For the past few months I’ve been concentrating on the Extra Paycheck Podcast and I haven’t published any new article, so this post is way overdue.
In July I released an episode called Finding A Profitable Niche For Your Online Business* and I got quite a few emails from people asking me even more information on finding their own business ideas and niches. It’s always interesting to hear (or read about) precise examples because real life examples make things easier to understand. I have lots of hobbies and passions so I always come across different niche ideas that could be very profitable.
*You can listen to this episode here:
In this post I will be sharing yet another (re-emerging) industry that could make you lots of money. And yes, that’s another hobby of mine. I am new to this industry but I am very excited about it and I am simply amazed by its potential.
We’re talking about vinyl records. Yes, those old dusty disks that spin at 33-45-78 rounds per minute. No, I am not crazy.
Before we dive into the details and numbers, I’d like to give a little back story on how I came up with this niche idea.
When I was a little kid we had a bunch of records at home and I loved listening to them. Then I grew up and was taken by the revolution of CDs and MP3s in early 2000. About 8 years ago I was given a crate of old records. I sold a few on eBay, I threw some in the trash and I kept several others. I bought a $50 turntable with in-built speakers that plays vinyls, radio, MP3 CDs, it had an SD and USB slots as well and I started listening to those records from time to time, although the sound was pretty bad. Fast-forward to 2015. I am hanging out at my friend’s place and Paul starts playing records. He’s probably got a 1,000 records (or a lot more) and 2 amazing turntables. The sound coming out of these machines was pure and addictive. Simply touching the vinyls reminded me of the simpler days of my childhood and I fell in love with vinyl again.
The very next day I jumped on Google and started reading about the industry of vinyl. I soon discovered that the “amazing” multifunction turntable that I purchased for $40 was rather horrible for the records. Cheap and unbalanced needle did a lot of damage to the records, which also explained why the sound quality coming out of the speakers was pretty bad. I also ended up collecting no less than 100 records within few weeks. As I kept getting more and more interested in the subject I kept learning more and more about the records, sound systems, turntables, amps, the value of it all and a lot more. I am a curious person by nature and when I get interested in a specific subject – there is no stopping me.
So that’s my story. You might think “so how can I make money with old vinyls?” and I am about to share just that.
The Vinyl Rebirth
Graph from http://www.vox.com/2015/1/5/7494461/vinyl-record-sales-2014
Sales of vinyl records went up over 500% (!!!) from 2007 to 2013. The vinyl sales in USA bottomed out at under 1 Million in 2005, however they surpassed 9 Million units sold in 2014. Although there aren’t any precise stats for 2015 yet, predictions have it that the number of sold vinyls will go up by at least 50% compared to 2014. And we’re talking mostly about brand new records, not the old ones sold through ads, garage sales and used record shops. Simply put, 2014 has been the highest selling year for the vinyl industry since 1993.
Sure, this medium will never go mainstream to beat downloads or streaming but the demand is growing and it’s growing fast.
Turntables and Other Equipment
As I mentioned earlier, the brand new 40$ turntable I purchased wasn’t the best idea. It didn’t sound good and it probably destroyed records. After learning quite a bit about turntables and how they function I ended up buying a used 1984 Technics unit. I actually ended up with 3 old (new to me) turntables but that’s another story. I’ve learned that Technics (manufactured by Panasonic) is the GO TO choice for turntables. You are much better off buying an old table from the 80’s than a brand new all-in-one unit, often for the same price of under 100$. However, a proper turntable requires a few other pieces of equipment such as pre-amp, receiver and speakers (which can also be purchased for relatively cheap). Just keep in mind that if it has built-in speakers or if it’s made by Crosley, it’s most likely no good.
There is a holy grail to turntables and it’s called SL-1200. This model was produced from October 1972 until 2010 by Matsushita under the brand name of Technics. Same model (with minor improvements) for almost 40 years! Released as a high quality home record player, the SL-1200 series quickly became the most desired piece of equipment among DJs, clubs and other professionals. Used SL-1200MK2 form 1980 are still sold for $300-600, although I know folks who bought them for $50 in pristine condition from oblivious sellers (at an estate sale). Brand new SL-1200MK5 are selling for $3000+ USD on Amazon and the prices will only go up as the model has been discontinued 5 years ago.
Can you imagine the commissions you can make selling these $3k tables? Yep, that’s a $150-250 commission per sale with current amazon referral rates. Build a website, put up content, start promoting and getting those sales.**
** This post is mostly about building an affiliate marketing based business. If you have a good idea of what affiliate marketing is than keep reading. If you aren’t aware of this model, please check out my explanation and my free 5 day online marketing course.
It’s important to mention that although these record players are of very high quality and they “never” break, they still need servicing. New cartridges, needles and headshells are in high demand and often cost over $100.
Besides the turntables, people will also often buy mixers that can go from a $100 to several thousand dollars, amplifiers, speakers, vinyl cleaning supplies, etc.
Vinyl Records
Average price for a new record in the US is $23. Not a cheap hobby. If you look at Amazon, there are tons of records going for thousands of dollars. You read that right, THOUSANDS of dollars per album.
Going back to my friend Paul. In 2011 he purchased a Rolling Stones re-issue (old album re-released on vinyl in 2010) for $180. At first I was like: “Dude, seriously? you dropped two hundred bucks on a vinyl?”. Paul proceeded to showing me that this very album is now worth about $1,200. 600% profit in 4 years, how is that for return on investment?
So here is the thing. You can simply sell vinyls as an affiliate of Amazon (and many other platforms that are now selling vinyl). You can, however, get into collecting and reselling for profit. Sites like Discogs.com will give you a good idea of what a record is worth. If you take this route, you’ll have a huge learning curve ahead of you. The price on Discogs is a great indication however it is not always accurate. You’ll also have to pay very close attention to the year the album was released, the place where it was printed, the rarity of that specific vinyl, the condition of the disc and the cover and many other details that I wouldn’t even try to explain here (because I am new to this and frankly I don’t know much about record collecting).
Many valuable records are sold through garage sales for pennies, simply because the sellers don’t know the real value of the record (and they don’t really care about it either). You might end up buying a $1,000 LP for a buck and you might pay 10$ for a used “rare” vinyl that sells for $0.99 online. When I bought an old Technics turntable for $40, the guy threw in a crate of about 50 vinyls in great condition. A quick check on Discogs revealed that most of these records are worth $7-12, some pitching as high as $40. Obviously the guy didn’t care about the value, he just wanted them out of his house. As I mentioned earlier, there is a LOT to learn in this niche and you gotta be patient and able to pay attention to detail.
Another Crazy Idea
Since vinyl records are gaining popularity, many record printing plants are having really hard time keeping up with the demand. I know of a local pressing plant that just shut its doors in Montreal simply because they couldn’t keep up with the demand. They started getting orders they couldn’t fulfill which resulted in the eventual lack of orders and the shutting down of the plant. It sucks for them but it’s the way it goes. New manufacturers are popping up all over the world and the biggest problem they are facing is the lack of machinery. I’ve read of companies paying as much as $250,000 for old vinyl pressing equipment. Money is not the problem, finding the equipment is.
If you can find such equipment you can easily charge a 10% finder’s fee. It’s a LOT easier being said than done but this is why I called it a crazy idea. I threw this idea out there just in case, somehow, you will hear of someone selling such equipment… somewhere, where they have no internet and can’t possibly know there is a big demand for it.
Niche Idea Conclusion
The vinyl industry definitely has a lot of promise and a lot of money will change hands within this industry. Just like with any other niche, I recommend it to those who have an interest in it. There is nothing more boring than trying to build a business around a subject that doesn’t light you up. The re-emergence of vinyl is relatively new and definitely isn’t over-saturated, at least for now.
I’d love to start some kind of project in this niche right now but I simply don’t have the time to concentrate on it at the moment. Take the idea and put it into action, because the idea in itself isn’t worth anything if you don’t act up on it.
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