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Woodland

How many of you dealers get solicited for kickbacks?

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quote:


Originally posted by:
yuen

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

but true.

Teachers can do a lot to curb the kickback practice. They probably know which shops are offering kickbacks, even if they, themselves, are not participating. A teacher can recommend anti-kickback dealers. An anti-kickback teacher can warn a student about kickback dealers, and have the student ask for a 10% discount, if the student seems determined to go to one.

A teacher can make it clear to fellow teachers that kickbacks aren't ethical. Most music teachers are either public school teachers or (semi) professional performers or both. Image what would happen to the whole kickback system if the various teachers unions and the musicians union explicitly forbade kickbacks.

Does the American Federation of Violin and Bow Makers forbid kickbacks by its members? It should.

What's the Violin Society of America doing about the issue?

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quote:


Originally posted by:
David Burgess

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.


David is absolutely correct. While commission expenses do not necessarily indicate that any single purchaser would, or is, paying over fair market value for an instrument, the cost of business is usually factored into the shop's, dealers or makers margins in some form or another. If the dealer/shop/maker in question does pay commissions and functions in the way described (considers the amount as a cost of doing business factored across the inventory), they probably don't pay them on every sale, so the factored amount wouldn't be equal to "X % on all instruments", it would be "X% on Y % of sales". That's the "good" news, if there is any. The bad news is, that like any other cost of doing business (insurance, theft issues, credit card & bank fees, utilities, business gifts, entertainment expenses, etc.), ALL of said dealer/shop/maker's customers would be paying for the commissions that are paid out, in one sense or another. This is often reflected in mark-ups, labor & service costs, or consignment fees.

A dealer/shop/maker who doesn't pay commissions will not necessarily have lower prices, however. In the climate of a commission culture, that dealer/shop/maker may have other expenses (advertising, travel, and possibly fewer sales from which to pay their overhead) in order that they might compete with those who participate in the commission culture directly. Because of this, it may be possible that the pocketbooks of ALL purchasers of items in which some portion of an industry (violins, copiers, medical equipment, drugs, textbooks, etc.) that pays hidden commissions are effected without really realizing it, regardless.

I've been in this business a long time, I'm sad to admit (why do I still see a 30 year old guy in the mirror? Must be the wine...), so I'll comment about the % being quoted here... In the trade of decent instruments, my experience would indicate that 20% is way high. Probably 10% is more like it, up to a certain point... probably less past that point (I think I mentioned a letter from the '60s in an earlier post on this thread. The "scale" proposed in it was graduated according to purchase price). Maybe the practice dictates higher commissions for commercial grade instruments. I don't know. I doubt anyone who has ever run their own business would argue that any cost of business should be, and is, factored into their margins. The factoring, or amount, really isn't what's at issue here. It's the specific practice (hidden, undisclosed commissions).

The above information is not meant in any way as justification for the practice. In this industry, there are many that I respect. Within that group, pertaining to this specific issue, those I respect are either the ones who do not pay commissions at all, or the ones who recognize the problems inherent in the system and are, and have been, working to correct them within their own businesses. Of those in the second group, some have stopped the practice completely (by avoiding those who demand commissions, or refusing even when approached, profit levels be d&%#ed), and/or seriously limiting involvement in the practice while searching for, and implementing, alternative ways to support sales so that all parties actually do "win"... and the expenses are those that can be disclosed (scholarships, concert or program sponsorships, etc.).

quote:


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?

This was mentioned before, but again... I'm in agreement with David.

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Jeffrey has really hit the head on the nail. Commisions are in everything they arent advertised and that is probobly a good thing. Salesmen sell services and items to make a living. There must be a decent margian or we wouldnt have salemen. Wouldnt that be a wonderful thought

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I refer to my last post on the previous page. Would any of you be tempted to contact the teacher in case she doesn't realise the implications of the transaction that almost happened. In my view, this situation could easily have ended up in a court of law. I wonder how many times in the past a similar transaction went through without an interfering third party(in this case me and a very knowledgeable dealer), or was this occurrence a one off and a genuine and very naïve mistake on the part of the dealer?

Peter

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Farmers used to have a saying, "See one rat, count ten." I really doubt it was a unique situation. Once a trusted person has accepted a bribe to present an item as genuine, they will not be looking too closely.

I know a maker who was curious as to why a particular individual kept buying his instruments...sometimes several at a time. He knew the person was a dealer somewhere, but never asked where. Finally one of his instruments came back for repair, artfully aged, skillfully re-labelled, and posing as an old Italian. The new owner was most indignant when he commented that he had made that violin. So he shut up--no point in winning that argument.

After that he began branding his violins with his own initials. No problem; the same dealer bought them, found an old master with the same initials, and continued his shady practice. Finally the maker branded his instruments with his whole name, and the dealer was no longer interested in his instruments.

Do you s'pose any of those instruments entered the market through deals such as you describe? It is the perfect way to pass counterfeits.

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quote:


Originally posted by:
COB3

Once a trusted person has accepted a bribe to present an item as genuine, they will not be looking too closely.

.

I don't actually know whether she was aware of the discrepancy in actual value versus asking price, after all she is "only" the teacher, and not an expert or valuer (...)

Peter

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quote:


Originally posted by:
nick60

Commisions are in everything they arent advertised and that is probobly a good thing. Salesmen sell services and items to make a living. There must be a decent margian or we wouldnt have salemen. Wouldnt that be a wonderful thought

I don't agree that commissions are in everything.

However, when we encounter a salesperson, we assume that they are compensated in some manner, possibly with a commission.

The problem with the teacher/student scenario is that most teachers don't represent themselves as salesmen. If they did, we could have a healthy and appropriate distrust, as we might with any other salesman.

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Is that offer open to everyone, David?

I'll certainly say I agree if there's compensation involved. Oh wait, isn't that what this is all about in the first place?

The other side of this is that there are teachers who never asked for a commission and received them anyway (someone commented to this effect earlier in the thread). While some would be offended and either return or dispose of said commission, I'm sure there are others who were drawn into the game, without nefarious intent on their part. I mean, if someone sends a check unbidden, how many of us would be forthright enough to refuse it? And the next time a student needed an instrument, where is that teacher going to recommend them to go?

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David

Thank You for the 20% "honorarium" I am humbled by your gracious offer. I here by agree with everthing David Burgess shall say on said subject.

Thank You Again

Nick

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quote:


Originally posted by:
vlnhunter

there are teachers who never asked for a commission and received them anyway

That's exactly right. Some 30 years ago, a teacher I knew got, from a violin dealer, unsolicited, out of the blue, a big, fat check for 10% of the selling price of a fiddle the teacher's student bought there. No doubt, such things still happen.

What's a teacher to do who receives such an unsolicited check? Keep it? But that means taking money out of students' pockets by condoning the kickback system. Give the money to the student? But the teacher has incurred a tax liability by receiving the check. Return check to dealer? Then both teacher and student lose and dealer wins big.

I suppose the teacher could retain 1/3 of the check amount as approximate taxes on the sums and give as a gift the remainder to the student. Then the teacher could write a letter to the dealer indicating that in all further instances of purchase by a student of that teacher, the student should receive a 10% discount, and the teacher receives no commission. If the dealer can't agree to that, the teacher would make clear that she would not be comfortable sending any further students to the dealer without informing the student of the financial disadvantages.

That's not an elegant solution. The kickback system is hard to fight at the level of the individual teacher. It's an institutional problem that needs institutional solutions -- solutions from professional organizations or the government.

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"It's an institutional problem that needs institutional solutions -- solutions from professional organizations or the government."

Please, let's not ask the government to regulate the violin business. One of the things that I like about it is that it's one of the few businesses that is not government-regulated outside of the general prohibitions against force or fraud. I do consider solutions from professional organizations to be appropriate. (I have never been solicited for, nor offered to pay, a teacher's commission.)

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I may be getting a bit off topic but Woodland reminded me of an experience.

I started my music education with the accordion. My mother is Polish, so get the picture. She hires an accordion teacher who sells us a piece of crap. Suddenly, he disappears after the sale.

My next accordion teacher informs us about our bad transaction. I continue playing, and the new teacher taught me music theory like no one else could. I learned every chord imaginable in a few years. I still have nightmares about diminished sevenths fending off dominant ninths.

Five years later the first teacher reappears in my school as a new music teacher. My mother called the principal and the crook was out of a job faster than I can wink.

There is justice in this universe.

Oh, I still can't play polkas.

Mike

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Touchy subject indeed. There is an out-of town dealer who gives a substantial kickback to a couple of college level teachers in our area, and those teachers badmouth every other supplier, including us. One even "fired" a student for buying one of our instruments, even though it was far better than the one she recommended, and a lot less expensive to boot, IMHO.

So far, we've maintained our decorum, figuring a few lost sales aren't worth losing our dignity. Still, it's frustrating and annoying, knowing those students are paying, way more than market value for those instruments.

I also visited parts of New Jersey, lately, and I was told by a couple of dealers that all the teachers in the area demand big kickbacks or they just shut you out. Also heard a few horror stories about really egregious overpricing and misrepresentation. I felt really bad for the unwitting parents who shelled that kind of money out for what were basically entry level instruments.

I don't have an answer except to be open and honest, have a great upgrade policy, and to try to get people to compare and to get advice from more than one disinterested party. I have thought about doing some copy about how to recognize and avoid conflicts of interest, but I'm hesitant because it might end up reflecting badly on us. Pointing the finger at others makes yourself look bad, and you're often wisest to avoid conflict and let these people expose themselves, eventually.

Michael, cool story. Nice to see it come around.

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quote:


Originally posted by:
Brad_Dorsey

"It's an institutional problem that needs institutional solutions -- solutions from professional organizations or the government."

Please, let's not ask the government to regulate the violin business. One of the things that I like about it is that it's one of the few businesses that is not government-regulated outside of the general prohibitions against force or fraud. I do consider solutions from professional organizations to be appropriate. (I have never been solicited for, nor offered to pay, a teacher's commission.)

Professional organizations doing something about the problem would be, far and away, my first choice, too. But if those professional organizations aren't making any effort, then somebody else needs to step in to see to it that everybody has a chance to compete openly and fairly. Open and fair competition is what makes capitalism work at its best. Otherwise, it's the little guys among customers and dealers that suffer.

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Good ears and good bow arms are needed to determine a string instrument is good or not (to make good sound)

It takes an art dealer of the trade to know if an instrument is worth the money for collectors. It is a complicated task, I may say.

If you can manage a win win situation when you sell an instrument then it is not so bad?

Most bad experiences were rooted at the inability to know if the instrument

is worth that much or that is suitable for you? Teachers are easy targets to blame.

Teachers should be well trained to meet high standard and well paid. It is the first step to good education.

More resource from governments available to our established institutions are needed.

We do not hear much voices in this respect this days. Complaining a symptom is pointless.

A few teachers, I come to know, are very good and they are able to meet high standards

Let me give you an example, one of my teacher's violin was given to her by her professor.

So generous and kind. Their students or themselves perform in public often. Nice people.

Good to know.

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"Is this an issue with other instruments?". Excellent question. I suspect that it's not nearly so big a deal (excluding the occasional accordion teacher), given the peculirities of string instruments, and string instrumentalists.

On the main question, I can only report on my local experiences. My granddaughter has been playing for about 8 years, has just begun with her 4th teacher, and we've never had an issue with violin selection. The partial sizes were all Doetsch, from a local shop, upgraded as the student enlarged. When a 4/4 became indicated, I bought a fine C F Albert from a dealer in Tennessee. Her then-current teacher liked the violin. I've since bought several ebay fiddles and violas. One local shop was a bit offended that I bought online; another has been pleased to perform setups and to give me insights into the instruments I've come up with.

When my daughter was taking lessons many years ago, she got her 4/4 from her teacher, who did a fair amount of violin trading on the side. He sold us the violin for $300 (around 1980), claiming it was a better violin than the price would warrant, but that he couldn't sell it for more. I agree in retrospect with his evaluation.

A shocking absence of horror story, but I live in the Washington DC area, and there are just too many shops and teachers for the issue to become a major problem, I suspect. (it's also possible that I'm being naive, andd/or just lucked out).

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