What Does 'Expensive' Mean?

Long ago, when I was a wee camera reviewer writing for the internet that came on pieces of paper bound along one edge and monitored through the mailbox or the newsstand, I decided not to tell people how to feel about money. I can't claim that I've always stuck by this resolution, but at least I can report that it bothered me to be told how to feel about what things cost.

The reason is mostly contained in the Christmas legend of the Little Drummer Boy, whose offering to the church is especially prized because it's such a great percentage of everything he has, even though it's a pittance in absolute terms. (I always thought that lesson was sinister, but that's a whole 'nuther story—let's not get into talking about the medieval church.)  But it points up the fact that those who claim the Leica M9 will be "ridiculously" expensive aren't saying anything real, because they're making relational statements without knowing the exact objects of those statements. That is, some people are poor and strapped for cash and some people are rich and aren't, and it's meaningless to generalize across both categories and everything in between. It might come as a shock to working stiffs beset with debt and expenses, but there are people out there who actually own six late-model automobiles purchased new; there are country clubs that cost $60,000 a year to belong to; there are people in crappy little apartments-gone-condo in Manhattan who paid a million dollars and more for them. Some people have money. Like it or not, there are people who are just not price-sensitive to the price of a camera...

...any camera.

Just as certainly, there are people who could never afford a $5,000 or $10,000 camera outfit because they just don't have the cash. But there are a lot of shades of this kind of relativism. Malcolm Forbes used to say that he didn't feel like an elitist for having a hundred fancy motorcycles, because he felt that even a factory worker could save up enough to own one fancy motorcycle. Which would make them equals, in effect, presumably because one butt can only be planted on one bike at a time. Whether a given piece of equipment is "expensive" also depends on what it's going to be used for. A professional can depreciate a camera purchase; a working photographer might be able to track exactly how much a camera will earn for her. My first DSLR literally paid for itself, because I used it to earn many times its cost. And then there's a whole raft of considerations of individual prioritizing: lots of people in our audience who claim they "can't afford" a D3X or 1Ds Mark III or M9 are really saying it's not appropriate for them, or perhaps not proportionate to the use they'd get out of it or to their economic and budgetary situation. Braces for the kid's teeth might be more important, and take precedence. Or they might take out the camera to do some snaps only once every couple of weeks, making a high expense for the equipment difficult to justify. Think of how many people actually have the equivalent of whatever the M9 will cost already invested in cameras. I know plenty of people who own half a dozen cameras, or a dozen, or more. The aggregate value of what they've got in their cabinets is more than the price of most single cameras, even very expensive ones.

Magic in hi-fi
I love music, and in addition to reading a lot about photography I also read "high end" audio magazines. I like the British magazines now, Hi-Fi News and Hi Fi World, but I used to read Stereophile and The Absolute Sound and occasionally still do. Those latter two magazines have been on a 20-year campaign to get their readers accustomed to higher and higher prices, which they do by writing about components that are much more expensive still. I believe the economic term for this is "normalizing." Twenty years ago, John Atkinson, the Editor of Stereophile, wrote about a pair of $3,300 "mini-monitor" speakers (Celestion SL700s) and called them "extremely expensive for a small speaker"—one effect of which was that it encouraged people to think that maybe $900 for a pair of mini-monitors might not be so bad after all. Through the years, the stakes have gone up: the "extremely expensive" end of things has gotten exponentially higher, which has meant that more and more expensive components have come to be referred to as "budget" models or "bargains" or "entry level." These things are usually described in the American magazines as offering "a glimpse of the high end," which is aspirational notation rather than descriptions of properties intrinsic to the devices. The American magazines are to the point now that they write straight-faced about $40,000 and $60,000 pairs of speakers, which corresponds to $10,000 and $12,000 speakers as normative. The New York City audio dealer Andrew Singer was on record a while back as having said that a "real" top-level high-end system costs $250,000 or more, adding slyly that the number might actually be $500,000. Although I don't doubt that he's actually sold $500,000 systems, that kind of claim also has the effect of normalizing $25,000 and $50,000 systems, which might previously have been thought of by most people as unreasonably or prohibitively expensive.

Not long ago I saw an $8,200 pair of speakers called "extraordinarily good value for money" in an audio magazine. It's possible to feel that way only if you truly believe that it's possible to get actual worth out of investing many times that amount into a pair of boxes with drivers in them. In order to create that illusion, marketers have to resort to a whole battery of interrelated strategies. They have to use advertising, which can be purchased; they have to get "rave" (unreservedly positive) reviews, which, although it is not nice to say so, can be "bought" too, by giving the reviewers "accomodation prices" that amount to bribes; and the product itself has to have as much value poured into them as possible—value of two kinds. The first kind is real if excessive and unnecessary value, which can be added for instance by using exotic materials and painstaking manufacturing methods and applying fanatical quality control; and the second kind is magical, by making invented but persuasive claims about esoteric (and of course proprietary!) technology, or magical skill on the part of a particular genius designer/creator. (An example of magical thinking in photographic equipment is the idea that any German-made lens has to be better than any lens made on the Pacific Rim).

Audio review writing, even more than its photographic counterpart, is replete with clichés. There are limitless legions of components that are "soundstaging champs," for instance, never mind that "champ," for champion, means something that is singularly the best as determined by direct contest. Linked adjectives and nouns are sprinkled around like bits of code: "palpable presence" for example. One cliché applied to high-priced items is "admittedly expensive." These terms are so regularly used together in audio writing that they really ought to be conjoined, like certain terms in German: palpablepresence and admittedlyexpensive.

The Leica M9, due to be announced tomorrow, will be admittedlyexpensive. What remains to be seen is whether it will also representgoodvalue and be wellworththemoney.

And, of course, whether it will deserveyourseriousconsideration.

A paucity of Veblen goods
Leica has for some time been a lightning rod for resentment, probably because it has been perceived as doing something akin to price-gouging. Really, of course, it's in the business of providing Veblen goods. "Veblen goods" are named for Thorsten Veblen, author of The Theory of the Leisure Class. They are commodities the desirability of which increases with increasing price rather than decreasing in accordance with the law of supply in demand.

A classic example: Around 1973, when OPEC and energy shortages were creating lines at gas stations in America and Europe, car prices experienced a brief period of severe increases. During that period, the price for the top model of BMW went from just over $5,000 to just under $10,000. And, to BMW's surprise, sales jumped. BMWs had become Veblen goods, and they have been ever since. (Or at least they were until Chris Bangle made them all look like Buicks with creases and they added iDrive, but let's put that topic in the basket with the medieval church).

1974 BMW 3.0CSi

The camera market is really remarkably free of this tendency. It's true that people often buy "more camera than they need" for status-seeking reasons, but, apart from Leica, there really are remarkably few photographic products that qualify as true Veblen goods in most of the world. About as far as the tendency goes is the age-old high status of allegedly "pro" products among amateurs. By way of comparison, though, consider that, among audiophiles, pro audio products are considered way below standard for true high-end home stereos.

Only occasionally is a pro audio product considered good enough for the high-end market. A good example is the recent popularity of the Benchmark DAC1, a pro audio headphone amp and digital-to-analog converter. The USB model is easily used as a replacement for your computer's soundcard for playing things like iTunes music files, by connecting it between your preamp or amp and your computer with a simple USB cable and choosing it in Preferences > Sound. It's gotten wide acclaim and lavish praise from reviewers, and Benchmark has capitalized on its popularity by making several hybrid derivatives modified for audiophiles' tastes, such as the DAC1 Pre, which adds a single preamp input, and, most recently, a variant with a remote control, a feature not needed at all by the professional market for which the product was originally conceived. However, the Benchmark products are already considered too "down-market" by many audiophiles, and "real" audiophile products such as the Wavelength Crimson, which uses triode tubes for its output stage and costs five times as much as the Benchmark DAC1 USB, are now coming along to replace it. And in any event, The Absolute Sound recently published an article warning sternly that USB does not qualify as a "true audiophile" connector at all. (Excommunicated!)

We really have nothing like that in the camera market. For the most part, the highest-status photo products are still tied closely to function: they're expensive because they actually cost more to design and produce, and they actually do things that less expensive products can't. There's relatively little magic involved. To choose just one example, consider the Nikon AF-S Zoom Nikkor 14–24mm ƒ/2.8G ED. It's true that it costs $1,800, but it's plain to see why: it's faster than the "amateur" $950 ƒ/4 12–24mm by a stop, it has 14 elements rather than 11, and it's visibly (one might say palpably) better built. And its price is still proportionate to that of the 12–24mm—it costs more but it offers more, and it doesn't cost that much more. There's no Nikon ~14–24mm zoom that costs $10,000 or $20,000 and that has had excessive value poured into it both actually and magically; and you're not instructed by experts when you buy the $1,800 14–24/2.8 that you are only getting a "glimpse" of the True Grail offered by a 10X-as-expensive alternative that you need to aspire to.

So why doesn't the photographic market have more Veblen goods? My guess—harking back to Veblen's own famous term "conspicuous consumption"—is that they're simply not conspicuous enough. Anyone who has owned and "worn" a Leica knows that the marque tends to draw the admiration of other photographers and enthusiasts but doesn't earn much in the way of status admiration from the general public. It's too far under the mass zeitgeist. It ain't bling. Except to those in the know.

It's clear from our comments section and from similar discussions all over the web that some people powerfully resent the incursion of true Veblen goods into the photographic equipment market. It's also very common for people who admire the few Veblen goods on offer to pine for affordable equivalents, or equivalents optimized with the kinds of advanced technologies offered by the leading manufacturers in more conventional products. But what I realized a long time ago is that people don't actually want cheaper equivalents of a Leica; they want a Leica. They just don't want to have to pay for it. And there's the conundrum of Veblen goods: the existence of the products create an aspirational model which can only be satisfied if they remain Veblen goods. You might claim differently, and for a very few individuals it might actually be true, but the market as a whole does not want a $2,000 Leica digital rangefinder. (Just like it didn't actually want the Zeiss Ikon ZI and the Konica Hexar RF in the film era, even though those things were just exactly what many people said they wanted at the time.) If one existed, you wouldn't buy it, because it would compare poorly to comparably priced DSLRs. The market wants a Leica to be a Leica: the inheritor of tradition, the subject of lore, and indisputably a mark of status to own.

Mike

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ADDENDUM: Now this is expensive.

Featured [partial] Comment by Benjamin R. George: "This doesn't in any way count against your point, but the M9 is due to be impressively expensive even for a Leica. Let me elaborate:

"Many of us, if we really wanted it, could tighten our belts for a few years and get ourselves, say, a new M7 and a decent lens to go with it. It would take real sacrifices in personal budgeting, and years of patience, but we could do it. Once we did, we'd have arguably the best 35mm rangefinder body in the world, and, if we took good care of it, we'd have arguably the best small format film rangefinder body in the world pretty much forever. As Christer Almqvist said in the comments, the month-to-month cost of ownership of Leica gear isn't so awful, if you can deal with the daunting upfront costs.

"The M9 is due to cost more than the M7, but certainly there are still a good number of us who could tighten our belts and save for a few years and get ourselves a new M9.2 (it would be a few years in the future, remember?). Then, if we took care of our new purchase, we'd have the best small format digital rangefinder body in the world for—well, certainly not forever. Maybe for another few years. Of course, our M9.2 would probably keep working just fine forever, if we take good care of it, but (I think you made a similar point in a reply to a comment on one of the A850 posts), it'd still be disappointing, because we'd know that the much, much better M10 was out there.

"When you consider the expected higher unit cost, shorter model replacement cycle, and greater marginal advantage of cutting-edge over slightly outdated models, digital Leica is shaping up to be a drastically more expensive proposition than film Leica.

"There are good reasons for this, of course, and this certainly don't make the M9 (or the M8, or the M10) a pointless camera, but, in understanding the expense complaints, it's important to keep in mind that it's not just that the M9 will be inaccessibly priced for a lot of digital photographers. It will probably be inaccessibly priced for a lot of Leica photographers, too."

Featured Comment by James McDermott: "Ironically, the most conspicuously admired bit of photo gear I own is the cheapest—my Rolleiflex T. Ashamed as I am to admit it, I experience a definite glow (Veblen radiation?) when someone expresses an interest (even if it's only to ask 'what in the name of the great, good God is that?).

"About fifteen years ago, I was pottering around Henley-on-Thames (a picture-postcard English town, home of a famous annual regatta), when an actor who was quite 'big' in the '60s sauntered over and, after congratulating me on my discerning taste, told me that he used to own a 'T' that had been gifted to him by Paul McCartney. I doubt my Pentax 20D is ever going to be the cause of such encounters (unless I tack chrome tail-fins on to it, perhaps). Nor even, dare I say, an M9?"

Featured Comment by "Mr. X": "Long ago, I was once a member of the high-end audio press. I agree with Mike that "accomodation pricing" on products is the dirty little secret of the audio industry, but I don't think he fully understands the extent of its influence.

"While being able to buy equipment at half off (or worse, being able to 'borrow' it on a long-term loan and thus avoid buying it at all) can certainly have the effect of biasing a reviewer's opinion relative to a particular product, what's even more pernicious (IMO) is how this ultimately warps a reviewer's perspective about equipment pricing in general.

"When I was in the industry, the general rule (observed both by magazines and equipment manufacturers) was that if a reviewer bought a product on accomodation, they had to hold onto it for at least one year and couldn't sell it for a profit. While I understand the benefits this policy has for all parties involved (especially reviewers, as magazines generally pay squat, so access to accomodation pricing constitutes most of a reviewer's compensation and, of course, the more expensive the products they buy, the more they are effectively 'paid'), I think it's also the cause of the cavalier (at best) and dismissive (at worst) attitude toward prices that Mike has noted.

"Here's why: When you're a reviewer and buy a pair of $60,000 speakers for $30,000, the odds are good that when you want to replace them a year or so later with the lastest and greatest, you'll be able to sell them to a friend and get all of your $30,000 back. Because you didn't have to pay sales tax or shipping (most likely because you bought your review samples), you broke even on the deal and in fact, your only cost was the income you forfeited while your money took the form of a pair of a speakers instead of numbers on a portfolio statement. Ditto for your amplifier, preamplifer, cables, what have you.

"In effect, no matter what the list price of the equipment is (or how much the people who read your reviews have to pay for it when they buy it from a dealer), so long as you're able to swing the cash up front, your cost to have a current, top of the line stereo system sitting in your living room is de minimus. And because (at least when I was involved) most reviewers are highly compensated professionals in their chosen fields—doctors, lawyers, business people, etc.—coming up with the cash to 'lease' their audio system usually isn't an insurmountable problem.

"It's my belief the fact that reviewers effectively get for free what their readers have to pay dearly for is the reason why, over time, reviewers ultimately come to perceive the notion of value differently than their readers. This disconnect is not only evident in the contents of the reviews, but also in the selection of products that are reviewed (and advertised).

"That said, though, the fact that TAS and Stereophile continue to prosper—or at least survive—means that, grumbling by disgruntled former readers notwithstanding, plenty of people have no issue with their editiorial orientation and continue to pay to read them."

Featured Comment by Brenden Kootsey:

(Click on image to read text.)

Comments

[Bop]

"those who claim the Leica M9 will be "ridiculously" expensive aren't saying anything real, because they're making relational statements without knowing the exact objects of those statements. That is, some people are poor and strapped for cash and some people are rich and aren't, and it's meaningless to generalize across both categories and everything in between"

No, people are saying many thousands of £ exceeds the real value of an M9 - and the fact that some people won't worry about this is utterly irrelevant.

[Jeffrey Goggin]

If it's any consolation, the 3.0 CSi, while beautiful to look at, was actually a very frustrating car to own and a rather flawed design.

While the basic drivetrain was for the most part bulletproof, the pillarless windows whistled annoyingly at speed and the car's chassis was full of nooks and crannies that (IMO) existed solely for the purpose of turning steel and water into ferric oxide. Worse still, the rocker panels as well as the fenders -- both front and rear -- were all welded on, not bolted on, so DIY rust repair wasn't easily accomplished even if you were so inclined.

As you may have surmised, my knowledge of the above is firsthand, as I bought and briefly owned a high-mileage '73 3.0 CSi way back in 1985. IIRC, I paid a whopping $5,200 for it -- a lot of money for me at the time! -- and sucker that I am, I'd very likely buy another one today if they could still be had for that amount.

[JonA]

Mike, there is something I don't understand. If pros use lesser equipment then isn't money spent on high end equipment pointless? If you record something on lesser equipment how can the high end equipment make that recording sound better? You can't squeeze more out of what's on the tape, right? No matter what high end equipment I use New Day Rising by Husker Du will never sound better because Spot didn't know what the hell he was doing and ruined the recording. (Yes, I can't find new music as good as older alternative that radio hasn't ruined in some way for me).

[Jason Orth]

Mike, there is a point where I think this breaks down, and I'll use BMW as an example.

BMW produces a tier of products, all with cachet and snob appeal but, some are accessible to the non-rich, even those where price is a consideration, even to the Forbes-ian "factory worker." The example is the 3-series. The 3 did not cheapen the brand, but instead brought a group of people into the culture, into the club, where they are likely to stay. Veblen on the cheap(er), as it were. And, they've even gone cheaper with the 1 series because unlike the Mini, people wanted a BMW, but they were content in NOT having a 750iL, but they wanted a Bimmer.

But here's where BMW, and others succeed in this market while others fail. Branding is important, but the hallmarks of the brand must be felt in all levels of product, and this is what keeps people buying into it.

GM failed with its "Cadillac" Cimarron because it tried fooling us with the Chevy Cavalier with fancy packaging. Leica did the same with rebranded Panasonic gear.

But the buyer of a BMW 3 series knows well they aren't getting all the amenities of a 7 series or M model, but they do know that SOME of the qualities: build quality, luxury and performance that are at least noticeably above the equivalent vehicle type of lower cost will come with the expenditure. It's simply a question of value.

The problem is the Leica M9 could be a good camera, but all the "Leica experience" (combined with its limitations) doesn't make this camera a value to most of the public, including some who are intimate with the Leica experience through film or who are accomplished photographers.

A BMW 7 series is a much better car than a 328 but unlike the Leica, is not literally an order of magnitude greater in price. Yes, there is no other digital rangefinder of consideration, but there are plenty of photographic devices that are doing just fine.

The Leica has to decide what it wants to be...a BMW or a Maybach.

Auto makers use the "Halo Vehicle" concept - where they make a vehicle that is just too over the top in features, luxury, technology, etc., and sell limited quantity if only to generate interest in the brand, knowing full well that the sales are in the lower tier of products

Leica produces a halo product in the M9. Their problem is they haven't produced the rest of the tier. With film they didn't need to for some time. But I think Leica's taking the right steps. I really believe the X1 is the start of adopting the successful strategy offered by other makers of upscale goods.

The Zeiss Ikon/Leica analogy fails, if for only it's a film camera in a digital world, but also because people didn't want a $1400 Zeiss. They don't want a $2500 Epson either. Yes, they want a $2000 Leica.

It doesn't have to be a M9.

[jedrek]

If anyone is interested, I will soon be offering a special service to "burn in" CF and SD cards for maximum photography fidelity!

[Mike Davis]

Excellent article. Struck me on two counts - as an ex-Leica user and as a one time marketing expert & lecturer in pricing.

Second, first: You never hear of de Beers offering cut-price diamonds! Why, because the price of something carries two messages:-
a) the economic cost to you as the purchaser, and
b) a indication of 'quality' of the product.

The 'quality' can be value of ownership (pride, self esteem, or economic use, etc.)
A company that manages to provide an excellent product and maintain high prices - without flooding the marketplace can maintain good profits and reinvest for quality. Leica are an excellent example of that. (But nearly missed it with the digital revolution!)

As a schoolboy back in the '50s, I wanted a camera, so my dad got a camera catalogue (Wallace Heaton, for the Brits here.) The most expensive camera was a Leica, even the standard lens cost what my dad earned in a month! I made up my mind to buy one. So by 1955, I was a 35mm owner, and reader of Leica fotografie, and in 1964 I had an old Leica IIIc, and by 1966 I'd bought an secondhand M3, and slowly built up a set of second hand lenses. I loved that gear and used it through to the late 1990's when I went digital with a 35mm scanner, but got sick of lugging lots of lenses around.

I sold the equipment for 3x the amount I'd paid for it (slightly better than inflation). Why? I'd got to the point where I suspected that carrying a Leica was too bound up in my own self image!!

So I got back to basics with a small Olympus fixed lens camera. After I went digital cameras in 2002, I found excellent Leica lenses on Panasonic stuff, and used a number of those (few regrets). Now I have a G1 and do regret selling my screw & M lenses.

Sure I'd love an M9 - but it wouldn't make me a better photographer - and at the end of the day - that is what it's all about, isn't it? Really?

Mike
www.flickr.com/photos/watchman