Topic: Business & Commercial

Strings Attached: Instrument Kick-backs
(3/27/2004)

From Strings Magazine comes news that kickbacks to music teachers are the norm in the instrument business. This means, according to Strings (who should know, it being a magazine about string instruments), that 10-30% of the cost of every child's instrument is actually going to a music teacher in compensation for the teacher sending their student's parents to a particular dealer. One dealer quoted in the article says that it is common to get a phone call from a music instructor who asks, "What commission do you pay?" If the teacher doesn't like the answer, the teacher's students go elsewhere to buy their violins, violas and cellos.

What is wrong with this practice? It is secret, first of all: the student doesn't know that the price of his or her instrument is being inflated by a payment to the teacher. If teachers are only sending students to a dealer because of the size of the commission they receive rather than because of the quality of the instrument sold, then the practice also works against the interests of the aspiring young musician. It is a clear conflict of interest for the teacher. It is, to be blunt, a racket.

Several teachers quoted in the article attempt to make a case for the practice. "Compared to my students, I have superior knowledge about quality, price, playability, setup, strings, and repairing," says one indignantly. "Compared to a violin salesman, with my decades of practice, I have vastly superior playing and demonstration ability. Why should I not be paid a fee for lending him my expertise to sell his product?"

The answer: as long as it is disclosed to the student, there's no reason at all. Kick-backs, or secret "finder's fees" and commissions, all have the same ethical flaws. They deceive one party that another party is providing advice based on judgment, when it may be based wholly or substantially on unrevealed compensation. In addition, they make a commodity more expensive than it should be.

Kick-backs are a common practice in many fields, such as meeting planning, hotels, and the printing business. Like the unethical practice described by Strings, they survive on rationalizations and the argument that "this is just the way it is done in this business." Fortunately, the remedy is often easy and direct: in the case of music teachers, ask them point blank if they are getting a commission from the instrument dealer they recommend. If they are and don't tell you, they are committing fraud. If they are and they do tell you, refuse to pay it. Kick-backs, like bribery, is an insidious and damaging form of corruption that flourishes in the shadows. It seems that the musical instrument dealers want to banish them from their trade.

Spread the word, and help them out.

Related Link: http://www.stringsmagazine.com/issues/strings102/ethics.html

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