If you are planning a $200 splurge on premium headphones — as millions of people are this year — who will give you the most for your money? Maybe a rapper like Dr. Dre, 50 Cent, Nick Cannon or Ludacris?
Or will you get better sound with headphones branded by rockers like Motörhead or inspired by the reggae artist Bob Marley?
Maybe headphones associated with the sports stars Tim Tebow and Michael Phelps or the reality television star Nicole Polizzi, better known as Snooki, produce even better sound?
This is how headphones are marketed these days — affinity headphones, if you will. The sequins, rhinestones, feathers and faux leopard print on Ms. Polizzi’s $60 headphones attract buyers as much as their sound quality does. Headphones are in high demand. The Consumer Electronics Association estimates 79 million were sold last year, and it predicts 10 percent more than that will be sold this year. But the category of headphones costing more than $100 is growing even faster — 64 percent, according to market analysts at the NPD Group.
That is wonderful news for retailers who feel their profit margins squeezed on laptops, televisions and most other electronic products. “Retailers can make more on a high-end pair of headphones than they can make selling a smartphone in many instances,” said Ross Rubin of Reticle Research, a consumer electronics research firm.
Knowing what’s behind the marketing can help a consumer avoid the hype when choosing a product. Headphone designers estimate the cost of making a “fashion headset” selling for $200 is as low as $14. “I would have guessed $20 to $22,“ said Tim Hickman, whose California Headphone Company and Fanny Wang Headphone Company brands are made in China.
“When you look at a $300 Beats headphone, how much does it cost to tool the enclosure, how much does it cost to stamp the thing out?” said John Chen, director of sales for the audio manufacturer Grado Labs. “Stamping it out is pennies.”
“I wish that were true,” said Noel Lee, founder of Monster Products, which until December produced Beats by Dr. Dre headphones. “I’m going to say it’s in the $40 and up range to make a quality product.” (Monster also makes those $80 HDMI cables at electronics stores, the ones that cost much less at Monoprice.com.)
The growth in pricey headphones is yoked to the growth of tablets and phones. IPods and other media players come with basic earphones, but the expanded menu of music and video apps now available encourage people to replace those with higher-quality headphones.
“What is really pushing premium headphones is not just the growth in mobile smartphones and tablets, but video and music services like Netflix and Spotify, that make people want a better listening device,” said Benjamin Arnold, a consumer electronics industry analyst for NPD. “It’s serious consumption rather than 30-second YouTube clips.”
The rush into premium headphones was set off in 2008 by the Beats by Dr. Dre brand, which marketed headphones like Air Jordan basketball shoes. (HTC, the Taiwanese cellphone maker, was once the majority shareholder of the Beats venture and still owns a 25 percent interest.) Headphones had traditionally been sold on technical specs like frequency response, but Beats created appealing designs in an array of colors. It also tweaked the headphones with brain-rattling bass.
Monster lost the rights to make the Beats, but has introduced 12 of its own headphones, none with a celebrity name on the brand, although some have celebrity endorsers. NPD found that celebrity endorsement was extremely or very important to 30 percent of consumers, and was the top factor driving purchases of headphones costing more than $100. Consumers say they want sound quality, but brand counts heavily too.
“Basically good-enough sound is good enough if everything else is in line, like brand and color,” Mr. Arnold said. “You see young people walking around the mall with them around their necks. They aren’t even on their ears.”
Not all headphones work on the same economics as the fashion brands. Classic brands like AKG, Shure, Audio-Technica, Grado and Klipsch still market based on realistic sound and value. With no celebrity endorsers to share profits and a nearly unlimited shelf life, because the style doesn’t change with fashion, the marketing model is different.
This article has been revised to reflect the following correction:
Correction: February 21, 2013
An earlier version of this article misstated the ownership stake of HTC, the Taiwanese cellphone maker, in the Beats venture. It is 25 percent, not a majority.
Tool Kit: Some Premium Headphones Amplify Celebrities Over Sound
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Tool Kit: Some Premium Headphones Amplify Celebrities Over Sound
