Another short, somewhat 'tradey' interview, but with a man who has managed to achieve the seemingly impossible - he has established a major new microphone brand from scratch in a handful of years. The following interview appeared in the May issue of Music Trade News.
 

INTERVIEW WITH PETER FREEDMAN - FOUNDER - RODE MICROPHONES, AUSTRALIA

IAs well as creating new markets, new technologies also open the door to new brands. Take the microphone business. Until the advent of home recording, the mic market was more or less owned by a handful of manufacturers, with little room for newcomers, however good. But once a market starts attracting new customers, who may not be so focused on the existing stars, or it forces a shift of perspective, so that existing users start to reappraise their requirements, then the once firmly shut door is suddenly ajar.

Ask Peter Freedman of Rode microphones. Who, 20 years ago would have given this Australian company a hope in hell against the established giants like Shure, Sennheiser and AKG? But Rode got it right: persuading people that what they needed was a different type of microphone for a different application, and by dint of clever design and manufacturing, offering it to them at a bargain price.

Part of the original Rode master plan, was designing in Australia and manufacturing in China. Back then, that was adventurous thinking, but these days it's the game everyone is playing. Which makes it all the more remarkable that a few years ago, Freedman decided to pull out of China and switch his production to Australia. Was he doing it just to be perverse? Far from it, he says.

'I started with a Chinese microphone and we were the massive low-cost alternative, which was a case of being in the right place at the right time. Then, as soon as the business took off, I wanted to improve the product and I had the money to do it. I found that I could manufacture the product myself and at the same cost, if not lower.'

If this sounds like it runs contrary to current business wisdom, that is probably because cheap Chinese manufacturing delivers its best when the labour component is high - which it can be with traditional musical products. If it isn't, and particularly, if you can get volumes up, then it can still make sense to produce at home, as Freedman is proving.

'Yeah, volume has been the basis of Rode's success. I absolutely hate this Chinese manufacturing thing, anyway. I understand why money makers do it, but not people who love manufacturing or the audio industry. They're people who'll nail two pieces of wood together and put a logo on it and if it sells, fine - they don't care. But it's very short-sighted and when those people who are running it move on, we'll be left to pick up the pieces.

'You don't have to move everything to China - it's due to greed and it's dangerous. People are losing their IP and they're losing their ability to manufacture things.

'I'm operating in a really high-cost country and I've been able to get round it by buying the absolute best machines, running them 24 hours a day and it's all done in Sydney. I employ about 110 people, but I'd have three or four hundred if it wasn't for the investment in machines. If you invest, you can make it and I would never let my intellectual property outside of my company - why would you risk letting it out of your company, which is what so many are doing? No matter where you take your product to be manufactured, you have to tell them how to do it and no mater what guarantees they offer you, they're going to use that know-how - it's lost.'

Now faced with digital recording equipment, even at home, microphones that were common currency in professional studios 20 years ago can be too noisy for really critical recording today and this is another area where Rode has been scoring. Using its volume production to drive down costs and raise profits, it has been able to invest in research, resulting in microphones like the NT1-A, which is clamed to be the quietest mic in the world.

Curiously, rather as guitar makers have to compete with vintage gear, some of Rode's customers swoon over old products, too - ancient valve Neumans and the like, which change hands for fabulous sums of money. How does Freedman handle that?

'They're magic if you get a good one. A good U47 is a good mic but if you do a real blind test with a modern one, you won't pick it - you'd probably pick the new one. But what they have got is the emotion. The producer or engineer is saying, "Oh, this is the mic Nat King Cole used" and it makes you sing better, because the blood's pumping - like picking up a '57 Strat. Most people don't care an don't think about it, though - it's really an image thing. People look at old Ferraris or Porsches - then they get into a modern Boxster and what do they buy? So we don't really have to combat that market.'

Freedman is far from being one of those manufacturers who regards his dealers as an necessary evil. 'Absolutely not! I get the same reaction from all my dealers around the world - they make goo money out of Rode mics. Why sell a 30 mic when you can sell a 150 one? Plus you are selling something really good, something that makes your customer really happy.

'We help our dealers with good back-up and we help the users too, with training schemes on the web, creating a community feeling among Rode users. That makes a customer who'll come back for more.

'We're mounting a huge programme for the dealers. We're planning conferences to find out what they need and we are instituting programmes to improve their profitability - differentiating the products, so that prices can be maintained and margins can stop being eroded.'

Which leads us, inevitably, to the question of imports from the Continent. How does a UK dealer compete if he sees Rode being sold at low prices? 'Do the same,' says Freedman, bluntly. 'We have focused on this is a way that very few people do. Everybody gets the same price from us, so the margins are the same - Germany, America and England all pay the same price. If you're worried about competition from overseas, do the same. And anyway, the reality is that there isn't much business being taken. It is more a perception that business is lost - I absolutely know that - the volumes aren't that great.

'I'm a distributor in Australia and we've just run an ad warning customers about what buying from overseas can mean to them - things like warranty issues and power supplies and how local retailers will support you. Let's do that kind of campaign here! Look - dealers have to educate the market about this and the distributors do, too, not just sit back an complain because someone is running an ad showing a lower price.'

Peter Freedman's "can do" attitude is highly infectious. Not only has he brought Rode mics from nowhere to market leader status in double-quick time, but he is positively brimming with new ideas for the future. Fortunately for retailers, he says every one of those ideas has been developed with dealer margins at the forefront of this thinking. As he says: 'without those guys selling my products, I've got nothing.' Which is, you have to admit, not a recognition you hear every day in this business.

Ends.

2008 Gary Cooper