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Issue Date: Vol. 43, No. 8 August 2003, Posted On: 8/27/2003

The Jukebox Industry Deserves Confidence

Marcus Webb

How fares the U.S. jukebox market? Not bad - although arguably it could be better. Sales have been holding steady for the last five years with estimated industry-wide annual volumes of 10,000 units, according to most , not all , manufacturers. If we "guesstimate" conservatively that 100,000 jukeboxes are currently on location, and further assume a 10% replacement rate is a reasonable goal, then manufacturers are enjoying roughly the correct level of sales.

Some believe a 15% or 20% annual replacement rate is a more reasonable target. If so, jukebox sales over the past five years have been artificially depressed, by as much as half of what they should have achieved. Why? In a word, fear. Many operators are anxious about the future. They fear making a major investment in, or risking a long-term commitment to, any one brand, technology, or format, when the future of the jukebox market seems so uncertain.

One question: what happened to those operators who held off buying a new jukebox in 1999, due to uncertainty? Are they better off today because of yesteryear's prudence? The answer, according to some of the best operators in the business, is no. Today those non-buying operators' inventories are five years older (lower route value). Meanwhile, their service costs are higher (hurts profitability). To this, I would add that certainty about the future of the jukebox is no closer now than it was in 1999. And no further away, either.

For an industry that's supposed to be in the middle of a revolution, the jukebox business has enjoyed remarkable stability from 1999 until now. Not just sales volumes, but key market conditions remain largely unchanged. Then, as now, both downloading and CD jukeboxes were available. Then, as now, it appeared both formats were going to co-exist side by side for a considerable time to come. Then, as now, certain locations seemed best for one type of technology, others appeared better suited for another type of technology. Then, as now, CDs were the dominant format worldwide. Then, as now, millions of consumers were enjoying downloaded music at home. Then, as now, CD production appeared likely to continue as a mainstream format for a decade to come. Then, as now, it appeared the music labels would be forced to accommodate consumers' desire for online music, too.

Conclusion: operators who hold off buying the requisite amount of new jukeboxes this year , whether CD or downloading , simply because of uncertainty about the market, will be making the same mistake again. Their service expenses will rise (again), while route value drops (again). And for what?

Certain operators appear to desire a degree and kind of certainty about the future of entertainment technology, that is simply not available in today's world. At some point, the desire for this mythical level of certainty stops being reasonable prudence, and becomes emotional paralysis. Those operators who buy 10,000 jukeboxes a year are not wild, reckless, coin-op cowboys. They are successful, careful veterans with decades of real-word experience. Keeping their jukebox routes up to date represents realism and business savvy. Most important, these operators have figured out that the kind of certainty and stability the jukebox market enjoys today, are perfectly sufficient to move forward with confidence.

Topic: Editorial: Music and Games

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