Rob Eastmann

Musicians Hotline is honored to present an amazing story that truly captures the entrepreneurial spirit. Robert Eastman, founder of Musician's Friend, shares the company's 20-year benchmark with Musicians Hotline. From the very first catalog in 1983 to currently producing over one million catalogs per month with over 35,000 products, the Musician's Friend story is truly amazing. Celebrating the company's 20th anniversary, here is what Rob shared with Musicians Hotline.

MH: Your father was a major influence and a pioneer in one of the first catalogs for musicians. Were you involved in Musicians Supply with your father?
RE: Yes, he started the first consumer combo catalog in the music industry back in 1968. My sister Sheri, my brother Steve and I all worked in the early days mailing catalogs and packing orders. We would come home after school and work out of our garage. After graduating high school in 1975 I started working full time. When my Dad semi-retired, I then became president and ran the company from 1977-1982. We closed Musicians Supply down in 1982 because of low profitability. Interest rates were hitting an all-time high of over 20%, the economy was shaky and Guitar Player was such a cash cow that my Dad really didn't want the retail exposure for such a low return. At that time we had about 70 employees.

MH: Is it true that a newsletter your father started is what eventually spawned "Guitar Player" magazine?
RE: Back in those days (1967) there were no magazines with lists available of core M.I. combo musicians, so in an effort to develop a mailing list of musicians to market a mail order catalog, my Dad started a club called "Guitar Players International," and the newsletter was a feature of the club. In order to defray the cost of the newsletters, Dad decided to sell advertising space-which was well received in the industry since there were very few choices of venues at that time for music product manufacturers to advertise in. As a result, the first newsletter began to look more and more like a magazine-until finally someone suggested he should just wrap it with a slick cover and call it a magazine-the rest is history. During this time, my parents were new to the publishing business and were already busy with their own music store "Eastman Studios" in San Jose, CA (now Guitar Showcase). Eventually, Dad focused on Guitar Player, while Mom and the kids ran the mail order catalog business using the GP list with the Guitar Showcase inventory.

MH: Tell us about the early days forming Musician's Friend and when did you actually produce your first catalog?
RE: After closing down Musicians Supply, I had some time to think where I wanted to go with my career. I knew I wanted to stay in direct mail. I enjoyed the medium and had really learned a lot over the years. My wife, DeAnna, also worked for Musicians Supply and had good skills in HR, accounting and payroll. We both agreed we had tons of friends and contacts in the music business, and that we should stay in the music industry. We produced our first mailer in early 1983. This mailer mainly carried reusables like strings, picks, polish and polish cloths. We also carried some basic accessories like tuners, string winders, guitar stands, music stands and tuning forks. We started it just like my Mom and Dad did, but this time in southern California. We set up a couple of desks in our living room for the call center and order entry, and converted our garage to a mini warehouse.

MH: How many products do you estimate were in that first catalog?
RE: We carried all the major brands of strings as well as about 30 accessories. There were approximately 300 skus.

MH: What was Musician's Friend's mission statement when you started the company and has that mission statement changed over the years?
RE: Our statement has always been "The Best For Less Shipped To Your Door." This is still our company slogan but our mission includes a lot of customer service emphasis as well. We were the first to have a money-back guarantee, same day shipping, guaranteed 2-day delivery, 24/7 call center, and an easy pay plan.

MH: What has been the most noticeable change in the direct mail marketplace over the years?
RE: For the catalog side of the business, the biggest changes have been in the quality of the products offered as well as the quality of presentation and customer service. When we were starting over, there were many brands like Roland, Fender, Gibson, Martin, Korg, Marshall and Alesis that would not allow mail order sales. Our catalogs in the early days were only 48 pages and printed on newsprint. We soon realized that a better-quality presentation and customer service not only gave us a better catalog response but also went a long way to making mail order legitimate in the music industry. With the superior presentation and customer benefits we offered, it was only time before all the large brand-name companies started selling to us. The biggest change to the direct mail market in recent years has been the influence of the Internet. Now anyone with a computer and a product to sell can be in the direct business. We see hundreds of small music dealers trying to sell on the Internet. Even though it's an easy medium to get into, it's an expensive medium to do it right. We have a large staff of programmers working every day just to improve the functions of our site, merchandisers constantly updating products and prices, copywriters continually writing current information on over 35,000 products. We have agents for live-chat, and our customer service staff answer hundreds of emails every day. Then you have to back all that up with in-stock inventory and great service.

MH: Musician's Friend is built on family history. Your brother-in-law Al Dinardi joined the company early on. What was his role with the company at the time?
RE: I've known Al since I was nine years old. He was always the musician in the family-worked in music retail and eventually opened a music store in Southern California, near where Musicians Supply was located. Many "family" conversations centered around both businesses and the music industry in general. When Deanna and I relocated Musician's Friend to Southern Oregon where the rest of the family lived, Al and I began working on MF catalog mailings at night together-he happened to be running a mailing facility at the time. One day in 1985 I received a new product from DOD-the DSP128. It was claimed to be the new revolutionary effects device that would allow three effects at the same time. I took a sample to Al, and he came back and said that it was an amazing unit and that guitarists would be lining up to get one. It became an overnight sensation and earned MF a "Triple Platinum Award." About that time Deanna and I had maxed out the space we were using in our dairy barn, and were looking to move the business to a larger and "real" building. We needed more expertise in the business and Al was a natural with his music background, product knowledge, and writing skills. We formed a partnership and have been building the business together every day since then.

MH: Tell us a bit about your facility. How many people does Musician's Friend employ?
RE: We used to have one facility in the old days, but with all the growth, our business model has changed over the years. Our first change was to bring distribution closer to our customers. Shipping from Oregon was taking up to seven days to reach the East Coast, and we do a lot of business there. We decided to split our warehouse into two, locating one in Knoxville, Tennessee. This allowed us to reach all of our customers within three days. Later as the company grew, we found it more difficult to find enough quality telemarketing sales reps in our small Southern Oregon community, so we opened a 250-seat call center in Salt Lake City, Utah. Salt Lake City has a great telecommunications infrastructure with numerous call centers, so it was a natural for the business. Recently we outgrew our Knoxville warehouse, so we consolidated the two DCs into Founder of Musician's Friend one large DC (241,000 sq ft) in Kansas City, Missouri. We found having one larger vs. two smaller DCs to be more efficient, providing the best customer service possible. We have over 600 employees among the three facilities.

MH: In the late 90's Musician's Friend became part of the Guitar Center Family. Explain how this all came about?
RE: We have had a retail presence since the early days in Medford, but in the early 90's we decided to open another store in Eugene, Oregon. After our first year in a remote location, we realized the potential for success in retail. We have always been aggressive in growing our business, so we decided that since we had many customers already in all 50 states that it was a natural for usto start a national retail expansion. Our first big box was in Kirkland, Washington. After this store we decided to hire a retail design firm to design a format that was appealing to the musician and that we could roll out on a national level. Our first new format store opened in Tukwila, Washington, in the late 90's. We subsequently opened stores in Las Vegas, Denver, Knoxville, Salt Lake City, and New Orleans, totaling nine stores in the chain. In mid-1998 Guitar Center was starting to look at the catalog business, especially since the Internet was fast becoming a hot topic. Wall Street wanted to know what GC's strategy was going to be. Concurrently, we were beginning to open stores in the same towns as GC. By then, each company had two competing stores in the Seattle area. Due to the differences in format, the stores were not overlapped. It was time for both of us to make a decision. We knew GC was destined to be in the direct business, so at some point we would not only be in the same markets, but on the same streets. Also MARS was gaining some steam as well as raising a lot of money. We decided it was better to join the forces of the number one in direct marketing with the number one in retail. It has proven to be a winning combination for both of us as we both can focus our strengths on what we are best at.

MH: Tell us about your key employees. How have they attributed to the success of Musician's Friend?
RE: Al and I learned at an early point in our careers that if we were going to grow our business to be world class, it was going to take having employees that are more specialized and more capable than we were. We have always strived to hire top professionals in their field so that they can bring something new to the table. We have great managers all over the company, which is extremely important when you have different operating units around the country. We would not have the great company that we do if we did not have the fantastic employees that we have.
MH: What are your personal thoughts on small "Ma and Pa" music stores who claim that they cannot compete to stay in business?
RE: I think the fact that "Ma and Pa" stores offer all the things the big boxes don't is the secret to their survival. Working with the schools on band programs, lessons and repairs are all profit centers and traffic drivers for the smaller dealer. Usually a smaller retailer is a musician with a store. This has a big advantage because there is more passion and better customer service if he knows his business and is always there year after year.

MH: How many catalogs are produced each year and how many musicians receive Musician's Friend?
RE: If you are one of our better customers you will receive a catalog every month. We also mail a catalog called LMI, which is geared towards the Kindergarten to 8th-grade school market as well as a catalog titled Giardinelli, www.giardinelli.com, which services the band & orchestral and pro market. We mail over 1,000,000 catalogs a month.

MH: What do you feel is unique to Musician's Friend as opposed to other catalog companies?
RE: We have been the leaders from day one, defining the benchmarks for catalog quality, service levels and pricing. We have continued this tradition today by offering more products, more catalog titles, free freight and twelve months same as cash financing.

MH: Musician's Friend experienced a solid 2002 fiscal year. What do you attribute your success to this past year in light of a slowing economy?
RE: As mentioned earlier, we have always aggressively grown our company. Even though it has been a slowing economy, we have continued to increase advertising, mail more catalogs, and improve our Internet presence. We also attribute a lot of our success to continuing to focus on the customer. We have found through the years that when your customers are happy, they keep coming back for more.

MH: What do you foresee in the future for Musician's Friend and how do you anticipate the company adapting to meet a changing market place?
RE: Our biggest challenges right now are our two new B & O businesses: LMI and Giardinelli. Schools and band & orchestra products are not part of our core competencies, but like any new venture we have taken on, we are focused on integrating our company values of customer service, price and presentation. We're also bringing in the best expertise we can find to assure it will soon become a core competency. Looking further in the future it will always be a challenge to understand the interrelationship between catalogs and the Internet. Both channels are intertwined: it's difficult to determine where one starts and one ends as well as where the common ground is that they share. As Internet access speeds grow, I see the Internet being an even more important tool for delivering information and services. It is definitely a huge part of our business and one of our main focuses to continue upgrading with the latest technology and features to provide the best shopping experience for our customers.

MH: In closing, Rob, what do you feel has attributed to Musician's Friend's incredible success over the past 20 years?
RE: To sum it up in a few words; it started with the mission statement "The Best For Less Shipped To Your Door." Add in a great partner with many talents. Commit yourself to your customers and the growth of the business (we reinvested almost every dime back into the business for the first 15 years). Include some great employees who share your vision and dedication and 20 years later we have a company with 600+ employees in three states and annual sales of over $200,000,000 of music products to millions of customers all over the world. I'm proud of our company and all the employees who have given a great deal of effort to make Musician's Friend not only asuccessful company but also a great company to work for.

931 Chevy Way
Medford, OR 97504
800-687-2612
www.musiciansfriend.com

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