September 16th, 2014 | By thescumfrog
Today the news broke that the Pioneer DJ division was sold to the private equity firm KKR for $551 million.
Having had the privilege and honor of working with Pioneer on several of their DJ products (mainly the DJM800) I gained a fair amount of insider perspective on how they became the market leader in DJ gear. It was the fact that they spent a great deal of effort and patience in talking to many professional DJs about their wants and needs while creating new products, so that their product line would truly be ‘for DJs by DJs’, while holding a professional standard.
Over the past years a shift in DJ culture, combined with a revision of Pioneer’s business strategy, has caused the Pioneer DJ line to fall from being ‘the’ standard to simply being one of many standards. This is not entirely Pioneer’s fault -some of it has to do with the sad reality that high quality sound is no longer a must for many DJs, opening the market to cheaper gadget manufacturers- but they did make a conscious decision a few years ago to significantly curb their hands-on relationship with DJs.
For many years Karl Detken, was their most active and most valuable liaison between the DJs and the Japanese design team. He had been a cornerstone in establishing a direct line of communication between top DJs and Japanese engineers, as well as making sure that the vast majority of A-list DJs were enthusiastic about specifically requesting Pioneer products in their riders. With this business structure Pioneer was unbeatable, and the numbers proved it. In the late 2000s, most of Pioneer’s products were losing money, but the “Pro DJ gear” was one of the very few branches that made a profit.
However, a shift in Pioneer’s policy led to the dismantling of this hands-on approach with DJs. A few years ago Pioneer told Detken his services were no longer needed (he took his skills to V-Moda and made their headphones into a very well established brand) and almost immediately thereafter, the urgency of Pioneer started to fade.
Today, Pioneer is still a top dog, but no longer is it THE top dog, and more importantly, it is no longer the ‘cool’ brand for the new generation of DJs. So as the news broke today that the DJ division had been sold for half a billion dollars to the private equity firm Kohlberg Kravis Roberts, I wonder if either Kohlberg, or Kravis, or Roberts talked to DJs in their process of acquiring the company. Do they even know that the strategies that took the company to the #1 spot in its field, had purposely been abandoned? And what will be their strategy going forward? Someone in that firm may want to call Detken.
Article from Nasdaq about the Pioneer DJ sale:
Pioneer To Sell DJ Equipment Business To KKR For $550 Mln – Quick Facts – NASDAQ.com.
I am keeping my eye on this one.