September 14, 1974
'Q' Sound Far Ahead
In Japan and U.S.
LOS ANGELES
Quadrasonic sound on an international scope seems to have two strong supporters:
Japan and the United States.
The rest of the world is far behind in terms of enthusiasm, product availability and any market concentration or penetration.
Canada, seems to be an SQ oriented country, with the CD-4 discrete interests aggressively promoting their system, but a lack of disks in both systems is felt by retailers.
Japan remains the world's leading quad nation, with its involvement with disks dating back to 1971.
In the U.S. equipment manufacturers expect hardware sales to exceed $100 million.
"Q' International
Market Reports
To assess the market penetration of 4-channel sound, Billboard asked its international correspondents to survey their markets.
What follows are their reports.
Japan
More releases of quad records and more items of 4-channel sound equipment are being made in Japan than anywhere else in the world. All new albums from CBS/Sony are quad and, CD-4 proponents predict, all disks will be discrete 4-channel in this melting pot of the world's music in 1984, if not before.
Anyway, statistics show that up to 14 record manufacturers in Japan have made over 1,000 quad releases in all during the three years since Nihon Victor's June 1971 release of the world's first CD-4 compatible (with stereo) discrete Quadradisc.
This year the Japanese electric appliance manufacturers, several of them parent companies of the record makers, are out to sell at least 900.000 home stereo ensembles compatible with 4-channel disks. And sales may total 1.4 million sets if the hifi stereo component manufacturers find it's still worthwhile competing against Japan's electrical giants in the general consumer market instead of catering to the millions of Japanese "audio maniacs."
As far as the Japanese public is concerned the "battle of Q” ended in April 1972 when the Electronic Industries Assn. of Japan (EIA-J) announced its adoption of the CD-4 "compatible" discrete 4-channel disk system, the so-called RM (regular matrix) and the SQ (stereo quadraphonic) system.
The Japan Phonograph Record Assn. (JPRA) adopted CD-4 in December 1971, RM in March 1972 and SQ a month later. The three systems also come under the Japan Industrial Standard (JIS) and its hallmark of quality is stamped on all quad disks manufactured in this country.
Thus, to all outward appearances, the three systems coexist in peace, with CD-4, SQ and RM disks mixed together more often than not in the 4-channel record bins at thousands of music stores throughout the islands of Japan.
It appears that the most active quad record manufacturer in the second quarter of this year is Victor Musical Industries, JVC's software subsidiary, with 39 CD-4 album releases under the RCA, Motown and Milestone besides its Globe world group label including Durium. At the same time, CBS/Sony is believed to have released up to 15 SQ records.
Under Hitachi's wing, Nippon Columbia will introduce UD-4 this fall, says Shigeru Watanabe, head of the record division's project team. Still under wraps in Japan, the discrete/matrix 4-channel system has been developed jointly by Dr. Duane H. Cooper of Illinois University and Nippon Columbia engineers. As shown to Billboard, the system requires a demodulator (not compatible with CD-4) and a 4-channel cartridge with Shibata stylus for optimum discrete reproduction.
Nippon Columbia's UD-4 records, set for demonstration at the 23d AlI Japan Audio Fair in Tokyo, Nov. 6-10, will retail for the same price as CD-4 quadradisks.
Following upward adjustments made from the end of last year, the retail price of a CD-4 Quad-radisc with artists and repertoire of international origin is about $8.93. Some instrumental CD-4 albums with music of Japanese origin retail for about $7.86.
The retail price of an SQ record is $8.21, an RM album with international a&r is $7.86 and Japanese $7.14.
Retail prices of home stereo sets also were raised by all Japanese manufacturers at the time of the oil crisis last year-end. However, JVC and Pioneer, among others, are trying to hold the price of a standard compatible stereo ensemble to just over $570. Technically speaking, compatible stereo sets by JVC and its parent company, Matsushita Panasonic do not include a Sony full logic decoder for SQ records.
Likewise, home stereo ensembles by Sony do not have a built in CD-4 demodulator, but connections are provided. Four-channel models with built-in CD-4/SQ/RM compatibility are being offered by Hitachi, Nippon Columbia, On-kyo (a Toshiba subsidiary), Pioneer, Sanyo, Sharp, Toshiba and Trio.
Discrete 4-channel cassettes are expected to hit the market late this year or early next probably from Nihon Victor (VMI).
Still under wraps are 4-channel cassette tape decks by Aiwa, Hitachi, Matsushita and Sony, but JVC will more than likely market the first model this fall in the U.S., rather than Japan.
Indeed, Japan is the arsenal of audio, but the U.S. still calls the shots.
United States
To most consumers and retailers earnestly following the long and heated debates over 4-channel music--matrix vs. discrete--one word best sums up their feelings: Phooey! The reason:
Consumers are buying quad and forgetting about systems claims.
One of the most depressing difficulties to consumers and retailers alike has been the sharply conflicting testimony of record company experts over the merits and conclusions of each system.
As usual, there are pressures in both direc tions, and the conflicts are usually complex and forceful. On one side, there are pleas from CBS on the merits of its matrix system, while on the other side, RCA and WEA are shouting the values of their discrete concept.
There are, to be sure, wide differences between the two camps. And the road to resolving them may be long and rocky. But the bitter struggle for influence creates potentially explosive issues at retail double inventory--and in the marketplace-consmer confusion.
Consumers, however, are watching the dispute with mild interest and one thought in mind,
"While they argue, I'II buy. My ear can't tell the difference, anyway."
So while record companies are tossing raspberries at each other, consumers are buying 4-channel music, both on disk and on 8-track and open reel tapes.
In the tape format alone, consumers spent $12 million last year buying quad music, a substantial increase from 1972 when they spent $6 million
Even if consumers decide they really like the quad concept, though, they still have plenty of problems awaiting them. There aren't many disks or tapes on the market yet to rival stereo choices, and music recorded for one 4-channel concept (discrete) can't be played on the equipment of the other (matrix).
Moreover, equipment manufacturers are developing two different electronic systems for producing the 4-channel sound,
Most equipment producers don't care which system gains the upper hand. Their concern is merely to "sell quadrasonic, in any format." To manufacturers, the battle between advocates of discrete and matrix systems merely gets in the way of the only objective: convince consumers that quad music is better than stereo.
With all the claims and counterclaims about whether matrix or discrete is better, customers are just going to throw up their hands in disgust and not buy anything, reason most manufacturers.
While most purists contend the discrete approach gives the best sound reproduction, the
"other” system--matrix--is less costly to manufacture and it won't obsolete all the inventories of records and prerecorded tapes.
In the automotive field, quad soon will be available in factory installed 1976 Ford models as an 8-track unit, probably integrated with 4-channel radio receivers equipped with decoders to handle discrete as well as matrix broadcasts.
In the automotive aftermarket, about 2 percent of the systems installed last year were 4-channel, a figure that's expected to jump dramatically this year.
Equipment manufacturers expect 4-channel components to account for over $100 million in sales this year in some quad format, either discrete, Sansui's QS or the CBS SQ. The equipment market breaks down this way: About 90 percent of the 4-channel receivers sold and approximately 75 percent of the decoders sold incorporate some sort of SQ decoder.
While it is difficult to obtain discrete software figures, CBS has stated it reported sales of $6 million in SQ records and tapes last year, with production geared for a 35 percent increase in 1974. CBS also reports it has sold about two million SQ units to date.
As business continues to slowly recover from a slow start, much of the gains are through the momentum of 4-channel.
While most retailers believe the business recovery will be gradual as the remainder of 1974 unfolds, they also maintain that 4-channel will provide a necessary push for sales.
Software producers and equipment manufacturers are spending promotional dollars to give the fall season a 4-channel look. But it's at the dealer level--the grassroots plateau--where the concept will spurt or sputter.
Retailers agree, however, that the consumer is becoming more familiar with quadrasonic, and with methods of demonstrating 4-channel fairly well set, the final four to six months of 1974 should prove a healthy one for sales.
Canada
Heavy promotion on CD-4 systems, a dismal lack of discrete disks to play on the equipment contrasted by the availability of SQ disks--tells the story of 4-channel sound in Canada today.
All of the 4-channel disks available here are imported from either the U.S. or Japan. None are manufactured here. JVC, the developer of the discrete system, concerned with the lack of CD-4 disks in Canada, has begun importing them from Japan and selling them through their dealers.
Of the two companies committed to the Quadradisc, WEA and RCA, only RCA has made any significant number of discrete disks available in Canada. There are 38 4-channel records from RCA in this country including product from Hugo Montenegro, Henry Mancini, Danny Davis and the Nashville Brass, Elvis Presley, Eugene Ormandy and the Philadelphia Orchestra and the Guess Who.
There are no WEA Ouadradiscs available in Canada at the moment but according to Mike Reed, WEA Canada's merchandising manager, the company is looking into the costing factors involved in bringing CD-4 disks to Canada.
John Chan, the owner of the Four-Channel Centre in Toronto that sells only quad systems, admits that "CD-4 is in pretty bad shape" because of the limited number of record selections.
He is currently importing JVC disks into Canada from Japan for sale in his store.
Sam Sniderman, head of the Sam the Record Man chain in Canada, indicates that the sale of quad records in general in his stores is infinitesimal. "If we had to employ one man to stand in each store and sell quad disks, we'd lose money," says Sniderman.
"It's all very embarrassing for the equipment manufacturers. I'm sure," continues Sniderman. "It's like buying an expensive car and finding out that there is no gas to put into it." It was supposed, and in some cases even promised, that the price of quad disks would be very close to the price of stereo LPs. As it stands now, most of the 4-channel recordings list at $8.29, one dollar more than stereo albums which have a list price of $7.29.
Lorne Lichtman, the manager of the Scarborough branch of the Music World chain of record stores, reveals another pitfall in dealing with 4-channel disks as far as record retailers are concerned. Says Lichtman: "No returns are allowed on quad imported albums and because of this the retailers in this country are starting to take a second look at the advisability of dealing with 4-channel product until the record companies in this country start to show that they really believe in quad records by manufacturing them here or by importing them in greater quantities so that the consumer can feel a little more secure about getting product to play on their 4-channel systems."
Ovation and Project 3, both imported and distributed in Canada by London Records, release everything in quad and most of it is made available by London in this country. RCA, with its 38 titles, leads and then comes Columbia; Vanguard, distributed by Capitol; A&M: London; and Pye, distributed by Phonodisc who have all released a limited number of 4-channel records. A poor showing considering that quad LPs have been discussed in the Canadian record industry for over four years.
A survey of opinion from the larger retail outlets for quad equipment in Canada reveals that the trend in Canada at the moment is towards the SQ system primarily because of the availability of software that can be played on that system.
John Arnold, manager of the Toronto branch of House of Stein, a division of Dyntron Inter. national Electronics Ltd., which also has outlets in Vancouver, Calgary, Edmonton and Winnipeg, indicates that Sansui is its biggest selling line, especially the model QRX 300 receiver which lists at $670. Fisher is second in sales and Akai third.
Jerry Pinhorn, the purchasing agent for House of Stein based in Vancouver, states that the picture of sales on the West Coast is similar to Toronto. Sansui is the biggest seller with Akai second.
George Burt, the owner of Fairview Electronics, one of Toronto's largest hi fi outlets, states that only 1 percent of his stock is quad equipment. He has just constructed a quad listening room in the store which cost approximately $15.000. Burt reports respectable sales on Pioneer's model OX 949 which lists at $949 and the Marantz 4415 which lists at $599.
Tom Yager, the manager of Bay Bloor Radio, another of the larger Canadian hi fi equipment retail outlets, indicates that Pioneer's model 794 which lists at over $700 is a consistent seller at their Toronto based store.
England
The 4-channel ball has yet to start really rolling in Europe and with the economic problems now facing most European Economic Council
(EEC) countries, it will be surprising if there is any dramatic expansion of the quad market in the near future.
Both the hardware and software industries are still firmly convinced of the potential of 4-channel. Even the BBC has finally given its mark of approval with a much-acclaimed experimental quadraphonic broadcast which was networked last month.
However, all concerned now realize that on this side of the Atlantic, it is going to be a long time before the 4-channel market grows to any significant size. What little growth there is in the U.K. is expected to be slowed down still further by the looming economic crisis and political uncertainty. Audio equipment sales are already beginning to suffer and expensive 4-channel systems have been the first casualties.
On the software side, record and tape companies' 4-channel sales are as sluggish as ever and with the concept of quad still to break out into the mass as opposed to enthusiasts market, the economic recession expected here will again only stunt growth.
There were signs of movement on the quad tape front earlier this year--particularly in the automotive sector-but with cassette and cartridge sales generally not growing now at the rate they were, even this area of the 4-channel market is still limping along painfully slowly.
Confusion in the public's mind over which system to buy is still as great as ever and the one thing above everything else the U.K. market needs is one system to emerge as the clear favorite.
Such a development depends largely on the decision of Decca and the Polygram group which have both matrix and discrete systems, to back the same system and thus bring standardization to the market.
The only indication so far of which format Philips/Polygram could favor came earlier this year when it was disclosed that the Philips hardware division in Eindhoven had signed a licensing agreement with CBS to manufacture SQ equipment.
However, Steve Gottlieb, chairman of Polygram U.K., immediately denied that Polydor or Phonogram would start releasing SQ albums.
Under the licensing agreement with CBS, Philips plans to introduce its first SQ model in September or October of this year. The unit will be a combined tuner/record deck with built.in 4-channel pre-amplifier and decoder and further SQ units will be introduced next year.
Among British hardware manufacturers already producing SQ equipment are Thorn, Garrard, Laskys, Connaught Equipment and Rogers Electronics.
Decca also confirms it has yet to make a decision. The company's technical director, Arthur Haddy, says: "We are not ready to move into the 4-channel record market yet. It is developing very slowly-sales of the few 4-channel cartridges we have released have been disappointing."
RCA and WEA are committed to the CD-4 dis.crete system while EMI is backing CBS with SQ.
This means that if Decca, Phonogram and Polydor were to put their weight jointly behind one of these two systems, it would firmly swing the balance in favor of the chosen system.
Pye is currently releasing some quad product using the Sansui QS matrix format but it seems likely that if either SQ or CD-4 was to emerge as a firm favorite, Pye would change accordingly.
It is now two years since the first 4-channel equipment and product was made available but everyone admits progress has been very slow.
With 4-channel record and tapes priced by most companies at rather more than their stereo equivalents--around $6 for records and $7.50 for tapes-and with consumers having to pay about $1,200 for an average 4-channel system, the outlook for quad, in the short-term at any rate, is not promising.
France
"It took stereo 15 years to establish itself in France. Maybe in 20 years time 4-channel will also be established."
This is the rather grey view of Gerhard Lerner who directs the Barclay Hoche Studios. He is quite sure it is going to be a hard and particularly long pull.
His view is a little special. He is 'sold' on CD-4 which is discrete and this means spending a lot of money. A cutter, he says, costs about $100,000.
On the other hand the QS and SQ systems, both Matrix, do not make this demand but for Lerner this is not real quad.
Barclay has released one SQ record and other houses have released a few. But there has been no promotion and no education so it is quite impossible to gauge public reaction at this stage.
JVC, Sansui and CBS are waiting in the wings but no one is going to make headway until the industry opts firmly for one system.
At the most, 10 studios might be equipped.
Europa, Sonore, Philips and Barclay are already but the real investment is being held up while minds are being made up, and it is going to be a long job.
West Germany
For two years some German record firms have been selling 4-channel records. WEA and RCA have the CD-4 system, CBS and EMI-Electrola the SQ-system. WEA and RCA have recently started a common marketing campaign for quad records with a catalog of 80 LPs, all imports from the USA.
RCA founded a hardware company for quad equipment 'RCA Electronics' in Frankfurt on June 24. CBS has 20 albums on the SQ-system, EMI-Electrola 50 LPs including 30 classic albums.
In Germany 10 hardware companies are offering quad equipment, among them Grundig.
Nordmende, Braun, Telefunken, Dual and Elac.
A good 4-channel system costs about 4,500 marks.
The record retailers are very reserved, because hardware is very rare. They feel 4-channel has little chance.
RCA-marketing-manager Clemens Krauss notes: "We hope that the record retailer will support us on quad records. Many retailers have special quad corners, so many customers looking for records see only the stereo album, but not the new system. Now the four German quad firms want the retailers to display 4-channel LPs with normal LPs.
Werner Klose of DGG, who knows the marketing situation is very skeptical: "For the next few years quad will be the poor relations of all German music activities.”
Ireland
Quad sound is still very much in its early stages in Ireland.
Notes Michael Geoghegan, chairman of the recorded music industries of Ireland: "My concern would be to see the overall record player's popularity increasing, so that there would be a fairly good record player in every house, rather than to see a big increase in expensive equipment for the relatively rich.
"I would think quad is still in the status symbol category. People already have either 4 or 8-track, also a stereo record player, so who can afford a third system?"
So far, there has been no indication of an in. dustry launch for quad.
John Woods of Polydor notes there are only about half a dozen retail outlets in the country for 4-channel hardware. "Nobody specializes in it in Dublin, to my knowledge."
There are very few records available from only two or three of the majors, including CBS and Pye.
Noel Shannon, Southern representative of Irish Record Factors, says that, "Basically, quad is at a stage where stereo was in 1960."
Sweden
Four-channel was first introduced in Sweden in the spring of 1970 with the introduction of the Sansui QS-system equipment. In the spring of 1971 JVC's CD-4 equipment was presented here by Rydin Elektroaukustik AB, and in the fall of
1972 Sony introduced its SQ system.
The big breakthrough has not yet happened here and 4-channel didn't get any real promotion here until last fall, when a big sound expo was held in Stockholm where for the first time 4-channel was introduced to a wide audience.
Right now there are about 25 different kinds of quad equipment available on the market-mainly of Japanese origin. European-made equipment is expected to be on the market later this year.
There are about 3,000 quad receivers sold here, with about half of them being CD-4. The receivers with the three major systems are the most popular. The average retail price for a basic 4-channel system is $750-$900 which is somewhat more than an equivalent stereo equipment.
Since January, audio industry sales have gone steadily up but 4-channel had a poor winter, mainly due to decreases of releases caused by the PVC shortage.
The situation is improving now and more equipment and more records are becoming available. CBS-CUPOI has so far released about
100 SQ albums, Metronome which represents WEA here has so far released almost everything available from the U.S. Electra RCA has released about 50 CD-4 albums, and EMI about 30 SQ al-bums. The average price on quad albums is about 50 cents more than a full price album. Average sale is about 50-100 copies per title.
The overall picture is that the Swedish market, both on the hardware and software sides is too dependent on the American and Japanese markets.
Denmark
The 4-channel scene is very small here. The record companies Metronome and RCA have combined their catalogs to promote their few records. Normally Metronome and RCA do not work together on promotion. All quad equipment is available in Denmark except the QS-system from Sansui because records in that system are not available. The Fona retail chain with 44 shops all over Denmark has CD-4 and SQ in stock.
About 50 records have been released by BASF, RCA, EMI and CBS. Only Phonogram Polydor does not release quad records. At a general meeting for dealers in Denmark, managing director Erick Toft of Ortofon-Pioneer said the market for quad sound will reach Denmark in 1978.
A market analysis indicates that the people who are going to spend money on quad are students between 16 and 25.
Austria
Four-channel music has been available in Austria for two and a half years, mainly in discrete and CBS-Sony systems. CBS was the first company in the field, followed by Ariola, Pye and Electrola with classical recordings.
The cost of quad albums varies between $9 and $10.30, with quad cartridges retailing at $10.80.
The first hardware companies marketing quad equipment were Japanese, including Sansui, Pioneer, Nivico and Sony, but since that time, three years ago, most German manufacturers have put equipment on the market. Most companies in Austria have chosen the CBS-Sony system.
The market is still very small owing to the high cost of hardware, but the growing importance of quad is reflected in RCA and WEA's plan to start releasing quad albums on the Austrian market this autumn.
Finland
Four channel systems, both matrix and discrete have been available in Finland's retail trade for two years. Helsinki's International Trade Fair of Consumer Goods, held in the fall of 1972, was the first real attempt to introduce quad sound in this country. Importers/wholesalers of 4-channel hardware constructed their own on the spot studios and listening booths to catch an ear or two, but the immediate effect of this new sound was more pale than bright.
Business today is still in its infancy. Between 2,000-5,000 4-channel outfits have been sold.
It's safe to say that 4-channel will remain in the shadow for a good many years. In fact, it may experience the same black fate as stereo 8-track now virtually vanishing from the market.
The time perhaps isn't right for the breakthrough of 4-channel. Finland is usually many months behind its western neighbor Sweden in accepting new trends.
Czechoslovakia
No 4-channel equipment is on public market here and no 4 channel disks are pressed. Supraphon is currently recording in 4-channel, but the tapes are only leased to other companies abroad and in this country they are released in stereo.
Billboard correspondents participating in this international quad report include: Hideo Eguchi, Japan; Marty Melhuish, Canada; Mike Hennessey, England; Henry Kahn, France; Wolf. gang Spahn, West Germany; Ken Stewart, Ireland; Leif Schulman, Sweden;
Knud Orsted, Denmark; Manfred Schreiber, Austria; Kari Helopaltio, Finland and Lubomir Doruska, Czechoslovakia.