How do you divide your audio-system’s budget so that you not only get all the components you need but also the highest performance per dollar spent? Excellent question! There are two basic lines of thought. I’ll present them both, followed by my own two cents based on years of experience in audio sales and manufacturing.

The first argument was championed by Linn Products Ltd., the Scottish company best known for their revolutionary turntable design. It goes something like this: The audio system is a chain. There’s a beginning, the source component (i.e., CD player, turntable, etc.). There’s an amp in the middle and finally the speakers at the tail end. Add cables to connect everything together and you’ve got the natural progression of the signal, from input to output. This line of thinking holds that most of the money should be spent on the source component, whether it is CD/DVD, turntable, tape deck or radio. It’s the old garbage-in/garbage-out maxim -- the end result can only be as good as the information gathered into the system from the recording itself. The Linn folks have a point. If your source component cannot extract the music off the disc in the first place, then nothing in the chain can magically restore it.

The second argument holds that of all the components in the audio chain, the loudspeakers are the most compromised because they’re the most complex -- speakers are electro-mechanical devices, and they vary from one another more than, say, CD players or amplifiers. Further, when you listen to a stereo, the component you are actually hearing is the loudspeaker. This argument holds that most of your budget should be allocated to the speakers.

Who’s right?

This is where my two cents come in. Let’s start at the source. If you use CD/DVD, you’re dealing with a very mature medium that’s come a long way since its inception. The technology involved is mind-boggling. Even an $89 portable CD player contains a laser mechanism that’s accurate enough to retrieve all data without errors! In fact, this entire technology has been refined to the extent that a current-generation low-cost CD or DVD player for $200 or so will give you performance that would have cost significantly more not too many years ago. You don’t need to spend that much on a CD player today to get fabulous sound.

So while the wily Linnies did have a valid point about concentrating your efforts on the quality of the source component back in the days of records, times have changed. Great-sounding source components are more affordable than ever. What still is true, and will remain so for the foreseeable future, is that loudspeakers are the component with the greatest potential for compromise. They’re also the component with the greatest range of possible sonic flavors and will give you your biggest bang for the buck. The recommendation to start your system by choosing the speakers is truly wise. This will also determine how much power you’ll need for an amplifier. Does this mean now that most of your money should be spent on the speakers?

To answer that, let’s consider the famous law of diminishing returns, which simply says that, at a certain point, the price:performance ratio begins to level off, and it becomes very expensive to achieve small improvements in sound. Beyond that point, improvements become ever smaller, but the associated costs increase logarithmically. That’s how the state of the art is advanced -- but you don't have to subsidize it -- opt out of the escalation while the improvements still seem worth the extra cost.

Modern speaker manufacturers, especially the really big ones, have perfected the art of trickle-down technology. This means that when their statement-level speakers advance the technology -- at great cost -- that technology will eventually be used in the products at the really affordable end of the line. So the wise buyer will utilize both the point of diminishing returns and the trickle-down philosophy to buy as much speaker as possible, incorporating as much of the top-end technology as has trickled down to that price point.

Having chosen a speaker, we need an amplifier. For simplicity’s sake, let’s assume we're buying an integrated amp at this price point. Upcoming reviews will report on the differences between integrateds and separates and when to consider one over the other. The important thing to know is that amplifier technology is also very mature. A $1000 pair of speakers should mate nicely with a good $500 integrated amplifier.

I just used a $2000 budget to allocate $1000 on speakers (50%), $500 on an amplifier (25%), and $300 on a CD player (15%), which leaves $200 for cables or other accessories, if needed. Using this type of math, you’ll arrive at a very well-balanced system. However, don't take those percentages as gospel -- after all, when you have $1000 or $10,000 to play with, the options change, even though the basic ground rules remain the same:

1. Loudspeakers influence the sound of your system more than any other single component and should make up the biggest single expenditure in your system.
   
   
2. In turn, loudspeaker selection should guide the amplifier selection process since the amplifier/speaker interface is crucial (I will discuss this in more detail next month).
   
   
3. Finally, a good-quality CD source is available nowadays at relatively low cost. It’s the least critical component in the system and should cause you the least concern about getting "just the right one."