The Digital Concert Pianist: How new digital norms challenge our traditional views of craftsmanship
For almost two centuries, Steinway has been the hallmark of the acoustic piano industry. The craftsmanship required to produce one instrument at one of their two workshops in New York and Hamburg is globally renowned and is the genesis of every instrument’s incredible depth and variation in tone as well as the speed and sensitivity of its mechanical action, making it the darling of professional musicians. In 1953 Steinway & Sons stated its goal was “to build the best piano possible, sell it for the lowest price consistent with quality.” But their manufacturing process, which involves 12,116 individual parts and throughput times of a year per instrument, has a retail price to match with a starting point of around $100,000. Steinway’s unparalleled quality value proposition led to high penetration in the professional segment of the market. With a thoughtful approach to branding including product placement in concert halls and dissemination by word of mouth to the lower retail segments, Steinway created significant barriers to entry for both its grand and cheaper upright ranges.
But with the advent of advanced digital music technology and a consumer with a digital habit, the piano and keyboard market has witnessed the ascendance of comparatively inexpensive digital disrupters, of which Yamaha is the most prominent. Rather than seeking to modernise by simply adding digital ancillary products for the acoustic piano as Steinway has, Yamaha is digitalising acoustic pianos at the higher end of the market with sophisticated hybrid pianos.
Many have been sceptical of a digital instrument’s ability to compete with the craftsmanship of the more traditional manufacturing methods at Steinway. This is partly a result of the fact digital keyboards have historically underperformed on most metrics: sound quality (depth and range of tone), action (sensitivity, key repeat speed), and aesthetics. But that is changing. The greatest competitive threat to Steinway yet may now be Yamaha’s TransAcoustic technology, described as sounding “like an acoustic piano with volume control, or a digital piano with strings.” It currently competes on all metrics outlined above and is likely to outperform acoustic instruments before long, Steinway included. Where Yamaha’s greatest value proposition lies over and above this is digital connectivity: its hybrid pianos are linked to smartphone applications allowing the user to record themselves, share their recording with other users online or play along with pre-recorded ensembles, inter alia. Rather than simply optimising for existing metrics, Yamaha is expanding the scope of possibility and capturing additional value for the consumer.
Yamaha describes itself as “the one and only comprehensive musical manufacturer” , combining acoustic and digital expertise. Though focused on what it calls “sound and music”, its operational model is divided into four sub groups:
(1) Acoustic musical instruments
(3) Education and leisure
(4) Industrial parts and machinery
Where Steinway innovated gradually across one product group, Yamaha’s product range and international presence allows it to lever a multitude of design principles and optimise supply chains to deliver a larger number of cheaper innovative acoustic cum digital instruments starting from $3-5,000. These in turn are compatible with a range of Yamaha’s digital audio equipment. The corporation has cornered the technological part of the instrumental market and is primed to benefit from the ongoing shift towards digital functionality across product classes.
What are Steinway’s options? Innovate or face obsolescence? Partner with Yamaha? Horizontally integrate by consolidating the upper end of the more atomised acoustic market? Bought by Paulson & Co in 2013, Steinway was debt laden with a debt covenant specifying a maximum debt-to-earnings ratio of 5.5x compared to actual leverage of around 5.48x at the time of acquisition. This was partly the result of significant capex relating to “Spirio” – a technology allowing users to select tunes for their Steinway to play autonomously, i.e. to listen to music played on an actual piano rather than to a recording. So Steinway is innovating. But is it innovating correctly? Spirio’s combined hardware and software is priced at around $110,000 and is surprisingly gimmicky. If Paulson & Co need volumes to grow their way out of Steinway’s financial woes, it is paramount to digitally address the middle to lower end of the market. It is hard to see how they will stop Yamaha’s inexorable drive to market without doing so.
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 Their product suite includes 6 grand and 3 upright models with total output of 2,500 instruments per annum across both factories. Famous for their design innovation over the last 150 years, Steinway at one time owned over 126 patents pertaining to every part of the instrument from the soundboard to their hammers.
 Yamaha Corporation, Analyst and Investor Briefing on the Fiscal Year Ended March 31, 2016 (FY2016.3)
 Yamaha Corporation, Annual Report Fiscal Year Ended March 31, 2016
 Yamaha Corporation, Annual Report Fiscal Year Ended March 31, 2016
 E.g. Fazioli.
Student comments on The Digital Concert Pianist: How new digital norms challenge our traditional views of craftsmanship
Thanks Laura for this piece! As a pianist, it is heart-breaking to know that the value of Steinway is diminishing with the rise of the digital era. We have already seen other brands disappear or change completely because of the market (e.g. Baldwin stopped all production and moved their entire manufacturing to China). You raise a lot of good options that Steinway should consider, yet there is one that I’d like to also suggest. Yamaha and other such brands already have a huge advantage in the digital instrument market. They target the mid- to lower-scale clients and the value proposition they sell is entirely different to Steinway. Personally, I don’t think Steinway has a shot in that market. With that said, I think that the value of a Steinway will still be appreciated by a (diminishing, but still present) small subset of buyers. As such, I would suggest Steinway remain the brand that it is. It should, instead, start producing digital instruments targeted at a different market under a different brand. This would allow the Steinway name to maintain its brand image and brand value, and also opens the overall company to a larger market.
Great article, Laura! I am also a pianist who has both a grand piano and a Yamaha electric piano. I had to switch to the Yamaha electric piano when I moved out of my parents’ home when I started college and into apartments / dorms for the last 10 years. After graduating from college, I tried to take piano lessons using my Yamaha electric piano, but it simply did not work out well. While there has certainly been improvements to the Yamaha pianos, the depth and complexity of an acoustic instrument just cannot be 100% duplicated. Real pianos are very complex and fragile instruments, requiring tuning even when moved across a concert hall. Moreover, even the humidity can change the sound and in my experience, the mechanics of very soft sounds such as staccato on ppp are not completely the same. While that may bode well for beginners or those who cannot live in a large enough space for a grand piano, I think for concert pianists or competitive players, there will always be a niche market for handcrafted goods like Steinways. If I were Steinway, I would therefore just dominate that niche (along with others such as Bosendorfer or Petrof) and not try to move into the lower end electronic market, which may even dilute the brand value.
Hey Laura, very interesting article. It is fascinating to think about incredible brands such as Steinway whose product has been built pretty much the same way for decades. The very source of a Steinway’s value (its hand built craftsmanship) would be wiped out by any decision to modernize or digitize their product.
I think that they should resist any urges to develop digital pianos. In my opinion, it is going to be a race to the bottom for digital instruments. Sources of differentiation between one digital instrument and another will only disappear as technology progresses – leaving very little hope for long term pricing and margin.
Perhaps they can pursue digital initiatives in a different way? Maybe they can bring Steinways to public places and film musicians playing the instruments for the first time? Some of these videos could go viral and there could be strong digital engagement with the brand, while maintaining the non-digital craftsmanship of the product.
An additional part of the story here is that Steinway is currently owned by the hedge fund, Paulson & Co. Whether these owners will be good stewards of the brand or overly focused on short term profits remains to be seen.
Interesting post, Laura! I’m saddened by diminishing value of Steinways in the face of digital technology. Digitalization has democratized the piano by dramatically decreasing the purchase price. Unlike my peers, I think Steinway should adapt its model and go digital. This could be in ancillary products like digital auto-tuners or in combining hardware and software as they have already begun. To protect the Steinway brand, I would suggest they rebrand their digital products as “___ by Steinway” to protect their brand integrity.
Great post Laura! This one I’m really torn on though. On one hand, I agree with Smitha that they likely need to go digital as I believe we will slowly not be able to differentiate between a handcrafted Steinway and a well coded and assembled digital machine, which is an impressive feat; but on the other hand, like others posting here, I find that extremely sad. The only way I could see them staying out of digital is if somehow the “artisan” culture of today that appreciates vinyl records and craft beer breeds a sustainable segment of the population that will always want an analog hand made solution where possible. If however that is just a temporary fad, I fear that the Steinway will be something for museums in the future. We’ll be sitting in our rocking chairs lamenting how they don’t make pianos how they used to, and our grandchildren will be wondering why we are so old fashioned and why we would ever want something more expensive and space consuming that creates more or less the same sound.