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Issue Date: Vol. 45, No. 9, September 2005, Posted On: 9/16/2005


An Interview With Incoming AMOA President Jim Pietrangelo


Marcus Webb

VENDING TIMES: Please give us a brief bio of yourself before joining the industry. Where were you born, where did you go to school, what earlier jobs did you have?

PIETRANGELO: I was born in Switzerland; my father is from Newark, NJ, but was attending medical school at the University of Lausanne. Following his graduation, my father, mother, and I traveled to the U.S. upon the ocean liner S.S. United States.

I grew up in the then-rural town of Toms River, NJ. Like most places in New Jersey, it’s not so rural now. It was a great place to grow up, though. We were the next town over from the ocean and, as such, spent most of our summers hanging out on the beach and boardwalk. Like most kids that grew up on the Jersey Shore, I took rides, games, arcades and redemption for granted – something that is just a part of everyday normal life. Imagine my surprise, later in life, when I learned that redemption was almost unheard-of in many places, and considered unlawful in others.

As for school, I graduated from St. Joseph’s High School in Toms River on June 8th, 1973. I want to get that date in because my daughter Media will get a kick out of seeing her birthday in your magazine. It’s a well-worn story in my family: I graduated high school, my first daughter was born, and I totaled my car – all on the same day! Even now I think twice before getting out of bed on June 8.

Following high school graduation, and desperately in need of a job, I apprenticed as a barber and worked in that profession, even owning my own shop for a while, for the next 10 years. It was that brief foray into owning my own place that made me realize I had better go back to school if I wanted to get ahead. So, while working full time, I enrolled in college full time, graduating Summa cum Laude four years later in 1982 from Monmouth College in West Long Branch, NJ.

1982: Remember that time? Pac-Man, Missile Command, Dig Dug, Galaga – these were the games and THIS was the industry! Sure, I could have gone into banking or stocks with my finance degree, but I loathed the idea of putting on a tie and commuting to New York every day. I wanted something different.

I had always been fascinated with computer technology, then still in its infancy. Video games were the first affordable commercial entertainment applications for computer technology and, like many, I fell in love with them. I had a friend in the business and approached him in the hopes that he might be able to help me find a job. An interview was arranged with a now-defunct distribution company in northern New Jersey and before I knew it I was behind a desk learning the art of sales. Not too long afterwards, a new manufacturing company was being formed and I was asked to come on board. That firm was SMS Manufacturing Co. and I worked with them as vice-president of marketing until the gaming arm of the company was purchased by Premier Technology.

Following a stint with Premier and a couple of other experimental ventures, in 1995 I was approached by Bob Nims, who owned both AMA Distributors Inc. and Lucky Coin Machine Co., in Metairie, LA, about moving down to Louisiana and taking over as general manager at AMA. I needed a change and this was about as big a change as was going to come along, so after discussing it with my wife and kids, I accepted. Off we went to Metairie, where I happily ran AMA for Bob and Jeri Nims until Bob’s untimely death in early 2000.

It was during those years at AMA that I joined the Amusement and Music Operations Association’s board of directors. Bob had been a past AMOA president and still kept himself involved in AMOA politics. When the time came that Louisiana didn’t have any representation on the AMOA board, I decided to apply and was, happily, accepted. While in Louisiana, I also served with Louisiana’s state association, LAMOA, with my last year as its president.

Shortly after Bob passed on, I decided to make another change. An operator friend was starting a company that was developing a content distribution platform to distribute digital files to coin-op video jukeboxes via satellite. This company is called Interactive Digital Systems Inc. and is in Martinsburg, WV. I signed on as company president. Unfortunately, while the technology worked perfectly, we have been unsuccessful at securing music video licensing agreements with the record labels at a rate that would work for our industry. The project is temporarily ‘on the shelf,’ full of potential.

My wife Ann and I live in Winchester, VA, a beautiful town nestled in the Shenandoah Valley. It’s a long way from either the Jersey Shore or New Orleans, but it’s home and we like it very much. Shortly after arriving in Virginia, I started Top Draw Enterprises LLC with Jason Rouse, a local who virtually grew up in the business. Top Draw is a small route, similar to that of many of AMOA’s members. Jason and I operate mostly jukeboxes and countertop games, along with a few merchandisers. We pride ourselves on giving exemplary service and on running a nice, neat little route. In as much as we both are involved in multiple ventures, we keep the company small on purpose, preferring to take on only what we can handle ourselves. This might not work for everyone, but we like it just fine.

VT: What do you do best?

PIETRANGELO: From a work perspective, what I really enjoy doing most is tackling new projects. Breathing life into new ideas is my idea of fun.

VT: How has AMOA prepared you for the job of president?

PIETRANGELO: The same way it prepares anyone to take the position. Let me explain. Our board is a working board. All directors sit on multiple committees, some of which can take up a lot of time. A director’s first three years are significant. Participation, or lack of it, is scrutinized by those further up the ladder who are ever mindful of the fact that one person in each new class will normally become president of AMOA.

For three years each class of 10 directors is studied until the time comes to be interviewed for one of the three open vice-president spots. As you progress through the levels of the AMOA board, you are given more responsibility in terms of committee leadership, special projects, etc. One of those three VPs will most likely become AMOA president.

It’s during your next three years as an AMOA vice-president that you really begin to get a handle on the workings of AMOA, both as a conduit for industry change and as a political entity in and of itself. It’s here that you begin to hone skills such as the ability to work efficiently within an organization that consists primarily of business owners who are used to making decisions both for themselves and for others. Learning the art of negotiation is essential since everyone has pet projects that they would like to see come to fruition. Like Kenny Rogers sings, “You got to know when to hold ‘em, know when to fold ‘em.” Good advice.

Finally, after three years as a VP, a total of six years as an AMOA director, you’re on what we jokingly refer to as the “hot seat.” You’re being interviewed for the position of AMOA secretary. It’s just you and the committee and you’re being asked why you want to be AMOA president. Never mind that you’re being interviewed for secretary. Everyone in that room knows the real deal. You see, with rare exception, the person elected to be AMOA secretary will normally progress through the “chairs” – secretary, treasurer, first vice-president and, finally, president.

By that point you had better have taken a good long hard look at the past six years and made a well thought out decision before giving your answer. Because if you begin talking – if you give your reasons, if you want it, and if you’re elected, you’ve just made a major commitment. An AMOA director, by the end of his five-year term as a past president, will have devoted at least 15 years of his life to serving AMOA. Some people think we’re nuts.

VT: What is your assessment of outgoing AMOA president Marion Paul’s term? What were her major accomplishments?

PIETRANGELO: Marion has had a successful year as AMOA president. She is a strong promoter of cooperation among the diverse segments of our industry and has done much to strengthen lines of communication. Lucky for Marion, as for all of us, we did not face any major unexpected crisis this year so she was able to concentrate on the goals she stated early on in her term without being sidetracked along the way.

VT: What is the toughest challenge (task, problem, issue) that you have ever faced as an AMOA board member?

PIETRANGELO: When you’re in the moment, they’re all tough in that they take time and energy to work through to successful resolution. None really stands out above the other. All I can say is that I’m glad I lived in Louisiana for awhile. Down there you either learn to work through the politics or you become very frustrated. That training at the hand of Bob Nims, whom I considered a master, has served me well on the AMOA board.

VT: What is the economic environment for today’s industry? Has the last year been one of stability, contraction or growth opportunity for most operators?

PIETRANGELO: This is just a personal observation. It seems to me that with today’s higher fuel prices and the impact that those higher prices will have on goods and services, the U.S. economy may be headed for a slowdown. Many areas of the country are in the throws of a housing bubble with most experts cautioning consumers about experimenting with exotic and dangerous mortgage schemes now so much in vogue. When this bubble bursts, and it will, a lot of folks are going to be financially strapped. That means cutting back on high-ticket items, maybe not going out to the more expensive restaurants, etc. However, people still want to be entertained and will now, out of necessity, seek out affordable options.

The foundation of coin-op is built upon our providing good, clean, inexpensive entertainment options to the common man. That is our bread and butter and that is where we’ve been hurt given the incredible competition in today’s world for the discretionary dollar. Normally, when the economy cools, we will begin to see the street pick up. Of course, we live in a changed world from that of only a few years ago. Stricter DWI laws, video game ratings, citywide smoking bans, challenges to redemption operations, etc., are all taking their toll on locations and the operators who serve them. It remains to be seen how those things will impact any resurgence.

To answer your other questions, I personally have not seen much change in the past year, although I certainly can’t speak for all operators.

VT: What kind of reading do you get from operators today? When operators talk turkey, are they confident, scared, happy, tired?

PIETRANGELO: The lion’s share of your readers are operators. They know how they feel and certainly don’t need me to tell them. I think that, as you might expect, the answer to that question depends much upon where those operators are located. I don’t operate in any metropolitan areas, so I don’t feel qualified to speak for those who do. As for the rural operator, I can tell you only that it’s a grind. There are some very good pieces of equipment out there that are just much more challenging to operate if you’re in a sparsely populated, rural area.

VT: Do you have any specific major goals or policies that you will pursue during your term as AMOA president?

PIETRANGELO: During my term as a director, I have been very involved with helping AMOA to get a better handle on its investment portfolio and would like to do a bit more in that regard. Our portfolio helps us to provide education programs, scholarships and member benefits and will help AMOA stay strong in the event of an economic downturn. I’m also a big proponent of using the Internet as a conduit for open communication between our members and the industry at large. AMOA has, in recent years, begun to use the Internet as a communications medium. I would like to see that trend continue.

I would also like for AMOA to spread its wings a bit and become more a member of the international entertainment community. I would like to take this opportunity to encourage international trade associations to reach out to AMOA and to actively work at keeping open the lines of communication. We realize that our markets are different in many respects, but also believe it’s quite possible that by gaining a more thorough understanding of international affairs we might gain a fresh perspective on our own.

VT: Incoming AMOA leaders typically say they want to “continue the work that has been going on.” What are the major ongoing projects and current top priorities for AMOA as of now?

PIETRANGELO: Our Expo is always a top priority and we have committees and staff that spends a much of the year making sure that the upcoming Expo is a success. Since music has always played a big part in our lives... being the ‘M’ in AMOA... we try to stay current on trends that may impact the ‘jukebox’ part of our business. Recent months have seen the emergence of a new phenomenon known as “iPod nights” in bars whereby patrons bring their digital music players to the bar with selected patrons playing the role of “digital DJ” for 15 minutes apiece. In an effort to help locations stay in compliance with copyright laws, we have hired council to research and report on any copyright issues surrounding these “iPod nights.”

Another issue, albeit not a national issue, is that of smoking bans. Since this is a state issue, we must limit our involvement to that of information conduit. We have formed a separate committee to work with state associations on this matter.

VT: As chairman of the AMOA Expo planning committee, what can you tell us about plans and progress for this year’s show?

PIETRANGELO: I can tell you that we’ve got a great show planned. Our pool party was a hit last year what with Tracy Byrd and his band. This year we’ve got the hit group SHeDAISY playing at the pool party. This is a free event for all registered show attendees, so we’re hoping for a great turnout.

Our Hesch Promotion committee has been hard at work coming up with a great lineup of prizes for this year’s raffle. One of our more coveted prizes will be a Harley-Davidson motorcycle. How’s that for a top prize?

As you know, the [William T.] Glasgow organization deserves much of the credit for making the AMOA Expo the much-anticipated event that it is. Bill, Brian and their staff really come through for us and we’ve come to depend on them for their professionalism, experience, commitment and honesty. The reports I’ve seen lead me to believe that this show will be bigger and better than any other in recent years. If you’re in the coin-op business, you really shouldn’t miss an AMOA Expo.

VT: Is AMOA’s board considering moving the show in future years?

PIETRANGELO: We’ve spoken about it now and then, but most believe that the street operator is best served by a targeted fall show. It just works better for the normal business cycle. Of course, we certainly recognize that there are other sectors of our industry that might benefit from shows held at other times of the year, but the lion’s share of our membership is the street operator. All the surveys we’ve taken over the years back up that claim.

VT: We are under the impression that AMOA has tightened up its membership qualifications and criteria. (That is, the definition of “who is a real operator” as opposed to “what is a location that also operates.”) Can you share the new definition of “operator” with us, if there is one?

PIETRANGELO: We have not redefined the term “operator.” It stands as it has stood for as long as I can remember. That definition is such: “Persons, firms or corporations who are in the business of owning and operating coin-operated amusement, jukebox, cigarette vending machines and other coin-operated equipment.” We have, though, recently tightened procedures designed to verify the information provided on member applications so as to assure that potential members are classified appropriately.

VT: What is your biggest worry or concern as you assess the state of the market today? Shrinking numbers of manufacturers, players, locations? Shortages of good, affordable equipment? Growing competition from legalized gambling? Erosion of the traditional market, chain and structure? Lack of standardization in new technology? Something else?

PIETRANGELO: It’s much simpler than that. Those things are just reactions to a bigger problem.

Remember back when video games first made the scene? One of the reasons we were so fascinated with them is that those games were, for all intents and purposes, our introduction into the world of computers. The “wow!” factor was off the charts. A lot of that is missing today. People have become numb to changes in technology. There’s not much we offer that isn’t available to players from the comfort of their homes. I guess my biggest concern is that we’ve misplaced the “wow!” factor.

VT: Beyond the strength of AMOA itself, what trends or factors do you view as most encouraging in the industry today? Increasing health and profitability for surviving operators? Sufficient amount of good, affordable equipment? Political harmony between AMOA and sister associations? Progress in bringing new technology to arcades and street locations? Something else?

PIETRANGELO: It’s good to see companies continue to invest in R&D. They wouldn’t do that unless they were convinced that that we are still a viable industry. Many of these manufacturers are experimenting with fun and unique merchandising and/or redemption equipment. They understand that providing fun ways to award players for skillful play is something that, for the most part, creates an experience that players are unable to duplicate at home.

VT: Manufacturers and distributors complain that operators aren’t buying new equipment, even when it’s good. Operators complain that manufacturers and distributors overprice their machines and sell direct. Your comment?

PIETRANGELO: It all comes down to return on investment. ROI, when viewed from a broad perspective, is a function of equipment cost, game earnings, availability of locations in which to place and rotate new and used equipment, and the health of the used game market. When one or more of those variables turn negative, it tends to negatively affect operators’ buying decisions.

Ask yourself: “Do you really think that, if there were an abundance of locations bursting with potential players, that operators wouldn’t be falling over each other buying equipment to fill the demand?” Of course they would. As for selling direct, it’s usually an act of desperation.

VT: Please give us a few lines of update on some key issues, beginning with AMOA membership: How many current members are there? Is membership up or down from last year?

PIETRANGELO: As of today, Aug. 1, AMOA membership stands at 1,629. That’s down 70 members from this time last year.

VT: How are AMOA’s finances today? Last year, president Marion Paul reported a balance of more than $1.2 million. How much money is in the bank today? Aside from show costs and staff salaries, what are the largest budget items?

PIETRANGELO: Knock on wood; AMOA is fairly healthy these days. To date, our reserve fund stands at just over $1.8 million. It’s taken a lot of work to get it to this level. As for the larger budget items, well, I’d have to say printing, postage, insurance, phone and travel.

VT: Where does AMOA stand in terms of fulfilling its desire for third-party digital music licensing?

PIETRANGELO: We would like very much to be able to provide our members with a JLO- [Jukebox License Office] type license that would cover the performance rights for all their “digital” [i.e. downloading] jukeboxes. We have gone to great lengths to attempt negotiations with the PROs [Performing Rights Organizations] in that regard. Unfortunately, the PROs still refuse to acknowledge, with minor exceptions, that a “digital” jukebox is a jukebox [aka coin-operated phonorecord player] under U.S. copyright law. That stops the PROs from any collective bargaining with AMOA, in effect forcing us to negotiate with each of them individually.

Second, “digital” jukeboxes are by design very effective and accurate reporting mechanisms. Without getting into this any deeper, AMOA refuses to act as an enforcement arm for the PROs.

We remain hopeful that someday music publishers and songwriters who are represented by the PROs will come to the conclusion that negotiating a digital public performance license with AMOA, similar to what is now in place for traditional, non-digital jukeboxes, would serve them well and, in the minds of many operators, would serve to “legitimize” that segment of the industry.

There is one other key to breaking down the barriers holding back digital from completely replacing non-digital music on the street. That is the mechanism by which operators must secure the music files. Performance rights are important, but they are only necessary to pay if operators are able to get the music in the first place. I personally would like to see the labels make an effort to create a standardized mechanism whereby digital music can be licensed and provided to any third-party content provider who wants to license it for distribution to the industry. Operators must be given greater choice with regards to selecting a content provider for their digital music libraries. For that to happen, the entire foundation upon which digital music distribution has been built must be examined and, in all probability, restructured.

VT: What can you tell us about plans for AMOA to obtain an update to the 2000 jukebox market study, which was conducted by two professors from the University of New Orleans?

PIETRANGELO: We have contracted with UNO to perform a follow-up study to our landmark 2000 Jukebox Survey. The survey has been designed to build upon what we learned in the previous study, to gauge the contribution of the jukebox to the health of today’s operating community, and to shed some light on the direction and acceptance of cutting-edge jukebox technology.

We implore the operating community to take the time required to completely answer this survey. One other important fact to note about the survey is that UNO has taken every effort to assure that no specific survey can be identified as belonging to any specific operator. This guarantees complete anonymity to the respondent.

VT: Is there any hope for AMOA-ASI Expo unification, and are talks underway about this?

PIETRANGELO: I guess it’s no secret that AMOA continues to discuss the possibility of this happening with the good folks over at AAMA. Like many things in life, what sometimes appears simple from the outside is anything but once you really start to work through the issues. All I can say at this point is that both associations have done a splendid job of keeping the door open with regards to welcoming further discussions on this issue.

VT: Factory-direct sales to operators and locations are reportedly at an all-time high. What is your take on this trend?

PIETRANGELO: What can I say? AMOA stands for the AMUSEMENT & MUSIC OPERATORS ASSOCIATION. Note the key word, operator. Obviously, we frown at those factories that bypass the industry and sell direct to street locations. To offer any future support to those factories borders on stupidity.

As for factories selling direct to operators, my personal preference is for them to make every attempt to honor the three-tier distribution structure that is the benchmark of our industry. However, having spent many years in both the manufacturing and distribution sectors, I will acknowledge that a manufacturer’s first priority is to sell games. While most that I know make every attempt to work through distribution, there are times and instances when that proves difficult to impossible.

When faced with that dilemma, a manufacturer will, out of necessity, sometimes sell to operators direct. Many times the hope is that one or more of those operators will become “jobbers,” reselling the manufacturer’s product to other operators in his area. If that jobber also takes on the tasks of providing service and repair functions, then everyone wins and the three-tier system continues on... albeit a little modified.

VT: The past decade has seen drastic industry consolidation with operators buying operators, distributors buying distributors, and factories buying factories. Has this trend ended, or do you expect more? On what level?

PIETRANGELO: Yes, I would expect this trend to continue on all levels.

VT: Competition from legalized gaming (American Indian and non-American Indian) has evolved from a minor annoyance to a major concern for operators nationwide as more than 400 Indian gaming centers, large and small, now exist. Can amusements survive the legalized gambling boom?

PIETRANGELO: Years ago I observed that two sectors of our industry, legalized gaming and coin-op amusement gaming, were on a collision course. Take a look at the games coming out of the slot manufacturers today. Those second screen games and bonus displays have more in common with traditional amusement games than with gambling. Why, you ask? Take another look. Who is the player in today’s casino? She or he is the “Pac-Man” player of yesterday. The slot manufacturers are smart; they know who their customer is and they’re designing what their customer wants to play. As a result, those factories are thriving.

Unfortunately, the cost of entry in terms of qualifying for licenses, when available, as well as very restrictive laws and regulations, make participating in a legal gaming environment impossible for many operators. Even those operators lucky enough to find themselves in a legal gaming environment that provides for operator participation, learn soon enough that when it comes to paying license fees and taxes on those gaming profits, enough is never enough. Most of them are forced to spend an inordinate amount of time lobbying just to keep even.

Further, with the proliferation of Native American gaming casinos, racinos and riverboats in many jurisdictions, operators of amusement games are going to have to prepare themselves to face an unprecedented level of well-financed competition. All this means that now, more than ever, our industry must take steps, at all levels, to identify our players and work to understand the needs and wants of those players. Not everyone is going to forego amusement games just to frequent casinos. We’ve got to make sure that the equipment we operate and the venues in which we operate that equipment go the extra mile to provide those players with an entertainment experience that makes them want to come back for more.

VT: What does the industry need most, in order to continue growing and improving?

PIETRANGELO: Innovation, young blood and solid cost-containment strategies.

VT: What’s the most important thing you’ve learned about the business or about AMOA in the past two years?

PIETRANGELO: I am always amazed and impressed with the dedication of my fellow board members and with the resilience and perseverance exhibited by operators everywhere in the daily management of their routes.

VT: Is there any other issue you would like to cover, or any message you would like to communicate to the industry at this point?

PIETRANGELO: I guess one final point that I’d like to make is that AMOA, by and large, is a good and necessary organization. When you’re running up and down the hen house collecting eggs, tending nests and making sure none of the hens are sick or missing, it’s good to have someone out front keeping an eye on the foxes.

 


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