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Issue Date: Vol. 45, No. 3, March 2005, Posted On: 4/10/2005


The Jukebox Future: Tomorrow's Challenges Have Familiar Look


Marcus Webb

Winston Churchill used to say, "The farther backward you gaze into the past, the farther ahead you can peer into the future." In that light, and in the light of several new developments on the digital music scene, an interesting window is opening on the future of the jukebox.

The jukebox industry is now entering what we all hope will be its third boom since the inception of the coin-op amusements industry. The first boom came when San Francisco saloon owner Charlie Glass invented the "Nickel In the Slot" in 1887, giving birth to the amusements industry and spurring the development of the recording industry. That initial era lasted a solid 20 years.

The second jukebox boom arrived in 1928 with the advent of electrical amplification of sound. This era, too, lasted 20 years. The third boom (we hope) is now being sparked by downloadable, digital music. As Rock-Ola president John Schultz recently commented, downloading jukeboxes are arguably today's highest-grossing coin-op products.

The first jukebox boom ended in 1907 when the hand-cranked Victrola made it possible for millions of ordinary Americans to afford prerecorded music in their own homes. The second jukebox boom ended in 1948 with the advent of the music radio format, cheap and portable transistor radios and television.

What can we learn from all this? First, this industry flourishes during a brief window of opportunity in the lifecycle of every new entertainment technology. Our moment comes when those technologies are too expensive for average consumers to have at home. And second, this industry contracts - or even implodes , when cheap home versions of our products achieve mass ownership.

As we've seen with more recent products such as video games, the cycle for new technology to progress from industrial to commercial and onto consumer applications (with each application becoming successively smaller and cheaper) is happening faster and faster as the pace of technological change accelerates. Accordingly, the amusement industry's window of opportunity to exploit any new technology with an "exclusive" grows steadily briefer.

All of which causes us to raise an eyebrow at news that "iPods" and MP3 players are being used to offer musical entertainment at bars and lounges from New York to San Francisco. It's even more troubling that officials from ASCAP say this may be perfectly legal under existing location licenses. Operators tell VENDING TIMES that "iPod nights" and similar activities are clearly cutting into their jukebox revenues in some cases.

But that's not all. The mobile phone industry has decided to go beyond its lucrative ring tone business to get into the music downloading business. From Sony Ericsson to Nokia, cell phones are turning into miniature downloading jukeboxes' only there's no coin mechanism and no operator in sight.

We cover these developments with a pair of stories in this month's issue of VT. But those articles don't offer a prescription for fighting this inevitable hi-tech onslaught, nor do they analyze how and why this happened in the first place.

From today's vantage point, it's highly ironic to recall the "hail of dead cats" that greeted TouchTunes a decade ago, when it first bowed a downloading jukebox. Operators, distributors, and above all, competing manufacturers, resented TouchTunes' very existence. They also resented every word of ink that company received from the trade press. (And they said so, loudly.)

But TouchTunes was on to something, as we all clearly acknowledge today. They offered some hardy pioneering operators a chance to ensure that the downloading music "window of opportunity" for coin-op began as early as possible. Now that growing signs are on the horizon , or maybe in our faces , that our industry's exclusive claim on downloading music technology for public locations may be coming to an end, we should draw several lessons from the TouchTunes experience.

First, viable new technologies often come from new companies, even from garage-based startups (which is how Apple and Microsoft began).

Second, this industry would be well advised to take a long, hard, open-minded look at any and every new technology that comes along' and to jump on those technologies as quickly as it is reasonable to do so. Strange or uncomfortable as that newfangled gizmo may appear today, it just could become your biggest moneymaker tomorrow. And the day after tomorrow, it may be eclipsed by a consumer version of the product , so act now.

Third, the trade press has both the right and the duty to inform its readers of new companies that offer new technologies and new products. This is not disloyalty to old-line manufacturers; it is loyalty to readers. (Beyond that, of course, it is the basic function of the "news" business to report on that which is new. At VT, we shall continue to do so.)

Now, how should today's jukebox industry cope with the rising tide of "iPods," MP3 devices, cell phone jukeboxes, and the like? The answer lies in a combination of aggressive marketing and that old stand-by, location contracts. Operators should aggressively remind clients that locations don't make money on free play with "iPods." Locations do make money , significant money , on jukeboxes.

Operators should ask location owners, "Are you going to let people start bringing their own beer from home into this bar? If not, then please be consistent and respect our partnership by refusing our customers to bring their own music into this bar, too."

Next, operators should aggressively educate location owners to the fact that music and games are not a nice "freebie" or a mere adjunct to the "real" product sold in the bar, namely food and drink. Music and games are integral profit centers in their own right. By the way, as DUI cuts into on-premise beverage consumption, it's even truer that music and games are vital, co-equal profit centers in today's bars and taverns.

Operators should aggressively educate location owners to the fact that a downloading jukebox offers instant gratification in a way that iPod and cell phones (so far) do not. You say you don't see a major label's hit tune that you want to play on a Rowe, Rock-Ola, or NSM downloading box? You can probably download that tune on the spot. The same is not true with MP3 players and "iPods" in the bar (although this will change in a year or so).

The Amusement and Music Operators Association has a crucial role to play in this educational effort. Individual operators should not be left out there on their own, trying to convert individual bar owners one at a time to that old-time coin-op religion. AMOA should launch a permanent marketing campaign to teach the above points to the tavern owners of the U.S. This does not have to cost a lot of money, but it will take considerable leadership, creativity, and dedication , qualities that AMOA enjoys in abundance.

In short: Attention, AMOA board. Your destiny is calling. This is too big a job to be left to the AMOA Jukebox Promotion Committee alone, although it can certainly play a role as an instrument of AMOA's educational efforts in this regard. But every AMOA leader from the president on down needs to get onboard this campaign, starting now and continuing in perpetuity.

Lastly, the operator must protect his investment in music with a rock-solid location contract. That contract should explicitly prohibit competing forms of music, whether provided by locations or by customers. This is mostly a job for individual operators, in the course of their relationships with their individual locations. However, AMOA could also play a vital role here. How? By asking AMOA's consummately talented legal team to draw up a model clause that could go into location contracts to cover this crucial point.

Some jukebox operators already have clauses in their location contracts that prohibit competing forms of music. Today, these operators may feel that they are sometimes in the awkward position of either threatening a lawsuit to enforce those contracts, or simply sitting back and accepting the erosion of jukebox revenues as "iPod" and other MP3 devices eat into the cashbox. Neither of these alternatives is acceptable. Is there a third way?

Yes, but that consists of the educational efforts described above. Ultimately, no contract is any good if the parties don't really want to comply with it. The coin-operated amusements industry must focus on making its allies want to comply.

That means marketing. For decades, we've gotten along without any real marketing efforts. We've even made fun of those industries, from automobiles to fast food, that spend so much time, effort and money on marketing themselves to people who have already bought their products and services. But the day of taking our locations for granted is coming to an end. The love-hate relationship between bars and operators isn't good enough any more. It needs to be love-love' and win-win.


Topic: Editorial: Music and Games

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  • Are Vendors Adapting Too Slowly To Changing Retail Landscape?

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