or the past century, brick andmortar retail has been definedby a  trend  toward specializa-tion,  as  department  storeshave  continually  lost  ground

to  wave  after  wave  of  merchantsaddressing  increasingly narrow marketsegments. At  a  time  not  too  long  ago,the  concept  of  a  viable  retail  businessselling  nothing  but  athletic  shoes,  or

sunglasses,  or  vintage  guitars  for  thatmatter, would have been inconceivable.Today,  they’re  commonplace  fixtures.With  the  launch  of  reverb.com,  anonline marketplace devoted exclusivelyto  selling  and  trading  musical  instru-ments,  David  Kalt  is  hoping  to  bringthe  same  specialization  trend  to  theinternet.In  concept,  reverb.com  closely  fol-lows  the  eBay model.  Both  sites  pro-vide  sellers  the  opportunity  to  presentmerchandise for a fee while giving buy-ers access  to a wide selection of prod-ucts  with  the  option  of making  a  bid,auction  style,  or  paying  a  fixed  price.What  differentiates  the  two  sites  arescale and focus. While eBay processesmillions of transactions daily, on every-thing from automobiles to videogames,reverb.com  is  devoted  exclusively  toguitars  and  related  musical  products.This  narrow  focus  is  what  Kalt  sayswill make his site a viable alternative tohis much larger rival.Kalt  is  the  owner  of  Chicago  MusicExchange,  a  thriving  brick-and-mortarstore  in  the  city’s  hip  Roscoe  Villageneighborhood. With  a  stunning  show-room stocked with 2,500 new and vin-tage  guitars,  the  store  is  a magnet  forguitarists.  “My store creates an  imme-diate emotional  reaction,” he explains.“It’s  an  environment  that  musiciansconnect  with.  We’re  trying  to  do  thesame thing with reverb.com. Create anonline  environment  that  says  to musi-cians, ‘this is a place where I want to dobusiness.’”Creating an appealing buying environ-ment at reverb.com starts with organiz-ing  inventory  in  categories  that  arereadily  understood  by  musicians.  Sitevisitors can search using broad productcategories  like  guitars,  effects,  partsand accessories,  amps,  and keyboards,or  they  can  get  more  specific  usingbrand  names  or  price  ranges.  For  vin-tage buyers,  there is also the option ofsearching products by decade. However,  unusual  and  constantlychanging  product  groupings  are  whatgive  the  site  its  distinctive  character.Under a recent “Staff Favorites” head-ing,  there  was  a  1980  Mesa  Boogieamp,  a  1976  Rhodes  Mark  I  stagepiano, new Planet Waves cables, and avolume  pedal  by  LeBg,  a  boutiquemanufacturer  in  Quebec.  The  “Deals

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92 MUSIC TRADES  October 2013

Reverb.com,The Musician’sE-CommercePlatformModeled after Etsy.com, new website offers a commerce

platform, with unique search options, tailored for musi-

cians and music retailers

Developed by Chicago Music Exchange owner David Kalt, Reverb.com is a placewhere manufacturers, retailers, and consumers can shop in a “musician-friendly”setting.

and Steals” heading listed a broad rangeof cut-priced gear including a BehringerEurodesk  console  for  $199  and  aHarmony  guitar  for  $75.  Other  cate-

gories  included  “British  Amp  Tone,”“Teles  of  the  ’60s,”  and  an  enormousselection  of  Electro-Harmonix  pedalsunder the “Big Muff-Madness” heading.

“When you have a search function thataccommodates lots of different users, itcan’t  speak  intelligently  to  every  typeof user,” explains Kalt. “With our cura-tion  efforts—the  way  we  group  somedifferent  products  together—our  sitescreams  that  we  know  guitars  andmusic.”  Other  unique  features  thatdemonstrate  musical  expertise  includea  real-time  price  guide  similar  to  thewell-known Kelly Blue Book guide forused car pricing, and a blog where staffmembers discuss gear, music, and othertopics of interest. Kalt hopes to attract a large followingwith  this  musician-friendly  vibe.However,  his  site  boasts  another  dis-tinctive  feature  that  has  universalappeal: low fees. Unlike Amazon.com,which  currently  charges  a  15%  com-mission on the sale of music products,and  eBay,  which  has  fees  rangingbetween 7% and 10%,  reverb.com hasno listing fees and charges a flat 3.5%commission only when an item is sold.Lower transaction costs are particularlyrelevant to musicians, who rarely popu-late  the  higher  income  brackets,  andinstrument  sellers, who don’t work onrich margins.Since  its  launch  in  April,  reverb.comhas steadily gained users and now boastsmore  than  50,000  friends  on  itsFacebook  page.  The  site  was  initiallypopulated  with  products  from  theChicago Music Exchange  inventory buthas  since  attracted  individual  sellers  aswell as product listings from a dozen orso retailers including Dave’s Guitar Shopof  La  Crosse,  Wisconsin,  SouthsideGuitars  in  Brooklyn,  and  CarlsbadGuitar, in Encinitas, California. After  his  presentation  to  other  retail-ers, Kalt says they all responded well tothe  combination  of  competitive  feestructure  and  an  online  environmenttailored  to  their  customers. He  is  alsofinding interest from boutique electron-ics manufacturers  and  luthiers  lookingfor an outlet for their products. “Someof these makers are too small and don’thave the infrastructure to develop a realdealer network, but they offer wonder-ful  products,”  he  explains.  “We’re  aperfect fit for them.”An  independent  m.i.  retailer  attempt-ing  to  create  a  digital  marketplace,going  up  against  multi-billion-dollargiants  like Amazon and eBay,  seems a

THE GUITAR MARKET

94 MUSIC TRADES  October 2013

Reverb.com is the creation of David Kalt (center), a hi-tech entrepreneur who nowowns Chicago Music Exchange. Although the web platform operates in offices atChicago Music Exchange, it is staffed by a team of developers who work independ-ently.

terrible  mismatch.  However,  Kalt’sunusual  technology and business  skillsgive  him  a  fighting  chance.  He  was  aself-described guitar geek through highschool  and  college,  but  when  he  real-ized he lacked the talent to be a star, hewent to work as an assistant producer ata Chicago  recording  studio. Two yearsof 80-hour weeks turning out commer-cial  jingles  for minimum wage  souredhim  on  the  music  industry  and  heenrolled  in  computer  programmingclasses  at  nearby  NorthwesternUniversity. 

He first applied his programming skillsto the travel industry, developing a busi-ness  that  helped  travel  agents  matchcustomers with appropriate tours. Afterselling  that  business,  he  developed  aprogram that let individuals trade stockoptions.  “I  had  taught  myself  optiontrading  and  was  doing  it  on  a  smallscale,” he relates. “But Charles Schwaband eTrade treated options like a secondclass citizen, and it was hard to trade ontheir platforms.” OptionsXpress provid-ed an alternative for independent tradersand managed to turn a profit in its first

year. Based on strong sales and earningsgrowth, Kalt successfully took the com-pany  public  in  2005.  Two  years  later,though,  he  stepped  down  as  CEObecause  “I  just  didn’t  enjoy  running  alarge public company.” In 2010 CharlesSchwab  acquired  Options  Xpress  for$1.0 billion.Kalt registered the reverb.com domainname in 2006 with the idea of launchinga direct response retail business to com-pete with Musician’s Friend. However,he quickly discovered that “you could-n’t get access to top product lines withjust  a  business  plan.”  So  he  boughtaccess  to  product  lines  by  acquiringChicago Music Exchange in 2010. Thereverb.com project was placed on hold,and  he  spent  much  of  the  past  threeyears  refining  the  Chicago  MusicExchange business.

The success of Etsy.com, a digital mar-ketplace  devoted  to  handmade  appareland  housewares,  prompted  him  torethink  reverb.com. Etsy was  launchedin 2005 and  found an  immediate  audi-ence with its quirky website and selec-tion  of  unique  items.  Last  year,  itprocessed  more  than  $1.0  billion  intransactions.  Kalt  is  making  invest-ments  in  hopes  that  reverb.com  willexperience a similar trajectory. He has astaff  of  six  developers working  on  thesite,  is  in  the process of developing anapp for mobile devices, and is spendingon  search  engine optimization  to drivetraffic  to  the  site.  “We’ll  offer  an  easyand  cost  effective way  to  sell  online,”he says, “whether it’s an inexperiencedindividual,  a  dealer  looking  to  reachadditional  customers,  or  a  boutiquemanufacturer.”www.reverb.com

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With our curationefforts—the way wegroup some differentproducts together—oursite screams that weknow guitars andmusic.