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Issue Date: Vol. 46, No. 11, November 2006, Posted On: 11/29/2006

Industry Watches Usage Of Jukebox MP3 Adapter Kits

Marcus Webb

Mike Leonard of Coin-Op Specialists (Adrian, MI) reports that illegal MP3 conversion kits for jukeboxes are “all over the Internet” and have appeared on routes in various locations.

One of the industry’s most knowledgeable operators on the subject of digital music, Leonard is a past-president of the Amusement and Music Operators Association. What many do not know is that 15 years ago, Leonard was in the forefront of creating music compression technology in a joint venture with professors at the University of Michigan.

Though Leonard never managed to partner with a jukebox manufacturer to bring his patented, pioneering music compression formula to the coin-op industry, he remains a keen observer of the digital music scene.

“Somebody should look into this – it could cause some problems,” said Leonard, and many of the legitimate digital jukebox manufacturers and platform providers agree.

“I think it’s serious,” said John Margold, vice-president of sales and marketing for Rowe International.

Rick Caviglia, president of View Interactive, agrees: “The proliferation of these MP3 player kits as illegal jukeboxes is probably going to happen unless somebody polices it.”

“I think it’s a growing problem,” said NSM said sales manager Geno Giuntoli.

Products like those sold by some online sources are often marketed as a means for consumers to enjoy digital jukeboxes in their home rec rooms. But such marketing may be done with a wink and a nod, because at least some unscrupulous operators and ignorant location owners – nobody knows how many – use these unlicensed devices in place of the licensed digital music platforms provided by TouchTunes, Ecast and its partners, or Rowe/AMI Entertainment.

Other suppliers are more blatant, and have established websites that offer lists of CD and 45 jukebox models that may be converted – using their kits – to MP3 player technology. There is even an illegal video downloading jukebox available, Guintoli. reported. He explained that any time anyone goes this route, it harms the entire industry.

“Some bar owners don’t understand copyright laws and requirements of the performing rights societies, so they are playing songs publicly without quite realizing it is theft of intellectual property,” said Rowe’s Margold.

Margold voiced hope that the Recording Industry Association of America and others with more resources, such as the PROs, will continue to educate tavern owners. They must understand that playing unlicensed digital music in a public venue through a money-collecting machine is no different from illegally charging $5 to patrons so they can view the public performance of an HBO championship fight – when the location is paying the subscription rate for private home feed.

“We work every day to provide RIAA with information on situations where we know this is occurring,” Margold said. “There are some bottom-feeders in every industry and I’m afraid some operators may be doing it, but most of the leading operators would never consider taking the risk.”

Ecast’s Bob Cooney said he doubts illegal MP3 player kits will ever become a serious threat to sales of legitimate downloading jukeboxes. But other industry leaders voiced concern that only a relative handful of bad apples can harm the reputation of the entire industry.

The problem of illegal MP3 players operated as jukeboxes is “on our radar screen, unfortunately,” said TouchTunes senior vice-president of sales and music Dan McAllister. He cited one Midwestern operator who had covered his entire route with illegal MP3 jukeboxes. That operator was caught, and was forced to remove his illegal MP3 jukeboxes from locations by Broadcast Music Inc. and the American Society of Composers, Authors and Publishers.

“Enforcing copyright laws is the responsibility of the RIAA and the performing rights organizations,” McAllister said. “They take a tough line, but the fact is they don’t have the capability to police it properly.”

The solution is for legitimate manufacturers to provide a product that is “more valuable than just throwing an MP3 player into the location,” said McAllister.

Like many operators who resent the failure of the PROs to take action against so-called iPod nights, McAllister is painfully aware that when free digital music is allowed for public performance, it devalues the commodity that TouchTunes and its competitors have invested so much money and effort.

“It’s not at the point where we have to say, if you can’t beat ‘em join ‘em,” McAllister said. “But it’s something we must keep our eye on.”

Some other industry members, however, feel that iPod nights and illegal MP3 jukeboxes may present exactly this case. At least one jukebox manufacturer is considering adding an iPod docking station to its digital jukebox.

“Legally, you’re not transferring music to your hard drive,” the manufacturer pointed out. “You are just charging $5 to let someone use your speakers.”

At least one more industry group is reportedly considering a plan to create an unlicensed MP3 jukebox conversion kit.

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