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Issue Date: Vol. 50, No. 10, October 2010, Posted On: 10/25/2010


MAKING CONNECTIONS: Jukebox Firms Address Consumer And Social-Networking Lifestyles


By Hank Schlesinger and Alicia Lavay
Jukebox, juke box, coin phonograph, jukebox and social media, social networking, location-based social networking, music business, digital music, vending, vending business, touchscreen jukebox, AMI Entertainment Network, Musicati, Rowe, Rock-Ola, Mike Maas, John Margold, Ecast Inc., Scott Walker, Ecast EQ, TouchTunes, TouchTunes Interactive Network, myTouchTunes, TouchTunes mobile, Circone + Associates

When it comes to jukeboxes today, it's all about software. In a digital environment where consumer expectations are exceptionally high, a juke has to offer not only what consumers want, how they want it -- but what they may not even know they want. Websites like Amazon and the endless smartphone applications have raised the bar for digital media.

This is a challenge that AMI Entertainment Network Inc. has undertaken with its new V3 software and Musicati feature. Company officials report that the development was  neither easy nor inexpensive.

"We started to develop V3 about two years ago and it was a massive undertaking," said AMI president and chief executive Mike Maas. "We rewrote all the client software from scratch in a multimillion-dollar development effort, and this year we gave it away to the market for free, downloading it to every jukebox on our network between January and June."

The new software is a thorough update based on Microsoft's flexible, Windows-compatible .NET framework. Not only does it run on legacy Rowe and Rock-Ola jukeboxes as well as new ones, but it's designed to support future enhancements. "I believe this is the first time in the coin-op industry anybody has done this on the scale we're talking about -- which is tens of thousands of units," Maas added.


CHOICE AND IMPULSE

One of V3's key components is the user interface. Patrons make selections using an intuitive touchscreen keyboard to browse or search by song, artist, album and genre, or from playlists assembled from past selections at the site. The selector screen displays "tabs" that guide the user to particular artists or common song groupings.

For instance, jukebox patrons can use the Top 40 tab to display the most popular songs played in their location or networkwide. Popularity lists can also be viewed within genres. Added to that are more than a dozen custom playlists, including '80s music, classic rock and country, along with music from AMI's content partners VH1 and Filter magazine. There is also a menu page dedicated to special albums, called up by touching the AMI Spotlight tab.

In short, V3 provides the tools to help patrons browse the AMI catalog or "drill down" into it. The new system works more quickly than previous versions, offering fast "Google-like" search speed. It also links seamlessly with AMI's Megatouch videogames, an option that can dramatically increase eyeballs (and fingers) on screens in the location. This is a crucial feature, since Megatouch networking could increase earnings up to 15%.

One of the more intriguing features is  "collaborative filtering" (sometimes called Automated Collaborative Filtering). The concept, originally developed a decade and a half ago at Xerox's legendary PARC (Palo Alto Research Center), predicts what a consumer will like on the basis of previous selections. These systems find common factors in small samplings of products a consumer has purchased, and then scan a larger database to suggest similar items.

Now a common (and profitable) tool for online marketers like Amazon, iTunes and Netflix, collaborative filtering tempts consumers to make impulse purchases of what often are unexpected but appropriate recommendations.

AMI's John Margold reports that the company's collaborative filtering technology, commonly called "affinity," was designed from the ground up. This was no easy task, requiring some 18 months to complete.

"We want our customers, and us, to make money," he said. "It encourages people to go a little deeper into their wallets. We've noticed a 9% increase across the network. This suggests that every other person who plays the juke with a $5 bill reaches in for another buck."

Margold points out that this increase is not small change. When calculated over a year, sales even on modest routes can jump very quickly, edging up five figures. It also leads patrons deeper into the catalogue with an almost game-like appeal. 

 

THE DIY JUKEBOX

On the heels of the V3 software rollout, AMI is launching a complementary Web-based system that enables local bands or labels to gain access to the network and promote their songs for a fee. Musicati was developed by AMI in partnership with Circone + Associates, a creative agency.

Although the pricing structure is still in development, there are three basic formats that allow bands to load as many as 20 songs onto jukeboxes, each no longer than 10 minutes in length, along with album cover artwork. The uploaded songs, which run for a year, appear in both standard AMI searches and on a Musicati playlist. While the contract is entirely nonexclusive, bands also receive the standard royalty rates at $0.005 a play with a $50 threshold for payment.

"This is not something AMI is trying to do to make tons of money," Maas noted. "We're doing it as a service to the artists and the coin-op industry. Musicati is about bringing new users and fans to our jukeboxes. If you think of the traditional jukebox user as the 50-year-old male, that's fine; but how do you get the hip 22-year-old artists and all their friends?" And, for that matter, how does a bar or tavern location promote bands with which it may have a close relationship?

Those with long memories and equally long careers in coin-op will recognize Musicati's concept, with some nostalgia, from the Golden Age of jukes when operators played a vital role in the success of musical acts. During that time, jukebox operators were on the front line of promotions for new artists, and were instrumental in landing them on the charts. Musicati is a modern approach to doing the same thing.

Musicati is offering additional options to contemporary standard operating procedure for bands promoting themselves on the Internet through Facebook and other social networking sites, by bringing their music to public venues. More importantly, it will bring local flavor back to jukeboxes.  

"I spend my days thinking how the operator can remain relevant or become more relevant," Margold said. "So, if there's a local band that has a local following, they're going to bring their friends into a location. Sure, they'll play the music, but they'll also add to the traffic in that location. It makes the operator more relevant if bodies come into a location because a local artist is on the jukebox. If the operator becomes more relevant and important to the location owner, that's a huge win."

Musicati is also a substantial "win" for the artists trying to develop a local following or extend their reach into new markets. "It's apparent that, in today's world, it's a very difficult proposition for an independent artist to get developed," Maas added. "It used to be you could go down to the circuit of clubs, build a local following and wait for a record executive to discover you. This is no longer a common approach. Artists can turn to the Web, but they'll likely be unseen. So we're creating a new outlet in the on-premise world."

This kind of two-pronged approach -- drawing patrons more deeply into an extensive music catalog and highlighting local artists -- just may pay off for AMI. Notably, there's little or no talk of "information overload" for the "Googling" generation now coming of age. It's all about what they want and when they want it. It's all about the software.

 

ECAST: FORM FACTOR

Engineers at Ecast always have exhibited a marked distaste for wasted space and computing power. Since unveiling its EQ juke two years ago, the company has been striving to add features, maximizing touchscreen and processing power. With an installed base of around 1,000 units and counting, the EQ has been in the company's innovation vanguard, though Ecast has also been working hard to leverage the power of all the 10,000 locations on its broadband network.

Ecast product innovations have been hitting the market regularly, with no signs of letting up. Company officials claim several 21st-century jukebox firsts: an all-broadband infrastructure, single-song downloads, wireless connections, paid advertising, social media integration and the large-screen form factor. Its designers are doing their best to stay in the forefront.

Present efforts are focused on the EQ's 40" high-definition touchscreen, and aimed at redefining jukebox functionality while adding location value. "The larger form factor of the EQ gave it better visibility and increased interaction in the location," said Ecast's Scott Walker. "It draws patrons to the unit, and that engagement translates into more transactions."

Other applications in the Ecast toolbox include mini games and Web-based tools like Posters, offering a wide variety of predesigned templates customized by typing in a promotional message for display in the top zone on EQ's portrait-format screen. The company's aggressive push into onsite interactive advertising that allows advertisers to capture names and email addresses has paid off with high click-through rates for Absolut Vodka, McDonald's, Verizon Wireless, Geico and Jeep, among other well-known brands.

The San Francisco-based company is now poised to leverage its broadband network and EQ screen even more strongly with a social media bundle, scheduled for release later this year. "Social media is a way to for us to engage in the 45 million users who frequent Ecast locations," Walker said.

The company has been cautiously testing the synergy between social media and jukeboxes for some time. The EQ permits interaction with and among location patrons by enabling text messages to be displayed on the center portion of the screen, called "the belt." Using Wiffiti, a LocaModa mobile phone application, bar patrons can "text" directly to EQ screens or receive text message feeds from the location. In one application, location management can send text messages directly to customers for use as coupons for drink or food specials.

Expansion into the social media arena is no small thing when it comes to onsite entertainment. The 21- to 40-year-olds who make up Gen Y and Gen X are the sweet-spot demographic who quickly adopted the always-connected concept and now live their lives following Facebook, Myspace and Twitter, and mobile-based check-in applications like Foursquare and Gowalla. What's more, members of the rising generation have lived most of their young lives with social media and text messaging.

If this is a bandwagon, it's an awfully large one. Facebook, which was founded in 2004, currently boasts some 500 million active users, of whom about half log on every day. According to the social network's estimates, that totals around 700 billion minutes spent on the site each month, with users documenting their lives and expressing their preferences.

Walker estimates that at most locations, patrons typically spend only eight minutes interfacing with a jukebox during every active hour. "EQ is the best opportunity to incorporate social media," he said. "The form factor draws people to it, and you can blend it right back into the music. But a huge education process must happen for it to reach full potential. We need to educate operators on the value of social media and how it can drive music consumption."

The company plans to launch its new social media bundle in the weeks ahead.

 

TOUCHTUNES: CREATING THE FUTURE

The nation's first and largest digital jukebox network also is breaking new ground in the social media space. In August, TouchTunes Interactive Networks plugged in its own location-based social network, myTouchTunes, which enables members to create, share and control music by creating playlists, sharing them with friends, checking in at local bars, and updating where they are and what they're listening to on Facebook and Twitter.

iPhone TouchTunes
PHOTO: TouchTunes unleashed its iPhone app on Sept. 14. MyTouchTunes Mobile turns a consumer's iPhone into a bar music remote control that creates playlists, shares and selects songs, and activates play on a jukebox. The application is part of the latest myTouchTunes Web-based service, which went online in August [see story]. As part of the service, the app can be used to track down TouchTunes locations within an iPhone user's proximity, and can manage jukebox credits and connect with other myTouchTunes members. The free app, developed by Skyrockit, is available at the iTunes store.

Last month, the digital media company released MyTouchTunes Mobile, an application that turns a consumer's iPhone into a bar music remote control that permits the user not only to select songs but to share them, create playlists and activate play on the jukebox. A subscribing iPhone user can find nearby TouchTunes locations, manage jukebox credits and connect with other myTouchTunes members. The free app, developed by Skyrockit, became available at the iTunes store on Sept. 14.

The myTouchTunes bundle includes a loyalty rewards program that allows users to earn free jukebox credits redeemable for music plays. Users can also opt to post and tweet jukebox plays automatically to friends on Facebook and Twitter, and  to check in at Foursquare.

According to TouchTunes chief executive Charles Goldstuck, the social landscape has changed; operators are now serving a market in which consumers have become the creators. "We can't feed them -- they are part of the process," he said. "We must fully connect with consumers' habits, increase growth and build a larger footprint in order to be relevant."

Goldstuck made those remarks at TouchTunes' first partners meeting, held in Phoenix, AZ, in September. Themed "Creating the Future," the TouchTunes meeting hosted more than 120 vending companies who run more than 20% of the firm's 45,000 jukeboxes.

"We don't use the word partners lightly," Goldstuck said. "We have no choice but to take risks, improve our business relationships and collectively prepare for the future. We need to shape the future rather than be shaped by it."

MyTouchTunes is one way the jukebox industry may do this, by connecting consumers at home, on the go and in jukebox locations, the TouchTunes chief explained.

TouchTunes' new consumer software runs on the company's latest jukebox platform, Gen 3, which now comprises 65% of its network. Gen 3 systems require a broadband connection and permit operators to take full advantage of TouchTunes' tools. The next version, Gen 4, is expected to launch in the first quarter of 2011. The company's short-term goal is an installed base of 50,000 jukeboxes.


Topic: Music and Games Features

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