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Woodland

How many of you dealers get solicited for kickbacks?

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Michael M,

You ask how much does it cost. Well, if a student comes to you looking for an instrument, finds one they like and take it out on approval, if there is a dishonest teacher involved, that student will NEVER buy your violin. So for this situation it will cost you the profits from that sale.

This is where the extortion fits in. The teacher is saying 'unless you pay me X% (usually between 10-20%) I will

1) never send any of my students to you.

2) I will kill any sale to any of my students".

I don't see how that's any different from the Mafia demanding 20% in exchange for 'protection'.

From the point of view of the student who is asking for the teacher's help and advice it means that rather than choosing from all the availalbe shops to find the best violin at the best price, the student is limited to those shops that give a kickback.

~OK

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The commission is an added and unnecessary expense to the student. I'm not sure how an already compensated teacher can justify the burden it places on the student. My experience is that student musicians seeking better instruments (not beginners) are, typically, financially tapped.

There is no added effort involved, and ultimately the "expert opinion" they receive from the teacher is just that... an opinion.

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10% has always been the starting point I've heard. Some dealers have had a "sliding scale" as the instruments go up in value -- giving 10% of a $600,000 sale as a commission would never work, obviously.

My question has always been -- how does the teacher report such income? I mean, if the check is deposited, and the teacher is audited by the IRS, how do you account for the money? For that matter, as a shop owner, how would you account for the money being spent? As advertising?

Maybe that's one way to show the teachers the error of their ways. If you have a successful shop, and teachers that are demanding commission, then simply send them a 1099 at the end of the year. That would probably go over just as well as David's idea of asking for a commission from students sent to them...

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Michael,

I've resisted paying any kickbacks so far. I like the teachers in my area, they are mostly hard working, honest, talented people and I appreciate that we live in a symbiotic relationship. I often get asked for my recommendation for a local teacher. I try to match the teacher to the geographic location, the type of music, gender and temprement of the student.

I've been solicited for a 10% kickback once. I responded that in that case I would like the same percentage for every student I recommend

(of course I knew that no teacher would ever agree to such a thing)

It's more of a problem if you are a dealer in a big city where the norm is to give a kickback and you are the last one to hold out.

The extortioninsts can get really brazen. I know of one instance where a student came to a shop found an instrument he liked and bought it. At the lesson he showed the teacher the instrument. The next day the teacher showed up at the shop expecting "his" 10%.

Oded

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Thank you, Oded.

I recently sold a violin to a young girl who is a friend of the family. I warned her that her teacher may be upset because she bought a violin bypassing a potential kickback for the teacher. I'm waiting to hear the teacher's reaction when she sees the violin. I do not give "commissions". (I'm waiting to hear of a mushroom cloud forming over Cape Cod where she lives. [grins])

When I learn what happens I'll report it.

Again thanks, Oded, for sharing.

Mike

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quote:


Originally posted by:
yuen
quote:


If a teacher

comes to your shop (I doubt any would) you should roll out a red

carpet to welcome her or them. Teachers are super nice, honest and

dignified. My impression of them they would not want to be targets

of of name calling "mafia" " kickback" " Cockroaches" Their heads

are thinking of beautiful music and how to make it even more

beautiful. A few teachers I know, they talk about beautiful things

all the time. I wish I can.

Yuen, since your post I have had 5 teachers come into my shop. One

of them drove 85 miles to do so. That was in spite of (or perhaps

because of) the fact that I have never offered him a bribe or

kickback. He has never asked for anything like that either. I have

had good relationships with nearly all of the teachers in my area

for over twenty years.

I would bet that even you can understand that terms like "mafia" "

kickback" " Cockroaches" would certainly not apply to ALL teachers.

But when someone engages in certain kinds of behavior, then someone

 may be described in somewhat unflattering terms. If you

believe that ALL teachers "are super nice, honest and dignified"

you are simply deluding yourself.

Onree

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++++++++++++++

Yuen, since your post I have had 5 teachers come into my shop. One

of them drove 85 miles to do so. That was in spite of (or perhaps

because of) the fact that I have never offered him a bribe or

kickback. He has never asked for anything like that either. I have

had good relationships with nearly all of the teachers in my area

for over twenty years.

+++++++++++++

It is good to hear it for everyone. You must have done something right to teachers.

I am sure more teachers will come.

I do not know "ALL" teachers. If some do come to ask for commissions you can just say a flat "NO"

(It is the policy of the shop or something like that) They are idols of our younger generations.

They do not know if you are even handed.

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Its an interesting topic.  Thx Woodland to bring it up

here.

I sold a violin to my friend's niece few months ago.  She

returned it to me after 2 days coz her teacher was very rude to her

after she bought the violin from me instead of buying one from the

shop which her teacher recommend.  Later I know that shop

offer 30% commission to teachers and teach those so called teachers

told their students that their violins are made in Italy which in

fact those are just Scott Cao violins which made in China.

 Its almost can't eliminate the under table transaction in

most of the industries.  I just hope the consumers use their

mind and use some time to do some research on how to pick a

suitable violin instead of just totally listen to those so

called teachers advice.

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One antidote that sometiems works is to have a blind listening test. Have the teacher & student listen to the two violins in question and pick the one they like better without knowing which one they're listening to.

Oded

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Many of my customers are the parents of students. Very often they won't even trust their own ears, they just do exactly what the teacher tells them to do and buy whatever the teacher tells them to buy. Quite often the parents say "I don't know anything about violins", but they can usually hear differences in tone between instruments and bows. In the end the teacher usually has the final say. When a potential new customer finds me independently (i.e. internet), they often tell me how they acquired their current instrument/bow. When the situation reeks of kickback scheme, I know that their current teacher is going to kill the sale of the new instrument/bow that they're taking from my shop on approval. It just happened again last week...

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Buying an instrument is such an important decision to a student and you want the teachers

play no part of the process.

Teachers are angry because they consider it is an action of disrespect, not the hunger

for commissions as you may think. Of course, it is only my guess. We know a case here and there

and try to draw a general conclusion.

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I don't think that any shop or dealer wants to exclude the teacher from the approval process. Every time I send an instrument out, the first thing I tell the student or parent is to show it to the teacher, to their friends, relatives, pets, and anyone else they think might have an informed opinion. The teacher should certainly be involved -- but that's not the issue here. There's a difference between a teacher assisting in the comparison between instruments and a teacher demanding a commission be paid without the student's knowledge.

The student's (or parent's) knowledge is the salient point. Nobody is suggesting that a teacher shouldn't be compensated for their time and expertise if they so choose. But that compensation should be with the full knowledge of the student -- this is the difference between consultation and collusion. It's analogous to what Jeffrey described when he assists someone with the purchase of an instrument -- he charges them a fee for his time, knowledge, and expertise, and he also tells them that they can't see any instruments he has a financial interest in, to avoid that very conflict of interest.

There are teachers I know who charge the student the equivalent of a lesson rate for time spent helping to choose an instrument. If more teachers did this, it would help hasten the end of the backroom commission, I think.

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I have been watching this thread since the start. I would like to ask how many people who are responding are self-employed? Ethics are fine and dandy and they are wonderful subject to kick around the in the acadamia of America. But in the real world there is always you wash my hand and I wash yours.

We own 2 businesses and we help others that help us. That being said I dont think it is fair or ethical to send a student to dealer of the teachers choice to get a royal scr**wing. To change labels and mark-up the price or just commit outright fraud. I love the violin but my lord is it a very shady business. I know there are many reputable dealers but the shady ones always get the press.

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I have been self employed since 1987. When a teacher comes to my studio to help a student I make it a point to tell the student or their parents to be sure to compensate the teacher for their time and effort.

Oded

P.S. I don't know if I can wash anyone else's hands very well but I do enjoy having my back scratched occasionally ;-)

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I'm self-employed as well. The only compensation I've ever offered to a teacher is top priority for repairs and a heartfelt thank-you. If they seem to be a reasonably competent teacher, I'm happy to pass on their business card.

Interestingly enough, the teacher that wanted kickbacks asked me not to give violin lessons (just send the students straight to him/her), now rents instruments. Yet another blow to my business. It really hurts because I always really liked this teacher as a person, we always had an honest business relationship and got along very well, but business is business I suppose.

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"""""""""I have been watching this thread since the start. I would

like to ask how many people who are responding are self-employed?

Ethics are fine and dandy and they are wonderful subject to kick

around the in the acadamia of America. But in the real world there

is always you wash my hand and I wash yours""""""""""""""""

I'm self employed, I make the instruments I sell, I don't give

kickbacks, and am willing to live with the consequences. In my

situation, my immediate competition is  a dealer who is

giving the kickbacks, on instruments not made by them, which have a

huge markup, and can afford the hand washing stuff. No need to wash

any thing, if it doesn't get dirty.

I guess in the end, I'd rather be known as an above the

board, good violin maker, not a shady,

savvy businessman.

Send you're donations to,,,,,,,,,,,,,,,

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As we're on the subject, this is my last encounter:

Last week, I was asked to assess a violin that had been recommended (and supplied) by an influential (not local) teacher.

This instrument was one of three that the teacher had got from a dealer she had a "relationship" with. The one in question was the player's favourite and the price was close to the player's(or rather, the player's parents, as I am talking about a fifteen year old) upper budget limit. I hadn't asked what the asking price was as I like to think I have a pretty good idea of how much things should sell at.

The first problem is that the instrument was described as a ******, and it certainly didn't look to me like a ******. Of course, no certificate came with the instrument. So this must have been the opinion of the dealer.

By then I was starting to feel a bit uncomfortable and suggested I should carry out a dendrocronology analysis, which I did. This ruled out any possibility of the instrument being a ******. It transpired that the instrument had been taken to a very eminent dealership who confirmed that it wasn't an******.

I was then asked if I thought the violin was worth about about half the asking price, to which I replied that in my opinion, about a quarter or less was a more adequate valuation.

They then volunteered the information that the eminent dealership had the same feelings about the value.

Thankfully, these good people later decided that this wasn't a "good buy" and returned the violin to the teacher.

Now, has this teacher any idea of the implications of this transaction? Even on a 10% commission,

this teacher was probably going to earn a couple of months worth of wages on a violin that had

an intrinsic value of about that same amount. I wonder if they realised what responsability goes with selling an instrument, and whether, had this sale gone through, they would have been liable for giving such misguided advice.

I have been left shocked and speechless that these people were seriously considering parting with the best part of about $60.000 for what is in fact an inconsequential violin. All because the teacher ( and I am talking about important teachers here) took it upon herself to recommend it, for whatever reason.

I remember a cello teacher, about twenty years ago, who used to come with his pupils, and quickly zoom in the most expensive instrument they could just about afford and listening from the workshop sentences like:" You haven't chosen this cello! it's the cello that has chosen you! or words very close to that. His last words to my ex boss as he went out were: "I'll be in tomorrow as usual"

Locally, now I have to say, this practise is rare, but I know that some teachers who come to me for repairs, re-hairs, advice, etc also have rarely sent me people to purchase, because of my aversion to this shameful practise.

Peter

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From the buyer's perspective, what does this kickback stuff (ie, secret payments to teachers) mean?

It means:

1. Avoid, if possible, dealers who give such kickbacks. How do you find out who those dealers are? You can politely ask the dealer if referring teachers are paid a commission on your purchase. I bet a dealer would own up to such an arrangement if asked directly, but may not volunteer the info.

2. Patronize dealers who have taken a stand against kickbacks.

3. If a kickback dealer has a fiddle you really can't pass up, then ask for a 10% discount, since the dealer will be spared a "referral" fee paid to anybody else.

4. If your teacher really can't accept a fiddle from anybody but a favored dealer and you suspect a kickback arrangement, start looking for another teacher. Do you really want that person as your teacher?

If you are a teacher, I would think that the worst way to deal with this would be to accept the kickback and then pass it on to the student. Besides the possible criminal issues of accepting a secret payment, by accepting the kickback, you've incurred an income tax issue, if you don't report that income. And I assume the kickback is part of your income, to be taxed, whether you passed the kickback on to the student or not.

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quote:


Originally posted by:
nick60

....Ethics are fine and dandy and they are wonderful subject to kick around the in the acadamia of America. But in the real world there is always you wash my hand and I wash yours.

We own 2 businesses and we help others that help us....

It's good to know that you feel that way. If you should purchase a violin in the future, violin shops which don't normally pay commissions can make an exception in your case, tacking 20% on to the price to spread along the trail that led to their shop, and do so with a clear conscience, knowing that you're OK with it.

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+++++++++++++++

It's good to know that you feel that way. If you should purchase a violin in the future, violin shops which don't normally pay commissions can make an exception in your case, tacking 20% on to the price to spread along the trail that led to their shop, and do so with a clear conscience, knowing that you're OK with it.

++++++++++++++++

If you tell me there is an extra 20% tacking on my purchase. Of course I (or any buyer)

would not be happy. If the kid's mother comes to the shop that and the shop tells her,

20% has been taken off. She loves to hear it too.

An ideal situation is so created but rarely happens: The mother is so happy and

offers the teacher 10% of purchase. Total cost to her is 110%. (rarely happens )

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quote:


Originally posted by:
yuen

If you tell me there is an extra 20% tacking on my purchase. Of course I (or any buyer)

would not be happy.

That's the point, Yuen. Where do you suppose the money comes from to pay the teacher commission? The sellers margin must be higher to accommodate this. Buyers aren't told about the higher price they are paying because they probably wouldn't be happy.

Which do you think would be likely to produce a better outcome for the student? If the student pays the teacher for their services in helping to select an instrument, or if the dealer pays the teacher a percentage of the cost of the instrument, regardless of the teacher's level of involvement?

There was a teacher who was apparently well-known for telling his students that they needed better instruments, and should contact a certain dealer.

A sarcastic quote from one of his students who was on to the game:

"I need to buy a new viola from ********* (dealer). Mrs. ******** (teachers wife) needs a new fur coat."

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I understand what you said. (next time, I will check whose wife wearing mink coat)

It seems little room for teachers to participate in the process in a meaningful way. Sad

but true.

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