reverb.com, the musician's e-commerce platform
TRANSCRIPT
or the past century, brick andmortar retail has been definedby a trend toward specializa-tion, as department storeshave continually lost ground
to wave after wave of merchantsaddressing increasingly narrow marketsegments. At a time not too long ago,the concept of a viable retail businessselling nothing but athletic shoes, or
sunglasses, or vintage guitars for thatmatter, would have been inconceivable.Today, they’re commonplace fixtures.With the launch of reverb.com, anonline marketplace devoted exclusivelyto selling and trading musical instru-ments, David Kalt is hoping to bringthe same specialization trend to theinternet.In concept, reverb.com closely fol-lows the eBay model. Both sites pro-vide sellers the opportunity to presentmerchandise for a fee while giving buy-ers access to a wide selection of prod-ucts with the option of making a bid,auction style, or paying a fixed price.What differentiates the two sites arescale and focus. While eBay processesmillions of transactions daily, on every-thing from automobiles to videogames,reverb.com is devoted exclusively toguitars and related musical products.This narrow focus is what Kalt sayswill make his site a viable alternative tohis much larger rival.Kalt is the owner of Chicago MusicExchange, a thriving brick-and-mortarstore in the city’s hip Roscoe Villageneighborhood. With a stunning show-room stocked with 2,500 new and vin-tage guitars, the store is a magnet forguitarists. “My store creates an imme-diate emotional reaction,” he explains.“It’s an environment that musiciansconnect with. We’re trying to do thesame thing with reverb.com. Create anonline environment that says to musi-cians, ‘this is a place where I want to dobusiness.’”Creating an appealing buying environ-ment at reverb.com starts with organiz-ing inventory in categories that arereadily understood by musicians. Sitevisitors can search using broad productcategories like guitars, effects, partsand accessories, amps, and keyboards,or they can get more specific usingbrand names or price ranges. For vin-tage buyers, there is also the option ofsearching products by decade. However, unusual and constantlychanging product groupings are whatgive the site its distinctive character.Under a recent “Staff Favorites” head-ing, there was a 1980 Mesa Boogieamp, a 1976 Rhodes Mark I stagepiano, new Planet Waves cables, and avolume pedal by LeBg, a boutiquemanufacturer in Quebec. The “Deals
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Reverb.com,The Musician’sE-CommercePlatformModeled after Etsy.com, new website offers a commerce
platform, with unique search options, tailored for musi-
cians and music retailers
Developed by Chicago Music Exchange owner David Kalt, Reverb.com is a placewhere manufacturers, retailers, and consumers can shop in a “musician-friendly”setting.
and Steals” heading listed a broad rangeof cut-priced gear including a BehringerEurodesk console for $199 and aHarmony guitar for $75. Other cate-
gories included “British Amp Tone,”“Teles of the ’60s,” and an enormousselection of Electro-Harmonix pedalsunder the “Big Muff-Madness” heading.
“When you have a search function thataccommodates lots of different users, itcan’t speak intelligently to every typeof user,” explains Kalt. “With our cura-tion efforts—the way we group somedifferent products together—our sitescreams that we know guitars andmusic.” Other unique features thatdemonstrate musical expertise includea real-time price guide similar to thewell-known Kelly Blue Book guide forused car pricing, and a blog where staffmembers discuss gear, music, and othertopics of interest. Kalt hopes to attract a large followingwith this musician-friendly vibe.However, his site boasts another dis-tinctive feature that has universalappeal: low fees. Unlike Amazon.com,which currently charges a 15% com-mission on the sale of music products,and eBay, which has fees rangingbetween 7% and 10%, reverb.com hasno listing fees and charges a flat 3.5%commission only when an item is sold.Lower transaction costs are particularlyrelevant to musicians, who rarely popu-late the higher income brackets, andinstrument sellers, who don’t work onrich margins.Since its launch in April, reverb.comhas steadily gained users and now boastsmore than 50,000 friends on itsFacebook page. The site was initiallypopulated with products from theChicago Music Exchange inventory buthas since attracted individual sellers aswell as product listings from a dozen orso retailers including Dave’s Guitar Shopof La Crosse, Wisconsin, SouthsideGuitars in Brooklyn, and CarlsbadGuitar, in Encinitas, California. After his presentation to other retail-ers, Kalt says they all responded well tothe combination of competitive feestructure and an online environmenttailored to their customers. He is alsofinding interest from boutique electron-ics manufacturers and luthiers lookingfor an outlet for their products. “Someof these makers are too small and don’thave the infrastructure to develop a realdealer network, but they offer wonder-ful products,” he explains. “We’re aperfect fit for them.”An independent m.i. retailer attempt-ing to create a digital marketplace,going up against multi-billion-dollargiants like Amazon and eBay, seems a
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Reverb.com is the creation of David Kalt (center), a hi-tech entrepreneur who nowowns Chicago Music Exchange. Although the web platform operates in offices atChicago Music Exchange, it is staffed by a team of developers who work independ-ently.
terrible mismatch. However, Kalt’sunusual technology and business skillsgive him a fighting chance. He was aself-described guitar geek through highschool and college, but when he real-ized he lacked the talent to be a star, hewent to work as an assistant producer ata Chicago recording studio. Two yearsof 80-hour weeks turning out commer-cial jingles for minimum wage souredhim on the music industry and heenrolled in computer programmingclasses at nearby NorthwesternUniversity.
He first applied his programming skillsto the travel industry, developing a busi-ness that helped travel agents matchcustomers with appropriate tours. Afterselling that business, he developed aprogram that let individuals trade stockoptions. “I had taught myself optiontrading and was doing it on a smallscale,” he relates. “But Charles Schwaband eTrade treated options like a secondclass citizen, and it was hard to trade ontheir platforms.” OptionsXpress provid-ed an alternative for independent tradersand managed to turn a profit in its first
year. Based on strong sales and earningsgrowth, Kalt successfully took the com-pany public in 2005. Two years later,though, he stepped down as CEObecause “I just didn’t enjoy running alarge public company.” In 2010 CharlesSchwab acquired Options Xpress for$1.0 billion.Kalt registered the reverb.com domainname in 2006 with the idea of launchinga direct response retail business to com-pete with Musician’s Friend. However,he quickly discovered that “you could-n’t get access to top product lines withjust a business plan.” So he boughtaccess to product lines by acquiringChicago Music Exchange in 2010. Thereverb.com project was placed on hold,and he spent much of the past threeyears refining the Chicago MusicExchange business.
The success of Etsy.com, a digital mar-ketplace devoted to handmade appareland housewares, prompted him torethink reverb.com. Etsy was launchedin 2005 and found an immediate audi-ence with its quirky website and selec-tion of unique items. Last year, itprocessed more than $1.0 billion intransactions. Kalt is making invest-ments in hopes that reverb.com willexperience a similar trajectory. He has astaff of six developers working on thesite, is in the process of developing anapp for mobile devices, and is spendingon search engine optimization to drivetraffic to the site. “We’ll offer an easyand cost effective way to sell online,”he says, “whether it’s an inexperiencedindividual, a dealer looking to reachadditional customers, or a boutiquemanufacturer.”www.reverb.com
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With our curationefforts—the way wegroup some differentproducts together—oursite screams that weknow guitars andmusic.