We’ve been hearing about declines in guitar sales for years. Now, one of the most storied guitar makers in history — Gibson — may be in serious trouble.
Updated, May 1st 2018: Gibson Guitar has now officially filed for Chapter 11 bankruptcy protection.
Gibson Guitar is now falling on hard times, and softer guitar sales are just part of the picture. According to details surfacing this week, the company remains deluged in debt, with desperate sell-offs to service a growing list of creditors.
Ringing the scary alarm is Nashville Post reporter Geert De Lombaerde, who unearthed mountainous debt obligations and a worsening financial crisis. De Lombaerde pointed to a recent, $16.6 million coupon payment by Gibson to service $375 million in senior secured notes that come due this year.
The debt pile wasn’t a secret to frustrated bond holders. But De Lombaerde is seeing an iceberg ahead. “The situation facing the iconic Nashville-based music instrument maker, which has annual revenues of more than $1 billion, is far from normal,” De Lombaerde remarked. “CFO Bill Lawrence recently left the company after less than a year on the job and just six months before $375 million of senior secured notes will mature.”
“On top of that, another $145 million in bank loans will come due immediately if those notes, issued in 2013, are not refinanced by July 23rd.”
Gibson Guitar started in 1902, and has been interwoven into the musical life of America ever since.
Back in 1952, the company produced its first signature Les Paul, one of the most famous guitar series of all time. The rest, as they say, is history. But that storied history is making the present situation harder to stomach.
Just recently, Gibson sold its ownership of a former Baldwin Piano warehouse for $6.4 million. Now, the guitar maker is trying to offload an even bigger Nashville property: the Valley Arts building, located on Church Street. The selloff is expected to draw $11 million. Both payments are likely to evaporate almost instantly to service a growing debt tranche.
We’ve read a separate report that Gibson is selling off Baldwin entirely — though that hasn’t been confirmed.
Gibson still pulls annual revenues north of $1 billion. But multiple investors, bondholders, and analysts are now saying the ‘b-word’ out loud.
“This year is critical and they are running out of time — rapidly,” Kevin Cassidy, a senior credit officer at Moody’s Investors Service, told the Post. “And if this ends in bankruptcy, [CEO/owner Henry Juszkiewicz] will give up the entire company.”
Moody’s has already downgraded Gibson. And others are projecting a major change ahead — in leadership, or total control of the company.
One question is whether sagging guitar sales are playing a role here. This has been a growing problem for years, thanks to surging interest in EDM and rap. But broader cultural shifts are also putting the guitar in the rearview. Indeed, the recurring ‘rock & roll is dead’ cliché may finally be coming true — and seriously impacting Gibson’s bottom line.
Incidentally, Moody’s also downgraded Guitar Center last year, as well. The mega-retailer, a massive seller of guitars, is saddled with more than $1.6 billion in debt.
The issue of plunging guitar sales became glaringly apparent last year.
That’s when sales figures revealed a serious sales drop over the past decade. Specifically, guitar sales have dropped from approximately 1.5 million units annually to roughly 1 million — all in less than a decade. That’s still a million a year, though this is all heading in the wrong direction.
And buried beneath those top-line statistics is another problem: sinking prices. All of which is great for anyone on the market for a guitar — new or used. But it’s disastrous for a company like Gibson.
One obvious problem is that the guitar is just another toy for younger people today. Up until relatively recently, it was a must-have for a giant percentage of young Americans — all of whom were in love with rock & roll in some form or another. Now, the six-string is just as easily replaced by a turntable, videogame console, or simply a laptop.
And the ‘guitar gods’ of the past are fading, with their adherents downsizing. “I don’t know. Maybe the guitar is over,” Eric Clapton said last year when asked about eroding guitar sales.
“Good question though.”
Guitar “sells” ?!
Doesn’t sound right, does it? Thanks Irv.
I think it’s commendable the Gibson tried to spread it’s wings into other musical realms but, by doing so you risk, ahem, forgetting who brung ya to the dance. While guitar sells may or may not be in the tank, perspective here) the further astray you get, even if it’s a short corner you go around, from yer starting point, the less control you have. Whether you think so or not.
Eh…? Can you speak English…?
May i suggest not overpricing their products?
Perfect. Also you constantly hear the phrase that the current model isn’t as good as the 1958 model. If you can’t improve your work in 50 years you shouldn’t be in business anyway
That’s the truth, without innovation there leaves just one palette and design scheme that’s perfected.
I will miss them. I grew up in the 70’s when the Electric guitar was Godly, as was the person playing it.
My favorite of all to listen to, when handled like your life-long mate, was the ES 355. Sigh……
Declining guitar sales are but a shard of the problem. Gibson has abandoned the Guitar industry for the consumer electronics business and is currently failing to make the leap. This has shattered an iconic guitar brand. Thanks Henry….
The Gibson story is complicated; they did it to themselves though for sure. Is it a sign of the times? That is part of it. But all popular music is in deterioration; that world is over already. Even the biggest acts are not what they could be. Even Lady Gaga has defaulted to Vegas which is the swan-song-stage of a career. Swift can’t sell tickets like someone at the top should as per the past dictated.
The music culture is only a reflection of the society it sits in. Where does any average city daily life value live music in a proper way where regular people regularly visit various types of venues and pay good money for it. The answer is nowhere. That is the future pop music culture.
Music is mostly made in the box now. No new music forms anymore; they are all repeats and variations on already created forms, derivative, reductive.
Look at some of the most high profile forms of pop and hip-hop: completely stale, static, idea-empty.
The electric guitar sales of Gibson are the canary in the coalmine for a whole cultural paradigm.
Oh God! I sincerely hope not.
At 55 I’m patiently waiting for the next teenage revolution
I will be 70 by year end……noticeably, the passion for guitar has died down!
HA HA ME TOO!!
Fine post. And their instruments were woefully overpriced as well.
You make some excellent points about culture. OTOH, pushing 70 here, been picking all my life, never hit the big time, and still dig the crap out of it. And it doesn’t matter to me if they sell a million guitars are seven a year. Fingerpicking, flat picking, acoustic, electric, rock and roll, jazz, country, blues, flamenco, it’s all good. So maybe it goes back to the way it used to be, fewer aficionados, less bucks to be made, fewer strutting peacocks, so what. Still beats anything else going.
Tennisun makes a good point, but I would add that, from my observation, there is good music out there- much of it still being made with guitars too. But the music industry has indeed shot itself in the foot by not investing in artists of lasting value for a long time, and is now experiencing the consequences. Between that and the internet democratizing the ability to get music heard somewhat, what we are left with is a deluge of new music (some of it quite good) that most of the public will probably never hear. Because while it’s out there, finding the good stuff requires effort on the consumer’s part- something too much of the public is totally unaccustomed to.
There is always good music to be found, the mechanics of finding it have changed, but ultimately it’s still only the hardcore 5-10% of music consumers that will go the extra mile in that pursuit. So, no change there. Where I see the biggest change, and ultimately some sort of death-knell, is in the presentation of and representation of older pop/rock artists and forms. The corporate record biz, for all it’s pros and cons, has repackaged and re sold their back catalogues again and again, in a desperate attempt to stay ahead, or keep up with, format changes and aging star rosters, basically saying “NOTHING AFTER 1986 MATTERS,IT HAS NO MERIT,IT CANNOT BE BETTERED,SO DONT BOTHER TRYING.” So why would anyone born after 1990 participate in that? Yes, we do have a shift in cultural paradigm, but that’s not the problem. The problem is the so called arbiters of our “industry” clinging to power by excluding their traditional market base, under 25s. EDM’s not the problem, there’s no such thing as “stagnant musical form”, it’s about perception, delivery and COOL. And banging on about about old geezers and their unattainable vintage instruments simply ain’t cool to the kid who can juggle 3 portables, play a game and talk to friends, all easier than breathing.
In some ways l believe there are parallels to pop radio circa 65-75 in that the songs stand out exclusive of the look of the artist,ie you heard from a really great track, maybe at the same time as your peers (commonality of experience), and then did more to pursue the singer/band. Now you’re as likely to be exposed to music as backing/soundtrack in a video game, movie or internet posting, and you’ll say to friends “wow, did you hear that, who does that, do you know?”And on it goes.
We’re also at the cusp of the fallout from an economy based on everyone buying a new toaster every month, and while the implications of that are inescapable, it’s not really the point I’m trying to make. Which is . . . ladies and gentlemen, the times they are a changing.
and you quote an “old geezer.” the irony is funny.
Gibson has been a poorly run business since I started playing guitar in the late 60’s. Finance capitalism has systematically preyed on the quality musical instrument manufacturing and retailing sectors for 50 years now. Fender (FMIC) has been a financial wreck for years as well. There will always be a solid market for quality instruments, but not a mass market one with the continuous high growth that finance requires. They will simply loot brand equity until there’s nothing left and move on to the next sector.
Well said . in fact that needed to be said. Especially what you said in that there will always be a market for high quality instruments
One question is whether sagging guitar sales are playing a role here. This has been a growing problem for years, thanks to surging interest in EDM and rap. But broader cultural shifts are also putting the guitar in the rearview. Indeed, the recurring ‘rock & roll is dead’ cliché may finally be coming true — and seriously impacting Gibson’s bottom line. ——————————— This is whitewashed horseshit. Guitarists aren’t extinct and they are still out there buying. If makers weren’t pricing themselves out of Earths orbit they wouldn’t find their customer base seeking other makes and models or even looking to places like Warmoth and such. Gibson has only themselves to blame for this. Rock and roll has come and gone and been back again and guitar sales never went thru the floor during those times. Gibson’s base of customers if they still want a Gibson are going used now.. a used guitar isn’t like a used car.. the depreciation is miniscule .. if I want a Les Paul custom I’ll happily buy one off reverb that is 20 or 30 years old for less than half the price a new plastic feeling one is being tagged at. And know that I’m buying one that was actually built with care and detail vs now. No. Gibson did this to themselves. No question
roger that. + 1
I couldn’t agree with you more. I just went out and purchased an acoustic guitar. I could not believe the prices that most of the popular brands want for their products, some of which aren’t made out of solid woods. I think that this “trend” is only just getting started. Which manufacturer will be next, Martin, Fender…..?
How can a company , who’s been in business for 115 yrs, making over a billion in sales go bankrupt? Sounds like too many hands in the cookie jar. I’m sure Les is shaking his head to.
“Shareholders” the product and the employee are just expenses these days. Shame.
Its good that this manufacturer has lasted this longer to prolong expression in human beings for the better part of one hundred years plus. Good luck Gibson.
The simple reality is today you can buy a quality guitar for fraction of the cost of a new Gibson or Fender. Heck, dollar for dollar, both Epiphone and Squire offer far more value per dollar spent than the Gibsons and Fenders they mimic. Hard to feel sorry for someone on crutches because they keep shooting them self in the foot.
Gibson owns Epiphone
I met Henry years ago at Les’ Birthday party (in NY City) and again at Les’ funeral service. He’s pretty straight up, and I didn’t see any greed or arrogance. He has a large nut to crack, and the lawsuit about the endangered species wood imported from Madagastor (sp?). But Henry is one of the good guys and a good businessman.
I have the epiphone version of the gibson hummingbird ,just as good for a fraction of the price.
How many Guitars does the world need ?? People die Guitars don’t !! Everytime a Rock & Roller dies he’s leaving a lot of Guitars behind to go on ebay or graigs list. I have got some great deals on like new Guitars on graigs list. I got a Fender Tellie 60th aniv. Like brand new gor half the price !
ha… you can never have too many guitars.
Gibson hasn’t been the same since Henry took over, your working guitarist can’t afford a new Gibson.
Amen brother. No guitar should cost more than a grand with the new manufacturing processes in place.
Gibson is a victim of their own demise. Instead of focusing on guitars, the powers to be have been using the Gibson brand to franchise into other industries such as purchasing Cakewalk which was a fabulous DAW software and renaming it Sonar and now is defunct. The so-called designers at Gibson has been very busy in the past trying to reinvent the wheel. This did not go over very well with seasoned guitarist as well as lifetime Gibson guitar users. Not until the past couple of years Gibson has begun to listen to its customers which was asking for nothing more than going back to the basics and like the traditional built guitars with an attention to detail in the quality control department that has became lackluster and focusing more on production instead of quality. Not everyone was happy with adding robotic tuning keys and other junk gadgets. This is what forced buyers wanting to purchase a true Gibson to start buying used Gibson’s. The point here is very simple. Get out of business in the other industries and concentrate on building a quality American made guitar without the frills. Stop churning out artists signature guitars because nobody wants to buy these museum guitars. A guitarist buys a guitar to play, not to collect dust. Slow down on production and focus on quality. Gibson has a reputable name and it still can be salvaged. One thing that Gibson has going for its company that Fender doesn’t is that Gibson guitars are manufactured in the USA not in USA and Mexico. Guitar manufactures such as Gibson and Fender hold a rich heritage as being the Granddaddy’s of guitars. There is young guitarists out there today who very talented and are yearning for such type of guitars being built. Rock is not dead! That is what the major recording companies want you to think and they control the sales on Billboard charts. Newsflash….There is this thing called Indie records which is taking America by storm and allowing the new artists to get their music recorded and aired on radio stations all over the United States. A lot of radio stations are gravitating toward Indie recorded material because the public is not exposed to this music through the major recording companies.
Long story short, contrary to the nay sayers, Just like rock music Gibson guitars will still be around for along time. ROCK ON GIBSON!!!!!
Well said . in fact that needed to be said. Especially what you said in that there will always be a market for high quality instruments
Spot on Ron. One thing that annoys me the most (other than the drop in quality) is the focus on making ‘candy crush’ colored guitars and as you said – Artist models (complete with buck-rash, oxidation, and chips) that are wall-pieces. If they want to persist with new models and cheap finishes – they should focus this in the Epiphone division. The Classics will always be in demand and the focus on cost reduction could come from eliminating the ‘fat’. I have recently fallen in love with SG specials and the necks without binding. After buying 2 new Gibsons over the last 12 years (a 2006 LP Standard & 2014 120th Anniversary Explorer) – and being pissed off with the quality of the workmanship on the necks (the most vital part of the Guitar no less) with the binding being uneven and having noticeable gaps in places, only to ‘stumble’ on a 2013 70’s tribute and it’s stripped back finish and great tone, I’m now more of a fan of bare bones tone machines (though I love the look of a good LP Custom). Gibson should go back to basics and not F#&% with a winning formula.
I am a proud owner of the g&l Comanche and at the same time owned a Gibson les Paul special Sante fa sunrise edition that I sold because it couldn’t company or even come close to the sounds and tones the Comanche can produce les pauls are way over rated way over priced good for them!!
Ive never had a Gibson but have had the same strat since 1962. I bought a Chinese copy of a strat a couple of years ago for someone I was teaching. It was half the cost of a Fender strat….the quality was fantastic, it had a great action, it stays in tune and sounded as good as my pre CBS Strat. Are guitar sales really falling or is it just Gibson and Fender? Anyone know how Chinese sales are doing?
Obama seizing their hardwoods on the assumption that it was illegally imported and hitting them with a big fine put a huge dent in their ability to make guitars. All those super cheap Chinese imports on Ebay and elsewhere are a huge problem. Lots of kids are monkeying around with midi and autotune instead of learning to play an instrument and sing. That is another kick in the pants.
Yes….yes…yes…nail on the head!
If that were the case other guitar makers would be going under too. Gibson is mismanaged simple as that.
Nonsense. The truth of the matter is that people are still learning how to play guitars. No average adult in their right mind would shell out 5,000 dollars for a guitar. What makes you think that a kid can afford a Gibson? Gibson did it to themselves. They had a good run.
Great points all the way around. Nailed it!
Gibson never had the competition in the past that they have nowadays. Companies like Epiphone and Vintage, to name but two are coming up with truly quality instruments, even some of the chinese models are selling very well, so this must surely be at least a factor in Gibson’s falling sales since these fine instruments are a helluva lot less cheaper that any Gibson guitar. Anyone who’s picked up a Gibson in a guitar store in the past 25 years knows the quality of these over-priced guitars simply is not there. I bought my first guitar in ’66, it was a piece of crap, but it didn’t exactly brek the bank either, a Watkins Rapier 33 costing like 35 pounds UK. App., 2 weeks wages back then. whereas today, 2 weeks wages would buy you a very fine instrument indeed from say Epiphone or Squier etc., if not the chineses market. The idea that it “must say Gibson” on the headstock isn’t as important as it used to be imo, many of these lower-priced guitars actually outsine the Gibson offerings tbh. Gibson’s market and selling power is not what it once was, they have brought this on themselves and most of us saw it coming from way back when. It will at least give an inroad for the cheaper brands to get in there and the buyer will benefit from this for sure. Gibson will never lower their prices, they missed that chance 25 years ago. They don’t seem to appreciate that low-quality and higher prices don’t belong in the same sentnce, but then they never have done.
Epiphone is a subsidiary of Gibson, they are not competition.
You might be surprised what a second-hand ‘piece of crap’ Watkins Rapier 33 would fetch these days. They have stood the passage of time well, as simply designed, value for money , serviceable workhorses, as have Watkins amps (Westminster, Dominator) and their tape-echo units (CopyCat). If you still have it – keep it! ?
I have 3 guitars and a bass and the one problem I have with Gibson too expensive the Fender are much better priced for me too afford there’s guitsrs under £200 are very good good value some even under £150
I don’t know what they could possibly do. They certainly couldn’t get any more for the already overpriced guitars!
Wish I knew this about Gibson just a few months earlier, I bought my very first Gibson just last month, A brand new 2017 Gibson SG, A guitar that I’ve wanted my whole life and for the $1000.00 price tag I was disgusted with the quality of the guitar. It weighs probably half a pound to the point that it feels like a toy guitar I don’t know what kind of crappy wood they’re using, The frets were so jagged overhanging the neck that it felt like I could cut my hand sliding up and down the neck. The “rosewood” was as dried out as the Sahara and the action was set so high it felt like I was playing a violin. My 1990’s Mexican Strat absolutely destroys this new Gibson in quality and sound and I’ve always liked Gibson’s sounds more than fender but they’re not turning out quality instruments anymore.
Many people don’t realize that Kalamazoo Gibson guitars are still being hand made by former employee’s of Gibson and their descendants in Kalamazoo Michigan where Gibson originated under the brand name Heritage Guitars. They’re even being made at the old original Gibson factory. They cost about half of what a new Gibson costs. Check it out … https://heritageguitars.com/
I find it highly amusing that several commenters apparently do not know that Gibson owns Epiphone andFender owns Squire.
Used guitars selling better than new ones is the problem… todays players also seem to want the “vintage” stuff rather than a new one.
I don’t know that i’d blame EDM/Electronic music. As a DJ, I own turntables, and I still own a 1980s Black Les Paul that I paid around $1000 for back in the 90s. The problem is with some new Gibsons running $4500+ its too expensive for an amateur.
I’m very fortunate to have some cool older Gibsons…. Lately, I’ve been disappointed with the latest products…. cheaply made, with dull finishes, thinner bodies, boring ‘new’ shapes….and ridiculous prices…. I bought a Heritage H-150..,, THIS guitar is superb…. If one is interested in buying ‘Gibson-esque’ guitars without ending up in the cheese line, go for the 1970’s made Ibanez PF-200/300/…etc, or other Japanese made copies….Greco, Aria,and so on…. You won’t be sorry…. They keep up with Gibson…before they got greedy… One can purchase one for under a thousand dollars…..(they’re much better than Epiphones, too….).
Gibson (and Fender, btw) might be among the few brands that could actually survive on Patreon.
I mean, we love them.
If they weren’t there, somebody would need to kickstart them. Why not save us all some trouble and support them already?
““I don’t know. Maybe the guitar is over,” Eric Clapton said”
🙁 Eric Clapton 🙁 is evil.
Music is dead, and people are realizing a Gibson guitar isnt worth $5,000. Thats a bad combination.
Its way more cost effective to pay one guy to make a backing track on his computer than to pay for actual musicians.
Gibson CEO/Chairman has offered a response.
Gibson is not going anywhere.
Once they really tank, someone else will buy that legendary name, stick to quality and good price point and they’ll be back.
Guitar music will also one day return to prominence once a couple of generations get tired of hearing everything being source recorded inside of a digital-box as junk-food for juveniles.
Here’s a great business model, make inferior products that are unaffordable. Then price the products that built your name and reputation (how they should be built, custom shop) out of reach for all but the wealthiest musicians.
Maybe drop the gimmicky robot type stuff. Drop the colors like surf green that always get discounted the following year. Stick to the classic burst and offer different colors for the body like the darker tobacco backs or the red of the 50’s. Imagine a honey burst with the red body, nice. Make sure the nut is cut properly so the D and G strings don’t bind causing intonation problems. I just don’t get it. It’s not that difficult.
If you want to try innovative new designs maybe slap the Kramer logo on the instrument. To me Gibson has always been about traditional craftsmanship. Not gimmicks.
That’s my opinion anyway. Rant complete.
My Gibson guitars are gonna be worth a lot of money if they go under.
if only they made guitars in 2018 that look good
There will always be problems and issues in business. As someone in executive management especially a CEO, your focus should be to formulate strategies to circumnavigate any issues that arise. If a strategy is not working it is then that person’s job to accept it, admit it, and formulate new strategies.
New, innovative, and exiting products are all good even necessary. However, not all ideas or strategies are home runs. Sometimes it is necessary to accept things are better left as is, and build or ” innovate ” from there. If it works don’t fix it. Any good CEO will listen to his/her council. Any good CEO will listen to his /her customers and clientele. Any good business person would never blame his/her customers when methods fail to succeed. He or she would simply formulate new methods, ideas, and strategies.
I’ve been a Gibson guitarist most of my life until the last several years. The quality just isn’t there.
These issues are not ” Purist ” issues. These issues are not the fault of every store in the universe in conspiracy. These issues are not the fault of the younger generation. These problems and financial issues did not occur overnight. This was a result of several years of stubbornness, refusal to listen, blame shifting, and lack of honesty with oneself.
So, look in the mirror Mr. CEO. Stop being stubborn. Most especially, stop blaming customers and clients for your failures. May be then there might be some chance of recovering from this financial crises.
I own an Epiphone because I can’t justify to myself paying museum level prices. She’s too damn expensive.
It wasn’t caused by EDM. They BOUGHT Deckadance, which has the best sound quality of all the DJ software, and Stanton Magnetics, which made the original DJing phono cartridges. Gibson has done nothing with Deckadance, though, and they completely discontinued the Stanton cartridge line! Their managers just have no idea what they’re doing.
There is something to be said when looking for used gear and someone say get “Pre Gibson”. They tend to drive stuff to the ground.
Gibson and Fender have both over saturated the market.
How many versions of a Les Paul or strat do you need,
So….let’see….Gibson owns Epiphone…Gibson uses Richlite fingerboards on their Les Paul Customs….Epiphone still uses Ebony….huh….what gives?
Gibson needs to go back to its roots and not keep trying to expand the product base….with quality woods and quality control.
people and products have changed . 9 doodes own most of the guitars and people dont value individuality anymore . i wrote 10 + albums in 3 years the right way and cant get a band going . back to the farm .
Gibson sales went down from 1.5 to 1 million during Obama. Do you see a pattern here. One third of the businesses I frequent in my University City went out of business during Obama. He ruined things for many people while he left office with millions. I don’t think you get that much off of book sales. A habitual liar and a thief both. While Gibson may be gone forever.
There are so many other interesting developments out there that I could never figure out why many people use Fender and Gibson guitars. Some of it is probably that they want to play the same instruments as their heroes. I like innovative designs such the Parker Fly, the Kiesel Holdsworth models and custom-built touch guitars. There are also many small shop innovative luthiers out there making really interesting designs both practical and beautiful that will help you create your own sound and really explore the studio space without having to play a cowbell.