Sounds like a hot investment

In case you haven’t heard, headphones are hot right now. Skullcandy, the U.S. headphone maker with a posse of musician, athlete and DJ endorsers, has kick-started the process to go public. Rapper 50 Cent recently used Twitter to pump penny stocks for H&H Imports, a company in which he’s not only invested, but has partnered with to create his own line of headphones, called Sleek by 50 Cent. Can’t wait till 50’s headphones hit store shelves? Then consider throwing on a pair of Beats by Dr. Dre Headphones from Monster Cable, a company that’s created headphones bearing the names of rapper Dr. Dre, Sean “Diddy” Combs, Lady Gaga, Justin Bieber and NBA star LeBron James. Big names, for sure. Big business? Time will tell.

Skullcandy’s prospectus, filed on Jan. 28, argues that the growing demand for portable media and music devices, like smartphones and Apple’s iPod, is driving a massive demand for accessories such as headphones. The document points to IDC Research, which estimates that, from 2010 through 2014, the number of smartphones available worldwide will grow at an annual rate of 24 per cent. Not everyone sees the connection being quite as clear. Or as guaranteed. “The market for consumer electronics is massive, but that doesn’t necessarily mean that the market for rapper-branded headphones is hot,” says Jack Plunkett, CEO of Houston-based Plunkett Research, Ltd. and author of the new book The Next Boom. “The question is: how long will revenues hold up until demand from fans has been filled?”

Fans are still hungry, it seems. At a Future Shop location in Calgary, salesperson Moe Morad says that shoppers are always on the hunt for Dr. Dre’s headphones, which, at roughly $100 to $450, aren’t cheap. “People want the headphones because they have his name on it,” he says. They’re also buying into a fashion trend. These days, professional athletes of all kinds are seen sporting the headgear before games, particularly in the NBA where the big, colourful, earmuff-style headphones seem as prevalent as running shoes. Presumably, consumers likely also want them because they’re supposed to be crafted by music-lovers, for music-lovers; they just want good sound, yo.

That’s what Josh Hartlen wanted, anyway. Last year, the 22-year-old Calgary music fan shelled out close to $300 for a set of Dr. Dre’s headphones. They didn’t fare well. Within months, the cord was in rough shape, the hinges cracked and a speaker blew out. “It’s called Beats, so when you crank the beats and the speaker blows, that’s crazy,” he says. From now on, Hartlen will only be interested in the rapper for one thing: “I would buy Dre’s music, but not his Beats.”