“Amazon doesn’t create demand” – Interview with Mike Matthews of EHX

In 2004, The Deli Magazine (the music publication that launched the Stompbox Exhibit and this very blog) was born with the mission of being on the side of small, independent, and local bands and artists, rather than the big, mainstream, and internationally recognized ones all the other music rags competed to cover.

Thirteen years later, that mission is taking on wider connotations: in many fields, the fight between big and corporate vs. small and independent has been brought to extreme levels by the internet and a handful of companies that were able to exploit its potential.

Facebook, Google, and Amazon (among others) have already done incalculable damage to small, local entities like newspapers and mom and pop shops, including many musical instrument stores.

A few months ago, Mike Matthews from Electro-Harmonix took a first, important step against this trend, deciding to drop Amazon from the company’s list of dealers. We had the opportunity to chat with Mike about this choice; this article was published in print in the Summer 2017 issue of The Deli, linked to the Brooklyn Stompbox Exhibit 2017.

EHX, Amazon, and David’s Sling
NYC’s Stompbox Pioneer Drops Online Retail Giant.

What I always found attractive about NYC is its romance with experimentation. At first, I felt it in records by The Velvet Underground, Television, and Sonic Youth (among many others). After moving to the Big Apple, I saw it everywhere, as if it was part of the city’s DNA; NYC’s geography made it the Eastern link through which millions of “American dreamers at heart” (read: immigrants) came through – people who made the ultimate life experiment by traveling hundreds of miles away from home in search of a better future

Mass immigration is a thing of the past, but NYC’s edge is still intact. Hordes of people move here every given year to start new companies (or jobs), seek new experiences, and take head-on the challenge of building something meaningful. The years spent in the city can have a profound effect on anybody’s future.

Enter Mike Matthews, the mercurial New Yorker who, in 1968, founded (and still owns) Queens based guitar pedal build

er Electro-Harmonix. The man knows a thing or two about experimenting. EHX was one of the first companies ever to ramp up stompbox manufacturing to mass production levels, managing somehow to retain a “boutique” and “rock’n’roll” reputation (the fact that he was friends with Jimi Hendrix – who bought one of his very first Big Muff fuzz pedals in 1969 – might have helped in that department). Other EHX-branded experiments carry names like Memory Man, the first delay pedal without moving parts, Micro Synthesizer, the first guitar synth pedal, and Hot Tubes, the first pedal simulating the distortion of a tube amp. Approaching its 50th year mark, Electro-Harmonix is one of the top 3 manufacturers of guitar pedals in the world, with hundreds of models under its belt, and at least a dozen of “timeless classics.”

Then in 2017 came a different kind of “first” -: Mike decided to drop Amazon from the list of EHX dealers. He won’t hide that the decision was entirely motivated by business factors (as thoroughly outlined in a couple of online interviews), but it sure required immense chutzpah.

“I do not think that Amazon creates demand,”  Mike stresses. “We do a lot of advertising throughout the world – even still in magazines… We have a huge email list with which we do big e-blasts to all of our end customers and all of our dealers, and also we advertise aggressively on social media on Facebook, YouTube, Twitter, and Instagram. We feel that we create demand for our stuff, and many music stores make their own videos of our product. Other dealers post our videos on their sites. And in the stores, in the pedal department, where there’s a guy that digs our stuff, he’s showing the pedal and saying, ‘Hey, I really dig this Electro-Harmonix pedal.’ So, I think all the demand is created by us and our musical instrument store dealers.”

Mike just gave music stores an extra reason to like his stompboxes, but also a powerful new story to tell – a David vs. Goliath tale. In this metaphor, Mike provides the sling (and advice on where to hit): “Amazon is great for the consumer because of its fast delivery and return policy, but from the vendor perspective – in my opinion – it’s a disaster, it’s a pain in the ass.”

Think about this, too: Amazon is in the stompbox biz just to make a buck out of it. They provide no advice, no reviews, no videos. 99% of the pedals found on Amazon can be bought online outside Amazon, at the same price, with free shipping. Why wouldn’t you use that sling?

Mythology aside, retailers are seeing this move as a business opportunity, a supply “hole” waiting to be filled: “I think the music stores ? big and small – are motivated, not because they want to do me any favors, but because they see they’ll have more business” says Mike. “All the business that went to Amazon will end up going to other dealers.”

This being said, not all online retail is necessarily detrimental to brick and mortar stores. Companies like Reverb.com and Ebay (who simply facilitate online sales by third parties), have a model that works better for manufacturers while supporting retailers. Also, “they quickly get on top of problems and resolve them.”

Remarkably, just a few days after the announcement, it was already clear to Mike that his choice had brought along something not entirely unexpected, but at a faster pace than he imagined: “Since we banned Amazon, we have gotten orders from lots of new dealers, from dealers that haven’t ordered [with] us in years, [and] from dealers that used to send small orders that now send much bigger orders. I knew we would pick up the slack because, together with the dealers,  we create the demand, but I’m surprised how fast we’ve picked up the slack.”

Dumping Amazon is tapping into something that goes beyond simple admiration for “sticking it to Wall Street” (a soundbite that already resonates wildly with the community of musicians).

This event’s sheer unlikeliness is bringing hope to a sector that’s been gradually shrinking, and living for years with the thought, in the back of its mind, that the online giant sooner or later was going to swallow it whole.

We can bet many in the industry are wondering if other companies will follow EHX’s example, Mike doesn’t want to interfere: “You know, what other vendors do, that’s their business, they have to do what they think is best for them and their customers. However, I kind of feel that for vendors that have too high a percentage of their business with Amazon it’s too risky for them to stop, and they feel like they’re trapped.”

Asked if changes in Amazon’s policy might get him to migrate back to the online retailer, Mike is categoric. “I have no regrets about my decision, and I have no intention of changing my mind about it.”

But hopefully, this choice will help change the mind of others. Because, ultimately, whether the future will belong to a few Goliaths or many Davids (or a mix of the two), it’s still entirely up to each one of us. But in a world where David loses badly, the American Dream dies, together with the NYC we know and love. – Paolo De Gregorio