A long, long time ago, way back in 2008, Monster's Beats by Dre line of headphones exposed young music listeners to better-quality sound. Ushering in a new premium, pro-sumer segment of the market, Beats combined a focus on audio quality with a fashion and design sensibility that numerous headphone companies are trying to capture today.
Sales of headphones priced over $100 have become the engine of growth in the audio market as a result, growing 65 percent (units) in the first half of 2012 and accounting for 43 percent of all headphone revenue, according to The NPD Group's Retail Tracking Service. Monster accounts for approximately half of the sales in this segment.
Of course, a large part of Beats' success is built on the name and image of Dr. Dre, and as such, has inspired numerous other musician-endorsed headphones. Offerings from Soul by Ludacris, Sync by 50 Cent, and House of Marley have proved to be notable entries into the market. The strategy clearly works.
The NPD Group's recent Headphones Ownership and Applications study reports that endorsements from music artists influence one in five premium-headphone shoppers to make a purchase. Compared with other industry data showing that celebrity endorsements do very little to actually spur purchases, this approach for headphones is a definite success.
But in an increasingly crowded market, how long can artist or celebrity endorsements provide differentiation?
A number of headphone companies have taken to promoting their premium lines in a different way. Harman's new Harman Kardon headphones, released in June, aligned not with a musician but with Apple in their design, engineering, and distribution. Logitech's Ultimate Ears have also partnered with Apple, making the Apple Store the exclusive launch partner for the new line of headphones and wireless audio speakers.
And headphone maker Denon has taken a fresh approach, gearing its four lines of headphones to different types of audio listeners ranging from audiophiles (the Music Maniac line) and workout warriors (the Exercise Freak line) to hip-hop bass lovers (the Urban Ravers line). Premium-headphone users own an average of 2.3 pairs, according to the NPD study, an indication that different pairs are used in different scenarios.
Denon might be on to something. With media consumption habits shifting to new devices like smartphones and tablets, headphones are being used for a multitude of activities, and consumers are going to expect better audio quality to maximize their experience. In fact, NPD's study shows 29 percent of premium headphones being used with a tablet, triple the level observed in 2011. Products specifically designed for activities such as watching video, gaming, or even composing music using apps like Garage Band or iElectribe from Korg will provide the next wave of growth in the market.
In the end, we're likely to see the premium-headphone market continue to grow, and as more companies chase the opportunity, differentiation will be key. Designs and engineering geared toward different pursuits will certainly provide this, but expect collaborations to emerge with other brands (like Harman and Apple), as well as content services (Monster just recently partnered with Viacom on the Monster DNA line).
Delivering quality sound is the new mantra in consumer audio now -- just look at HP and HTC's Beats Audio branding and Apple's Mastered for iTunes effort, but with most headphones brands claiming high fidelity, consumers will need something else to help capture their eyes (and ears).