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Music Inc David Kalt Cover Story The mix of gear is already supported strongly by Reverb.com, a website Kalt launched in January 2013, where musicians and dealers can buy, sell, or trade used gear. At press time, the site had done about $1.2 million on 3,500 transactions. With Reverb only taking 3.5 percent of each transaction, Kalt said that the goal of the site is to remove the price friction that exists in such platforms as Amazon and eBay.

"Even at brick-and-mortar stores, there is too much of a spread between what someone is willing to pay for something and what the intrinsic value is," he said. "At 3.5 percent we open up all kinds of possibilities, and we are seeing that every day. Basically someone who couldn't make a living selling guitars on eBay because of its 12 percent can now afford it."

And it's not just end-users selling on Reverb. Kalt estimated that about 800 MI retailers have sold on the site. Including the name of the seller's store and a "banner" on the seller's page helps promote other brick-and-mortar stores and creates a feeling of community, Kalt said. While CME is both a buyer and a seller on the site, Kalt is running the two entities as separate companies.

"The word that we are hearing a lot from our sellers is that a lot of dealers are buying from dealers," he said. "There's definitely a sense of community because it's not eBay." According to Kalt, what makes Reverb stand apart from eBay and Amazon is its expert sensibility. "Websites like eBay are not very good at telling a story or curating it into a really interesting story or context," he said. "We at Reverb take a lot of time doing that. We have a signature guitar section, offset guitars, funky vintage, Japanese vintage, and so on. We've come up with really creative ways to think about our instruments."

Music Inc David Kalt Cover Story "I think it comes back to what we are doing at the store here – getting good at merchandising is what's going to get the consumer excited. And that is something that is lacking in our industry. There isn't a lot of innovating."

Kalt forsees Reverb doing about $10 million in transactions next year. "We think that pot is really big and our platform is going to help sell that. I do projections for four years. So, in 2015 I see Reverb doing about $40 million and the following year $100 million. That seems very doable."