I guess I will preface this post by saying I am a huge fan of the Grado house sound and love their headphones. That being said I will comment on what I feel qualified to discuss.
I don't know what part you don't understand? Imported goods are more expensive than their domestic counterparts. Imported goods are cheaper in their originating country. In order to protect dealers, distribution networks need to be controled, and they are, through binding contracts. Each distributor is able to sell to their respective zone, which happens to be by country in most cases. The US is fortunate in that they are able to purchase directly from Grado Labs. This cuts out a middle man. The price then is cheaper. Grado sells the phones to the distributors of other countries at a lower price than he sells to the dealers in the US. He makes less money with the international sales. If for example, Tyll sold via the internet to folks in Germany, the German distributor is cut out of the equation as are the potential German dealers. If the German dealers feel they can't compete with online sales from US dealers who get their phones at a better price, then they will stop carrying the Grado line. This means fewer people will have access to Grado products through those stores. Grado has built up its business around "brink and mortar" stores, not online sales outlets, and out of appreciation to them, John insists on protecting them. This also means that the industry has a greater respect for Grado products and they will then likely more readily want to sell his products.
Shipping costs
Distributor takes his cut which also includes his storage costs
Dealer takes his cut which also includes his storage costs
The end result? The consumer pays more.
The issue is the distribution networks. Import costs apply to everyone and are not a reason to have these protections. Rather a distribution network is a method for a monopoly to price discriminate. Which is all well and good. After all a profit maximizing firm should always choose to do this. And generally speaking being allowed to price discriminate maximizes consumers and producer welfare. And I agree that monopoly protection rights will make distributors much more willing to sell Grado. I guess what I am trying to say is: I can understand what Grado is doing, but talking about things like shipping costs and import taxes is misleading.
Of course none of this has stopped me from starting my own RS-1 fund.
