 1>the three new business owners would lead the way to

0:27:21.160 --> 0:27:25.200
<v Speaker 1>acquire the Flat Iron Mandolin Company out of Bozeman, Montana

0:27:25.320 --> 0:27:29.119
<v Speaker 1>in nineteen seven and turn it into a new manufacturing

0:27:29.160 --> 0:27:33.280
<v Speaker 1>plant for Gibson acoustic guitars and other instruments. In nineteen

0:27:33.400 --> 0:27:37.000
<v Speaker 1>eight nine, things were looking up. The Gibson name was

0:27:37.040 --> 0:27:39.879
<v Speaker 1>returning to a revered spot in the world of music.

0:27:40.359 --> 0:27:43.880
<v Speaker 1>People were starting to forgive the the era of the

0:27:43.920 --> 0:27:47.760
<v Speaker 1>mid seventies to early eighties, where the guitars were viewed

0:27:47.800 --> 0:27:50.960
<v Speaker 1>as being of lower quality. They were starting to say, well,

0:27:51.000 --> 0:27:53.520
<v Speaker 1>things look like they're back on track now, and the

0:27:53.560 --> 0:27:57.840
<v Speaker 1>company continued to grow through acquisitions. Gibson would buy companies

0:27:57.880 --> 0:28:04.119
<v Speaker 1>like Steinberger and Tobias Basses, Cramer Guitars, Slingerland Drums, O

0:28:04.440 --> 0:28:07.800
<v Speaker 1>m I, and Baldwin Pianos over the next several years.

0:28:08.520 --> 0:28:13.119
<v Speaker 1>In nine, the company celebrated one years since Orville Gibson

0:28:13.160 --> 0:28:16.200
<v Speaker 1>started selling his guitars, and they introduced a new model

0:28:16.280 --> 0:28:20.520
<v Speaker 1>called the Nighthawk, which would later win the Most Innovative

0:28:20.560 --> 0:28:24.560
<v Speaker 1>Guitar Award at the National Association of Music Merchants trade show.

0:28:25.000 --> 0:28:28.000
<v Speaker 1>The night Hawk had elements that made it again kind

0:28:28.000 --> 0:28:29.920
<v Speaker 1>of sound a little bit like a Fender, and then

0:28:29.960 --> 0:28:32.480
<v Speaker 1>other elements that made sound more like a Gibson. But

0:28:32.560 --> 0:28:35.399
<v Speaker 1>despite all these accolades, it was never really a top

0:28:35.480 --> 0:28:41.400
<v Speaker 1>selling guitar. It was discontinued by nine. Gibson would reintroduce

0:28:41.440 --> 0:28:43.320
<v Speaker 1>the line a couple of times since then. They would

0:28:43.360 --> 0:28:47.600
<v Speaker 1>have a little limited edition run of Nighthawk guitars, but

0:28:48.440 --> 0:28:52.320
<v Speaker 1>some of them were only superficially similar to the nine model,

0:28:52.360 --> 0:28:55.200
<v Speaker 1>Like some of them just looked like the old Nighthawk

0:28:55.240 --> 0:28:57.800
<v Speaker 1>guitar but did not have the same sort of pickups

0:28:58.400 --> 0:29:02.360
<v Speaker 1>that the original run of Nighthawks did, So they were

0:29:02.400 --> 0:29:07.360
<v Speaker 1>really just Nighthawks in name and shape, but not in performance,

0:29:07.760 --> 0:29:10.200
<v Speaker 1>which makes things really confusing when you start talking about guitars.

0:29:10.200 --> 0:29:12.240
<v Speaker 1>It also means that if you are shopping for a guitar,

0:29:12.320 --> 0:29:14.440
<v Speaker 1>this is just a good note for anybody. And this

0:29:14.240 --> 0:29:17.360
<v Speaker 1>this extends beyond Gibson. If you're shopping for a guitar

0:29:17.840 --> 0:29:21.600
<v Speaker 1>and you've heard about a particular model of guitar that

0:29:21.760 --> 0:29:24.720
<v Speaker 1>you really like, because maybe there's a musician you admire

0:29:24.880 --> 0:29:28.479
<v Speaker 1>and he or she plays that guitar, find out what

0:29:28.600 --> 0:29:33.880
<v Speaker 1>year that guitar was made. Because different times throughout the

0:29:33.960 --> 0:29:37.880
<v Speaker 1>history of these manufacturers, uh, they have used different types

0:29:37.920 --> 0:29:42.400
<v Speaker 1>of technology in reissues of guitars, and it may turn

0:29:42.440 --> 0:29:44.760
<v Speaker 1>out that if you go out and buy a new

0:29:44.960 --> 0:29:47.640
<v Speaker 1>version of that same model, that it will not sound

0:29:47.720 --> 0:29:51.760
<v Speaker 1>anything like the one that you are familiar with. For me,

0:29:51.840 --> 0:29:55.040
<v Speaker 1>it wouldn't sound anything like anything, because I am not

0:29:55.160 --> 0:29:59.360
<v Speaker 1>a musician and it would just be awful. But for

0:29:59.440 --> 0:30:02.440
<v Speaker 1>my musician and friends out there, narrow it down not

0:30:02.560 --> 0:30:06.520
<v Speaker 1>just to the the model and manufacturer, but the year

0:30:07.000 --> 0:30:09.680
<v Speaker 1>of the guitar. Well. In the early two thousand's, Gibson

0:30:09.720 --> 0:30:14.320
<v Speaker 1>introduced a new protocol called Media Accelerated Global Information Carrier

0:30:15.080 --> 0:30:18.320
<v Speaker 1>or MAGIC, which is pretty cute. The company featured the

0:30:18.320 --> 0:30:21.600
<v Speaker 1>protocol on a new product called the Gibson Digital Guitar,

0:30:21.720 --> 0:30:24.960
<v Speaker 1>which they introduced in the late part of the first

0:30:24.960 --> 0:30:28.080
<v Speaker 1>decade of two thousand. Boy, that's a really where are

0:30:28.080 --> 0:30:32.120
<v Speaker 1>you wait to say? Two thousand six two thousand seven? Anyway,

0:30:32.600 --> 0:30:35.200
<v Speaker 1>this guitar had your standard quarter inch jack that you

0:30:35.200 --> 0:30:37.960
<v Speaker 1>could plug into an amplifier, but it also had an

0:30:38.000 --> 0:30:40.960
<v Speaker 1>Ethernet port and you could plug in a CAP five

0:30:41.040 --> 0:30:43.400
<v Speaker 1>cable into the either net part and then plug the

0:30:43.440 --> 0:30:46.800
<v Speaker 1>other end into a PC and send signals straight to

0:30:46.800 --> 0:30:50.680
<v Speaker 1>the PC. The digital guitar even has the ability to

0:30:50.720 --> 0:30:54.440
<v Speaker 1>capture information from each string individually, which meant you could

0:30:54.440 --> 0:30:57.600
<v Speaker 1>apply effects to specific strings and you can leave that

0:30:57.640 --> 0:31:01.880
<v Speaker 1>effect off other strings. So you could add an effect

0:31:01.920 --> 0:31:03.920
<v Speaker 1>on say the eastering, and leave it off of all

0:31:03.920 --> 0:31:06.640
<v Speaker 1>the others. If you wanted to um, I think that's

0:31:06.640 --> 0:31:09.480
<v Speaker 1>an interesting idea, and it was. It showed that Gibson

0:31:09.600 --> 0:31:13.040
<v Speaker 1>was really trying to push for the next era in

0:31:13.600 --> 0:31:17.160
<v Speaker 1>electric guitars, especially with this eye on how electric music

0:31:17.200 --> 0:31:21.560
<v Speaker 1>electronic music was really, uh, the new thing. Digital music

0:31:21.680 --> 0:31:23.719
<v Speaker 1>was big and so and still is big, but was

0:31:23.960 --> 0:31:26.280
<v Speaker 1>getting big at this point, so the company was trying

0:31:26.320 --> 0:31:28.240
<v Speaker 1>to get out in front of that. It did not

0:31:28.360 --> 0:31:33.560
<v Speaker 1>necessarily receive a whole lot of enthusiasm from professional musicians,

0:31:34.200 --> 0:31:36.080
<v Speaker 1>but there were a lot of technologies who thought it

0:31:36.120 --> 0:31:38.200
<v Speaker 1>was pretty darn cool. I remember seeing it for the

0:31:38.200 --> 0:31:40.320
<v Speaker 1>first time and thinking, wow, that's kind of interesting. I've

0:31:40.360 --> 0:31:44.320
<v Speaker 1>never really considered having a Ethernet port on an electric

0:31:44.360 --> 0:31:48.800
<v Speaker 1>guitar before Gibson started to encounter a problem that was

0:31:48.840 --> 0:31:51.840
<v Speaker 1>affecting a lot of guitar companies. This was the demand

0:31:52.200 --> 0:31:54.920
<v Speaker 1>for guitars. It was on the decline. It wasn't just

0:31:54.960 --> 0:31:57.160
<v Speaker 1>for Gibson, it was for everybody now. Gibson, of course,

0:31:57.560 --> 0:32:00.880
<v Speaker 1>again being a premium guitar man you facturer, meant that

0:32:01.240 --> 0:32:04.360
<v Speaker 1>they were feeling it pretty hard, because you know, they're

0:32:04.360 --> 0:32:09.040
<v Speaker 1>they're they They really relied on selling fewer guitars at

0:32:09.040 --> 0:32:12.640
<v Speaker 1>a higher price, and when you're your number of orders decreases,

0:32:13.240 --> 0:32:17.120
<v Speaker 1>you're gonna feel it pretty pretty heavily. More and more

0:32:17.240 --> 0:32:19.880
<v Speaker 1>music was entering the digital age. More and more music

0:32:19.960 --> 0:32:23.680
<v Speaker 1>was being created without any actual musical instruments being involved.

0:32:23.720 --> 0:32:28.400
<v Speaker 1>You could create stuff by computer, and so uh. Guitar

0:32:28.440 --> 0:32:31.800
<v Speaker 1>companies in general were facing really big problems. But in

0:32:31.840 --> 0:32:36.080
<v Speaker 1>two thousand seven, Gibson would purchase Garrison Guitars, Still moving forward.

0:32:36.080 --> 0:32:39.280
<v Speaker 1>Garrison was an acoustic guitar company based out of Canada,

0:32:39.560 --> 0:32:43.360
<v Speaker 1>and Gibson would then introduce a technology called the Meny

0:32:43.560 --> 0:32:46.480
<v Speaker 1>Tune and two thousand and eight it became something of

0:32:46.640 --> 0:32:51.240
<v Speaker 1>a joke among musicians. The device consisted of a tuner,

0:32:52.200 --> 0:32:55.720
<v Speaker 1>as in a little device that has a microphone in it,

0:32:56.120 --> 0:32:58.640
<v Speaker 1>and it detects the frequency of a strum string. So

0:32:59.160 --> 0:33:01.080
<v Speaker 1>there are lots of different kinds of tuners out there.

0:33:01.400 --> 0:33:03.640
<v Speaker 1>I've used tuners before. I did say I'm not a musician,

0:33:03.640 --> 0:33:05.840
<v Speaker 1>but I do play ukulele on occasion, and I have

0:33:05.880 --> 0:33:09.040
<v Speaker 1>a ukulele tuner. So what happens is you play a

0:33:09.080 --> 0:33:12.040
<v Speaker 1>string and the tuner detects what the frequency of the

0:33:12.080 --> 0:33:15.600
<v Speaker 1>strummed string is. It compares it to what it should be,

0:33:15.840 --> 0:33:17.640
<v Speaker 1>and so it starts to tell you whether you need

0:33:17.680 --> 0:33:21.000
<v Speaker 1>to tune the string so that you add more tension

0:33:21.080 --> 0:33:24.560
<v Speaker 1>to it and increase the pitch, or decrease the tension

0:33:24.640 --> 0:33:27.800
<v Speaker 1>and decrease the pitch of the played note until you

0:33:27.880 --> 0:33:31.600
<v Speaker 1>hit the exact frequency you are looking for. So if

0:33:31.640 --> 0:33:34.440
<v Speaker 1>the strings frequency matches up, everything's good to go. But

0:33:34.520 --> 0:33:37.680
<v Speaker 1>if not, well, the mini tune would trigger a mechanism

0:33:37.800 --> 0:33:41.160
<v Speaker 1>to turn the tuning pegs of the missed tuned or

0:33:41.200 --> 0:33:44.200
<v Speaker 1>miss tuned strings to get them to tune up properly.

0:33:44.800 --> 0:33:49.000
<v Speaker 1>So you get this little robotic as the little tuning

0:33:49.040 --> 0:33:52.240
<v Speaker 1>pegs would turn and it would put on more and

0:33:52.280 --> 0:33:55.560
<v Speaker 1>more tension or less tension in order to get the

0:33:55.560 --> 0:33:59.040
<v Speaker 1>the strings tuned exactly to the right note. Some musicians

0:33:59.040 --> 0:34:02.760
<v Speaker 1>complained then, not only was this an unnecessary gimmick, but

0:34:02.840 --> 0:34:05.320
<v Speaker 1>that it also would add several hundred dollars to the

0:34:05.320 --> 0:34:07.920
<v Speaker 1>price tag of a guitar. So, in other words, they

0:34:07.960 --> 0:34:10.520
<v Speaker 1>were saying that Gibson was trying to create a license

0:34:10.560 --> 0:34:13.239
<v Speaker 1>to print money. They were including features no one really

0:34:13.280 --> 0:34:15.960
<v Speaker 1>needed as an excuse to charge more for their guitars,

0:34:16.520 --> 0:34:19.080
<v Speaker 1>And essentially the argument boils down to this Tuning a

0:34:19.080 --> 0:34:21.640
<v Speaker 1>guitar is easy. You just need the tuner. You play

0:34:21.640 --> 0:34:23.920
<v Speaker 1>a string, you look at the tuner. It tells you

0:34:23.960 --> 0:34:26.080
<v Speaker 1>if you're too higher too low. You adjust the string,

0:34:26.120 --> 0:34:28.200
<v Speaker 1>You play it again, and you do this a few

0:34:28.239 --> 0:34:31.520
<v Speaker 1>times until you've tuned into the right frequency. And it

0:34:31.640 --> 0:34:33.279
<v Speaker 1>might mean that you have to do it three or

0:34:33.320 --> 0:34:35.200
<v Speaker 1>four times. Maybe if you have a really good ear,

0:34:35.239 --> 0:34:37.040
<v Speaker 1>you don't need to do it that frequently, or you

0:34:37.040 --> 0:34:39.080
<v Speaker 1>know that frequently need to get to the right the

0:34:39.200 --> 0:34:43.440
<v Speaker 1>right a note. But it doesn't really take up that

0:34:43.520 --> 0:34:46.240
<v Speaker 1>much time. And so the convenience of the mini tune

0:34:47.080 --> 0:34:51.480
<v Speaker 1>was questionable according to these musicians, that why would you

0:34:51.520 --> 0:34:54.600
<v Speaker 1>pay an extra three four hundred dollars on a guitar

0:34:55.160 --> 0:34:58.960
<v Speaker 1>for something that you could easily do yourself for a

0:34:59.080 --> 0:35:01.120
<v Speaker 1>third or a quarter of that price with a good

0:35:01.200 --> 0:35:04.520
<v Speaker 1>tuner and just a little patience. In two thousand nine,

0:35:04.560 --> 0:35:08.879
<v Speaker 1>Gibson faced some legal trouble. The company's manufacturing facilities were

0:35:08.920 --> 0:35:11.840
<v Speaker 1>the center of a raid led by the United States

0:35:11.880 --> 0:35:16.040
<v Speaker 1>Fish and Wildlife Services. Which might sound really weird to you.

0:35:16.200 --> 0:35:20.840
<v Speaker 1>What was Gibson somehow using guitars to torture fish and wildlife? Well, no,

0:35:21.000 --> 0:35:23.960
<v Speaker 1>it turned out that Gibson had purchased ebony wood from

0:35:23.960 --> 0:35:28.520
<v Speaker 1>Madagascar and the would was illegally imported that would be

0:35:28.560 --> 0:35:31.520
<v Speaker 1>a violation of a US law called the Lacey Act.

0:35:32.000 --> 0:35:34.960
<v Speaker 1>Two years later, Gibson was rated a second time when

0:35:34.960 --> 0:35:38.680
<v Speaker 1>the company imported would from India that the US government

0:35:38.760 --> 0:35:42.360
<v Speaker 1>said had been labeled incorrectly when it went through US customs.

0:35:42.920 --> 0:35:46.880
<v Speaker 1>Gibson's CEO, Henry jessica Witz, claimed that the government was

0:35:47.080 --> 0:35:50.799
<v Speaker 1>unfairly targeting Gibson, going so far as to suggest it

0:35:50.840 --> 0:35:53.080
<v Speaker 1>was due to his own alignment with the Tea Party,

0:35:53.360 --> 0:35:56.759
<v Speaker 1>and then the whole thing was politically motivated and got

0:35:56.800 --> 0:35:59.840
<v Speaker 1>into a big argument about property rights. The government maintained

0:35:59.840 --> 0:36:01.960
<v Speaker 1>its argument that the goods were brought into the country

0:36:02.000 --> 0:36:06.239
<v Speaker 1>illegally was the real reason that they targeted Gibson, and

0:36:06.320 --> 0:36:09.600
<v Speaker 1>that Gibson eventually would be compelled to settle out of court.

0:36:10.000 --> 0:36:12.840
<v Speaker 1>Though jessica Witz continued to protest the whole thing and

0:36:12.960 --> 0:36:15.879
<v Speaker 1>got all have support from certain people in the Tea

0:36:15.960 --> 0:36:19.560
<v Speaker 1>Party movement, others said no, if you break the rules,

0:36:19.760 --> 0:36:22.799
<v Speaker 1>then you pay the consequences, and if you think the

0:36:22.840 --> 0:36:25.440
<v Speaker 1>rules are unfair, then you lobby to have the rules changed.

0:36:25.520 --> 0:36:28.279
<v Speaker 1>But you can't just be complained that you're being You

0:36:28.320 --> 0:36:32.160
<v Speaker 1>know you're being held up when you are caught breaking

0:36:32.200 --> 0:36:36.200
<v Speaker 1>the rules. In an effort to diversify beyond music instruments,

0:36:36.239 --> 0:36:39.840
<v Speaker 1>Gibson acquired a company called the Stanton Group. By this stage,

0:36:39.920 --> 0:36:43.760
<v Speaker 1>Jessica Witz was envisioning Gibson transitioning into a lifestyle brand,

0:36:44.160 --> 0:36:47.480
<v Speaker 1>not just a musical instrument brand, so that would include

0:36:47.520 --> 0:36:53.160
<v Speaker 1>audio equipment like monitors, loudspeakers, headphones, turntables. Gibson launched a

0:36:53.200 --> 0:36:57.360
<v Speaker 1>new department called Gibson Pro Audio. Gibson would build this

0:36:57.400 --> 0:37:00.359
<v Speaker 1>out further with a partnership with Kio Corporation, in which

0:37:00.360 --> 0:37:03.520
<v Speaker 1>made home theater systems. So this was really Gibson saying,

0:37:03.680 --> 0:37:07.400
<v Speaker 1>let's look into the consumer electronics market and try to

0:37:07.480 --> 0:37:13.000
<v Speaker 1>make a spot for us there because the guitar business

0:37:13.480 --> 0:37:16.760
<v Speaker 1>has been slowing down so much. In two thousand thirteen

0:37:16.800 --> 0:37:20.200
<v Speaker 1>and two thousand fourteen, the company continued to push for

0:37:20.280 --> 0:37:24.560
<v Speaker 1>a diversified portfolio and an increased presence in consumer electronics. First,

0:37:25.000 --> 0:37:28.560
<v Speaker 1>Gibson purchased a majority stake in a Japanese electronic company

0:37:28.640 --> 0:37:33.080
<v Speaker 1>called Teak Corporations U T E T e a C.

0:37:33.960 --> 0:37:37.360
<v Speaker 1>Then it acquired the consumer electronics division of another company

0:37:37.400 --> 0:37:41.040
<v Speaker 1>called Royal Phillips, and while making those moves, Gibson was

0:37:41.080 --> 0:37:44.960
<v Speaker 1>spending a lot of money and taking out high interest loans,

0:37:45.600 --> 0:37:48.320
<v Speaker 1>and that, paired with flagging guitar sales, would spell trouble

0:37:48.360 --> 0:37:51.800
<v Speaker 1>for the venerable company. By two thousand eighteen, the question

0:37:51.880 --> 0:37:55.600
<v Speaker 1>appeared not to be if Gibson would declare bankruptcy, but

0:37:55.760 --> 0:37:59.239
<v Speaker 1>when the company's acquisitions led to a great deal of debt,

0:37:59.480 --> 0:38:03.000
<v Speaker 1>that would be do. In July two eighteen, according to

0:38:03.040 --> 0:38:06.440
<v Speaker 1>The New York Times, Gibson as a company brought in

0:38:06.480 --> 0:38:10.000
<v Speaker 1>more than one point to billion dollars in revenue annually,

0:38:10.360 --> 0:38:12.840
<v Speaker 1>but had more than five hundred million dollars in debts,

0:38:13.320 --> 0:38:15.480
<v Speaker 1>and then that was going to increase if the company

0:38:15.560 --> 0:38:18.960
<v Speaker 1>was unable to pay those debts. By July, the company's

0:38:19.040 --> 0:38:22.279
<v Speaker 1>lenders were really getting concerned, and that concern was largely

0:38:22.360 --> 0:38:25.120
<v Speaker 1>due to the fact that Gibson's earnings, the stuff that's

0:38:25.120 --> 0:38:27.960
<v Speaker 1>actually around once you take the costs out of your revenue,

0:38:28.280 --> 0:38:32.200
<v Speaker 1>had been dropping steadily. In Gibson had three hundred million

0:38:32.239 --> 0:38:35.800
<v Speaker 1>dollars in revenue, so a fraction of that one point

0:38:35.800 --> 0:38:38.279
<v Speaker 1>to billion we were just talking about but they had

0:38:38.320 --> 0:38:42.200
<v Speaker 1>a twelve point nine percent earnings before taxes and interest margins,

0:38:42.200 --> 0:38:45.040
<v Speaker 1>so the profit margin was twelve point nine percent. In

0:38:45.080 --> 0:38:48.759
<v Speaker 1>two thousand and fifteen, Gibson had an astonishing two point

0:38:48.800 --> 0:38:52.520
<v Speaker 1>one billion in revenue, a huge amount of money in revenue,

0:38:52.760 --> 0:38:55.640
<v Speaker 1>but the profit margin was down to four percent, so

0:38:55.680 --> 0:38:57.319
<v Speaker 1>it was less than a third of what had been

0:38:57.360 --> 0:39:00.680
<v Speaker 1>a few years earlier. So they were making more in sales,

0:39:00.719 --> 0:39:04.600
<v Speaker 1>but they were capturing less an actual profit. The company

0:39:04.680 --> 0:39:07.120
<v Speaker 1>was over extended and time was running out to pay

0:39:07.160 --> 0:39:10.840
<v Speaker 1>the bills. In addition, more news came out about Gibson

0:39:10.840 --> 0:39:13.960
<v Speaker 1>employees who felt that Jessica Witz's managed management style was

0:39:14.000 --> 0:39:18.480
<v Speaker 1>intrusive and confrontational. He was often accused of being a

0:39:18.600 --> 0:39:21.680
<v Speaker 1>micro manager, that he was getting involved in way too

0:39:21.800 --> 0:39:24.160
<v Speaker 1>much stuff. If you go to glass door and you

0:39:24.200 --> 0:39:27.320
<v Speaker 1>look up employee reviews for Gibson, you're gonna find numerous

0:39:27.360 --> 0:39:29.680
<v Speaker 1>stories from people who felt the CEO was just involving

0:39:29.760 --> 0:39:33.920
<v Speaker 1>himself too much in tasks that his executive management team

0:39:33.920 --> 0:39:37.120
<v Speaker 1>and below should be handling, like hiring new employees or

0:39:37.160 --> 0:39:40.640
<v Speaker 1>overseeing raises and things like that. Some even said that

0:39:40.680 --> 0:39:44.239
<v Speaker 1>you couldn't even hire a janitor without taking it ultimately

0:39:44.280 --> 0:39:48.080
<v Speaker 1>to the CEO for approval, which is definitely a little

0:39:48.080 --> 0:39:52.720
<v Speaker 1>excessive for any really big company. Well, by May time

0:39:52.800 --> 0:39:57.040
<v Speaker 1>had run out. By Mayen, that is, Gibson filed for

0:39:57.440 --> 0:40:01.200
<v Speaker 1>Chapter eleven protection with the tend to divest itself of

0:40:01.239 --> 0:40:03.960
<v Speaker 1>all those electronics companies that had picked up over the

0:40:04.040 --> 0:40:08.840
<v Speaker 1>last few years and concentrate once again on producing musical instruments.

0:40:08.840 --> 0:40:11.919
<v Speaker 1>So the goal now is to liquefy all the parts

0:40:11.960 --> 0:40:15.680
<v Speaker 1>of the business that are not related to producing musical instruments,

0:40:16.040 --> 0:40:18.000
<v Speaker 1>pay off as much of the dead as it can,

0:40:18.200 --> 0:40:21.080
<v Speaker 1>refinance the new streamline company, and try to focus on

0:40:21.120 --> 0:40:23.400
<v Speaker 1>what the company had been founded on in the first place.

0:40:24.000 --> 0:40:27.640
<v Speaker 1>In addition, there may be a move to oust the CEO,

0:40:28.040 --> 0:40:31.120
<v Speaker 1>Henry jessica Witz, that's in the process now. I've seen

0:40:31.160 --> 0:40:34.880
<v Speaker 1>a lot of articles suggesting that lenders want jessica Witz

0:40:34.920 --> 0:40:37.880
<v Speaker 1>out and to have new leadership at the company, But

0:40:38.120 --> 0:40:41.120
<v Speaker 1>as of the recording of this episode, he is still

0:40:41.200 --> 0:40:44.239
<v Speaker 1>CEO of Gibson and owns about thirty six percent of

0:40:44.239 --> 0:40:46.680
<v Speaker 1>the company. So we'll have to wait and see if

0:40:46.719 --> 0:40:50.239
<v Speaker 1>Gibson's lenders demand his resignation as part of the refinancing deal.

0:40:50.280 --> 0:40:52.120
<v Speaker 1>In fact, by the time this episode goes live, that

0:40:52.239 --> 0:40:54.879
<v Speaker 1>may have already happened. A lot of people are also

0:40:54.920 --> 0:40:58.800
<v Speaker 1>saying that Gibson's efforts to get into consumer electronics was

0:40:58.880 --> 0:41:01.040
<v Speaker 1>just an enormous mist ache from the get go, which

0:41:01.080 --> 0:41:03.840
<v Speaker 1>is probably true, but I'm not so sure that it

0:41:03.880 --> 0:41:07.000
<v Speaker 1>was obvious back when the company started making those acquisitions

0:41:07.000 --> 0:41:11.600
<v Speaker 1>because guitar sales were falling and they had to do something.

0:41:11.640 --> 0:41:17.520
<v Speaker 1>Gibson had to figure out how to offset flagging guitar

0:41:17.600 --> 0:41:21.840
<v Speaker 1>sales and stay in business. Again, they produced the higher

0:41:22.000 --> 0:41:25.840
<v Speaker 1>end of guitar models, so if they had started cutting

0:41:25.880 --> 0:41:29.640
<v Speaker 1>costs and cutting prices in order to boost sales, Gibson

0:41:29.680 --> 0:41:34.040
<v Speaker 1>would have the danger of of making its brand become

0:41:34.560 --> 0:41:37.799
<v Speaker 1>less important in music. They were kind of stuck. It's

0:41:37.840 --> 0:41:40.720
<v Speaker 1>like it's like if you were a luxury car manufacturer

0:41:41.360 --> 0:41:45.760
<v Speaker 1>and you suddenly realized that no one wanted luxury cars anymore.

0:41:45.880 --> 0:41:47.759
<v Speaker 1>It would be really hard to move from that to

0:41:48.600 --> 0:41:52.359
<v Speaker 1>making standard vehicles because your whole brand is based off

0:41:52.400 --> 0:41:57.360
<v Speaker 1>of a different appearance. And again, it wasn't just Gibson

0:41:57.400 --> 0:42:01.200
<v Speaker 1>that was facing this. A lot of different guitar companies

0:42:01.239 --> 0:42:04.280
<v Speaker 1>were having the same issue. Musical taste have moved away

0:42:04.320 --> 0:42:08.480
<v Speaker 1>from guitar driven music. That's decreased the demand for new instruments,

0:42:09.040 --> 0:42:12.280
<v Speaker 1>and there's a big interest in vintage musical instruments as well,

0:42:12.680 --> 0:42:15.359
<v Speaker 1>which also is not great for Gibson. So you've got

0:42:15.400 --> 0:42:18.880
<v Speaker 1>people who are serious musicians who want Gibson guitars, but

0:42:18.920 --> 0:42:22.719
<v Speaker 1>they don't want current Gibson guitars necessarily. They might want

0:42:22.760 --> 0:42:25.799
<v Speaker 1>a nineteen fifty nine Gibson Less Paul, which means you

0:42:25.840 --> 0:42:27.200
<v Speaker 1>have to go and find one, you have to go

0:42:27.239 --> 0:42:30.359
<v Speaker 1>and buy a used one, and you're not buying a

0:42:30.440 --> 0:42:33.440
<v Speaker 1>new instrument. So that doesn't help out companies like Gibson.

0:42:33.440 --> 0:42:36.040
<v Speaker 1>And again that's not just Gibson. Fender also is seeing

0:42:36.080 --> 0:42:39.200
<v Speaker 1>the same sort of stuff where people are fans of

0:42:39.239 --> 0:42:44.120
<v Speaker 1>specific years of of specific models of guitars, and that's

0:42:44.120 --> 0:42:46.480
<v Speaker 1>what they're going for and they're not interested in buying

0:42:46.520 --> 0:42:48.520
<v Speaker 1>a new one. So unless you were able to produce

0:42:49.440 --> 0:42:54.120
<v Speaker 1>brand new guitars using the exact same technologies as the

0:42:54.160 --> 0:42:57.680
<v Speaker 1>original ones, and then sell them at a price that

0:42:57.719 --> 0:43:00.839
<v Speaker 1>would be lower than what people are asking for for

0:43:00.920 --> 0:43:04.440
<v Speaker 1>the vintage models, you might be kind of stuck. But

0:43:04.480 --> 0:43:07.120
<v Speaker 1>then you'd also get accused of not innovating in the space.

0:43:07.160 --> 0:43:10.680
<v Speaker 1>It's kind of a really tough position to be in. Now,

0:43:10.960 --> 0:43:14.239
<v Speaker 1>that doesn't mean that Gibson is doomed. It may very

0:43:14.239 --> 0:43:16.360
<v Speaker 1>well be that this is exactly what is needed to

0:43:16.440 --> 0:43:19.719
<v Speaker 1>refocus the company, get it back on track, and to

0:43:20.280 --> 0:43:23.719
<v Speaker 1>get back into the good graces of the music industry.

0:43:23.880 --> 0:43:27.720
<v Speaker 1>But for now, that is Gibson's story. Maybe I'll tackle

0:43:27.920 --> 0:43:30.560
<v Speaker 1>Fender in a future episode and we can rock out again.

0:43:31.120 --> 0:43:33.520
<v Speaker 1>In the meantime, If you guys have any suggestions for

0:43:33.800 --> 0:43:36.240
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0:43:36.520 --> 0:43:38.759
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0:43:38.840 --> 0:43:42.280
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0:43:42.320 --> 0:43:45.880
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0:43:46.080 --> 0:43:48.719
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0:43:49.239 --> 0:43:52.200
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0:43:52.280 --> 0:43:55.560
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0:43:55.920 --> 0:43:57.480
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0:43:57.480 --> 0:43:59.839
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0:43:59.840 --> 0:44:02.279
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0:44:02.280 --> 0:44:05.920
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0:44:06.040 --> 0:44:13.840
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0:44:14.080 --> 0:44:25.200
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