Gibson selling fractional shares of prototypes of Iommi and Slash guitars?

Tucson Thump

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www.wsj.com /articles/buying-a-share-of-a-collectible-guitar-in-this-market-you-may-get-shredded-11632475801

Buying a Share of a Collectible Guitar? In This Market, You May Get Shredded.
Jon Sindreu7-9 minutes

Space-tourism companies, flying-taxi startups and pizza-related cryptocurrencies are among the unlikely ventures to have recently reached public markets. Now it is the turn of electric guitars.

This month, American guitar maker Gibson said it would use Rally, a site specializing in collectibles, to issue shares in prototype instruments designed in collaboration with famous players. Ownership of an EDS-1275 doubleneck model approved by Slash, of the band Guns N’ Roses, was chopped into 13,000 parts and sold for $5 apiece to 562 investors in just two hours.

Two more will follow: An SG Special modeled after the “Monkey” guitar played by Black Sabbath’s Tony Iommi, valued, like the Slash signature-model prototype, at $65,000; and a Les Paul Custom signed by Adam Jones of the hard-rock band Tool, worth almost $100,000.

Combining hobbies with financial engineering speaks directly to the 2021 zeitgeist of amateur traders putting their money in unorthodox places as a statement of personal identity. Pandemic stimulus checks have been funneled into Dogecoin and “meme stocks” like GameStop. Since Gibson and its main rival, Fender, aren’t publicly traded, listing the instruments is a creative way to tap investors who want to keep on rockin’ in the free market.


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Stairway to HeavenGibson and Fender guitars made in the 1970s,resale price on online marketplace ReverbSource: ReverbNotes: Average of prices of Fender Stratocasters andTelecasters and Gibson Les Pauls, Les Paul Customsand SGs. Smoothed with a six-month rolling average.

“I think this fits perfectly as an iconic, authentic item in a new economic model,” said Gibson Chief Executive James “JC” Curleigh, comparing it to crypto. “The next generation is looking at alternate ways of value creation.”

For guitar makers, this is less about money than about reconnecting with their customers. A few years ago, these companies appeared to be on a highway to hell, as the era of hairy rock gods gave way to guitar-light hip-hop music. Gibson was singled out as catering only to lawyers and doctors by making $3,000 guitars with poor quality control, with a target demographic of 50-year-old shredders.

In 2018, following a bankruptcy and a takeover by private-equity firm KKR, the job of mending Gibson’s relationships with musicians fell upon the leather-jacketed Mr. Curleigh, a guitar enthusiast who left a senior position at Levi Strauss.

This time, the tide is in his favor: Gibson’s factories have accumulated a record order backlog. As with computer chips, production stoppages in 2020 played a part, but this is also about demand: The pandemic has created thousands of new bedroom players.

Guitar inflation has hit extreme levels in the secondary market. Music marketplace Reverb, which was bought by Etsy two years ago, said that the first quarter of 2021 was its best ever, with gross merchandise sales up 50% from a year earlier.

Echoing GameStop’s Reddit fan base, a growing community of online forum contributors and YouTube reviewers has become devoted to talking up the next cool guitar, even giving rise to the term “gear acquisition syndrome,” or GAS. A love of playing, investment goals and musical mysticism often get intertwined on these platforms, especially when it comes to vintage guitars.

Guitarists Eric Clapton and Mike Bloomfield are credited with starting the collectibles craze in the late 1960s, conferring a mythical status to guitars such as the 1959 “burst” Gibson Les Paul, of which only about 600 remain at prices north of $200,000. In the 1990s, these guitars were swept up in the mania for exotic assets, alongside wine and contemporary art, that lasted until the 2008 global financial crisis.

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Replicas of Black Sabbath guitarist Tony Iommi’s ‘Monkey,’ a 1964 Gibson SG Special.
Photo: Gibson Brands

Investors may get fooled again: Hot pandemic money has taken vintage-instrument prices close to the previous peak, dealers say. And, in a way reminiscent of pre-2008 subprime mortgages becoming triple-A-rated, the “vintage” label has expanded to include the notoriously shoddy guitars made in the 1970s.

A $60,000 valuation attached to a modern guitar—even a prototype—also seems like the product of a frothy market, especially since owners don’t get to take it home. “There is no way an investor is going to make money on this,” said Baxter Clement, owner of Casino Guitars, a famed music store in Southern Pines, N.C. “With that money I can buy a real vintage guitar.”

Financial returns matter to an extent, even with investments of passion. Those who invest on Rally typically start with a focus on a specific collectible, but often end up with other rare objects as niche assets in their portfolios, according to the site’s CEO, George Lermer. Rally allows them to allocate money to vintage cars, fossils and even copies of the Declaration of Independence without having to buy the whole thing. Sometimes, the objects are placed in museums.

As for the guitars, fractional owners will be able to take pictures with them in the recently opened Gibson Garage in Nashville, where they will sit next to the more valuable vintage pieces that the company has spent years reacquiring.

Here is where Mr. Curleigh may be on to something: Through Rally, Gibson could eventually offer connoisseurs who can’t afford truly historic instruments the chance to fund their purchase from private collectors—blues player Joe Bonamassa alone owns over 400 guitars—and then put them on public display. For the Gibson brand, it could become a clever way to capitalize on vintage-guitar mysticism.

For those going into it for financial reasons alone, though, it isn’t just their guitars that may end up gently weeping.
 
Perhaps Gibson should focus on some semblance of consistent quality instead of this; a fractional share of a prototype copy of the original artist's guitar. I wonder if the paper the certificate is printed on sounds better as it ages?

I thought it was rather telling that the graph shows the appreciation of 1970s guitars rather than the 50s and 60s that made Gibson's reputation.

Or am I being too harsh?
 
Perhaps Gibson should focus on some semblance of consistent quality instead of this; a fractional share of a prototype copy of the original artist's guitar. I wonder if the paper the certificate is printed on sounds better as it ages?

I thought it was rather telling that the graph shows the appreciation of 1970s guitars rather than the 50s and 60s that made Gibson's reputation.

Or am I being too harsh?
I have a rippin’ 1972 SG… let the appreciation begin!
 
I thought it was rather telling that the graph shows the appreciation of 1970s guitars rather than the 50s and 60s that made Gibson's reputation.
/QUOTE]
'50s and '60s have been sky high for a while but until recently '70s Gibsons were a bargain. I had several fantastic '70s SGs that I got cheap cheap cheap. The prices have doubled and then some on those guitars in just the last year or two. I think it comes down to people who really want a '50s or '60s one but looked at the cost and said "guitars from the '70s are old too". It's been a hot market. Gibson showing that is sort of cherry picking the data though for sure.

Personally there is no chance I'd "invest" in owning a piece of a warehoused guitar. This is the sort of thing that makes me think the vintage and collectable guitar price bubble is about to pop
 
“I think this fits perfectly as an iconic, authentic item in a new economic model,” said Gibson Chief Executive James “JC” Curleigh, comparing it to crypto. “The next generation is looking at alternate ways of value creation.”

Are we sure Henry J is really gone? This sounds like the kind of nonsense he spewed once upon a time.

Gibson has found a whole new way to jump the shark.

If you're building "investment" guitars to sell fractions of to people for the privilege of having a picture taken with it? Those people are not customers, they're marks!

This is P. T. Barnum stuff.
 
Perhaps Gibson should focus on some semblance of consistent quality instead of this; a fractional share of a prototype copy of the original artist's guitar. I wonder if the paper the certificate is printed on sounds better as it ages?

I thought it was rather telling that the graph shows the appreciation of 1970s guitars rather than the 50s and 60s that made Gibson's reputation.

Or am I being too harsh?
No, you are not being too harsh. Since Gibson is now owned by Kohlberg Kravis Roberts, this stupid move comes as no surprise. Increase the quality of their instruments? Invest in R&D? Better customer support? Nah, let's come up with a gimmicky new revenue stream.

Don’t buy a (fractional) guitar for investment. Make an investment in order to buy a guitar. :)
^ Best advice right here.
 
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