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Issue Date: Vol. 52, No. 3, March 2012, Posted On: 3/16/2012


AMOA's Andy Shaffer Will Focus On Combating Music Piracy, Recruiting New Blood And Speeding Decision-Making Process


Marcus Webb
Amusement and Music Operators Association, Andy Shaffer, Shaffer Services, AMOA, Amusement Expo, Donovan Fremin, Delta Music Inc., amusement machine operator, vending machine operator, jukebox, pinball, coin machine business, TouchTunes, touchscreen jukebox, digital music, music piracy, dart league, pool table, billiards league, Circone + Associates, Brad Circone, on-premise promotions, bar entertainment, Megatouch, video game, coin-op machines, Get Lucky Tonight and Score, Tournamaxx, Michael Martinez, N2 Entertainment, Tracy Ferris, A&M Amusement

Amusement and Music Operators Association, Andy Shaffer

COLUMBUS, OH -- "AMOA needs to put on its boxing gloves more often when it finds regional issues that impact operators and the industry nationally. Music piracy is one of those issues." So said Andy Shaffer of Shaffer Services, based here, as he prepares to take the helm of the Amusement and Music Operators Association. Shaffer begins his one-year term as AMOA president on March 16 at the close of this year's Amusement Expo in Las Vegas, produced by AMOA and the American Amusement Machine Association.

Music piracy is already a key focus for outgoing AMOA president Donovan Fremin of Delta Music Inc. (Thibodaux, LA). Shaffer said he is eager to continue what he and Fremin started.

"Donovan and I are great friends with the same outlook on running our businesses and leading AMOA," said Shaffer. "That makes it easier to step up to the president's job. No. 1 on my list is something Donovan and I are working on already -- music piracy. We are all well aware of how New York operators are negatively impacted by it. We will be doing more to educate operators nationwide about music piracy in the coming year."

NEW BLOOD, NEW IDEAS
A second priority of the incoming president will be bringing new blood, younger operators and nontraditional perspectives to the industry, and into AMOA.

"High on my list is identifying good, new people beyond the familiar faces we know and love so well and bringing them into our association," he said. "Our business has a gold mine in people like my dad, Steve Shaffer, who thrive on a progressive business philosophy and keeping up with the latest developments. He is the 'Steve Jobs' of our family, full of new ideas."

Some new and progressive operators, Shaffer called out, are Michael Martinez of N2 Entertainment (Brea, CA) and AMOA director Tracy Ferris of A&M Amusement (Augusta, GA). They entered the industry in recent years because they seek independence and new opportunities, he said. These and other fresh faces are bringing new energy and innovation to the amusement trade, he emphasized.

Additionally, more educated and corporate-trained people are entering the workforce, including amusements, as result of corporate downsizing. "They bring a lot of organizational communication skill to the industry that we never had before," Shaffer said.

Tired of a bureaucratic corporate world or laid off from it, these men and women hit the street to form their own startups, he said. Some enter the temp agency field; others have started floor and carpet cleaning businesses in recent years.

"A lot of that talent is also spilling into our industry," Shaffer said.

MORE TRANSPARENCY
A third priority for Shaffer's term will be to foster greater transparency from within AMOA. "Transparency is a worthwhile goal," he said. "The 'lack of communication' perception that surfaced in last year's member survey was somewhat surprising to me, and I plan to make a concerted effort to improve in this area."

Shaffer said he believes any perception of "lack of communication" by AMOA grows from insufficient attention paid to relevant communication rather than a deliberate effort to withhold information.

"I don't think there is any veil of secrecy or lack of transparency in AMOA," he said, "but rather an overall lack of proactive communications about its efforts and operations -- most importantly, pertinent to operator business growth."

One way to foster better communication between AMOA and operators, Shaffer believes, is by taking an informal approach to his role as AMOA spokesman.

"As I travel around the country, I intend to get out from behind the podium and speak off the cuff. My intent is to let people know 'I'm an operator just like you. I have the same thoughts, hopes and frustrations that you do.' I work better off the script than following the script," he said.

Not only talking to operators, but also listening to them will be a vital part of Shaffer's communication plan.

On this point, Shaffer quoted some advice that he received many years ago from his AMOA "big brother," a relationship that comes under the umbrella of the board's mentoring program for new directors. When Shaffer joined the board, the "big brother" assigned to him was Frank Seninsky of Amusement Entertainment Management (E. Brunswick, NJ), an AMOA past-president.

"Frank's advice was simply to respect everyone's opinion, even if you don't agree with it," Shaffer said. "I've tried to follow that advice over the years in dealing with locations and hundreds of customers across Ohio. It has helped me professionally and personally."

FASTER DECISION-MAKING
Creating a faster-acting AMOA is also on the new president's agenda. "One of my personal goals is to streamline the process so AMOA can decide and act quickly on important issues and opportunities," he said.

This issue is especially important, Shaffer believes, in an era when digital communication has greatly increased the tempo of business life around the world ... such that perceptions and information can transform the industry's image and status overnight, for good or ill.

"For me the basic decision-making process inside AMOA takes too long," he said.

"There is a little too much deliberation in cases when potentially many members will be affected or the whole industry could be affected by a pressing issue or an open opportunity. We aren't a global brand like GE; we are entrepreneurs," for whom flexibility is critical, he said.

"Collectively, both the association and its members need to adapt faster and more efficiently to market changes and competitive forces influencing our industry," he added.

Shaffer Old Building

THIRD GENERATION
A third-generation operator, Shaffer officially launched his 22-year industry career in 1990 after graduating from Elon University (North Carolina) in 1989; he double-majored in business and sports medicine. But he had grown up doing weekend and summer work around the family business since age 13.

Today, he is vice-president and owner of the Shaffer Services music and games operation. The company's 36 employees serve more than 300 locations, and over 500 teams in its league programs.


Photo | FOUNDATIONS: Shaffer Services was founded in 1988, but its roots date back to 1929, when druggist Estel "Pop" Shaffer began a route called Shaffer Coin Machine Co. In 1954, Pop's son Ed Shaffer bought the company and changed the name to Shaffer Music Co. In 1962, the organization became Shaffer Distributing, reflecting its greater marketing scope, which included the distribution of Seeburg, Rowe and Rock-Ola jukeboxes. Shaffer Services is the modern incarnation of the original route. Shaffer Distributing has offices in Columbus and Cleveland, OH, Indianapolis, IN, St. Louis, MO, and Detroit, MI.

Shaffer Services has long resisted expanding beyond its traditional central Ohio footprint, due to concerns that far-flung route geography would make it difficult to deliver on their trademark Service Performance Excellence Pledge, a "59-minute service guarantee," (which in practice has often meant 30 minutes from a location phone call to the tech's arrival on the scene).

But in recent years, the company has found ways to maintain that service response time at greater distances. Accordingly, Shaffer Services has begun to broaden its operating zone beyond central Ohio, particularly with bowling center gamerooms and FECs.

Shaffer Services is a sister company to Shaffer Distributing -- or perhaps it might be described as a "brother company" since Andy's brother Scott is the dealership's vice-president of sales and marketing.

"Sunday dinners are real interesting around our house," Shaffer chuckled. "Shaffer Services is a customer of Shaffer Distributing; we buy from them. The distributorship's chief executive is our dad, but I spend 99% of my time on operating."

GOOD NEWS, BAD NEWS
Evaluating the state of the industry nationwide, AMOA's incoming president offered a paradoxical assessment. On the one hand, Andy Shaffer believes the industry as a whole is continuing to consolidate. On the other hand, AMOA is moving into a period of greater stability after many years of downsizing.

"Over the past three years, our industry, like most of the economy, has had our head handed to us," Shaffer said. Industry consolidation is likely to continue, he predicted. He pointed to steadily shrinking numbers of locations and operators, and admitted this trend shows no sign of slowing.

"We are seeing a steady loss of potential opportunities," he said. "As more and more national chains expand on the location level, it frequently eliminates the local operator. A few national coin-op groups tend to link up with the chains and this often knocks the small, local operator out of contention, especially in small towns."

AN UPTICK FOR AMOA
Despite the ongoing prevalence of industrywide difficulties, Shaffer sees many reasons to be optimistic when looking at AMOA's response to challenging circumstances.

Rebounding membership is one metric he cited. "This year, AMOA membership is looking up," he reported.

At presstime, AMOA was conducting its 2012 membership renewal campaign. As of Feb. 1, the association reported that it had 596 members, comprised of 502 operators, 27 distributors and 22 manufacturers. At the end of last year, AMOA had more than 1,200 members.

In addition, the influx of the "new blood" element into operating circles remains a counterforce that Shaffer finds highly encouraging.

REGIONAL OPERATOR STRENGTH
The overall mood and outlook of operators across the country varies regionally and locally, according to Shaffer.

"If I speak to operators in Illinois, they have been pulling out their hair for years over video lottery terminals," he said. "Even with the VLT market established by law, there are obstacles. I think they'll eventually get the program they're hoping for.

"On the other hand," Shaffer continued, "you can talk to operators like Donovan Fremin in Louisiana, who entered the music sector for the first time just five years ago and is very happy with the results."

In his home state of Ohio, Shaffer said operators are concerned over having been "shut out" of the legal gambling business. Four new casinos are slated to open soon, but the governor has embraced a "limited gambling license" policy. This left no room for operator-run VLTs in local bars. And Ohio operators continue to cope with a statewide smoking ban, which has prompted significant losses in location traffic.

Despite the variability of business conditions from region to region, Shaffer said operators on the whole appear confident about the future. And they remain comfortable with its three-tiered structure of manufacturer, distributor and operator.

2012 EXPO PLANS
AMOA and AAMA are entering their third year as co-owners of the Amusement Expo, which resulted from merging AMOA's former fall show with AAMA's former spring show.

"The first year was a six-month sprint to the finish," Shaffer recalled. "Last year was the first full year of working together. At this point, I think we're hitting our stride in trying to grow and enhance the event."

Working hard to promote show attendance from different angles are several AMOA subcommittees, said Shaffer. These include committees on education, marketing, and the Hesch Scholarship, among others.

Highlights of the show include the American Amusement Machine Charitable Foundation's golf outing, collocation with the National Bulk Vendors Association convention and an FEC educational program by Foundations Entertainment University.

"We believe Amusement Expo 2012 will be better and stronger than ever," Shaffer concluded.

CIRCONE + ASSOCIATES OUTREACH
Last year, AMOA retained Circone + Associates, a notable Columbus-based marketing and branding company headed by former Geffen recording artist Brad Circone, to conduct a comprehensive member survey and develop some new member communications and services programs.

Shaffer C+A Catalog

C+A is closely linked to Shaffer Services. The latter was founded in 1988 when Shaffer Distributing acquired three local routes and merged them into a single operation. One of those routes was Modern Music Co., founded by the grandfather of Brad Circone.


Photo: Get Lucky Tonight and Score promotion was originally developed for Tournamaxx, when Merit Industries owned Megatouch videogames on which the tournaments were played. The program earned a direct marketing ADDY Award and was the first promotional program recognized as a "Merit Endorsed Third Party Promotion." The Tournamaxx touchscreen videogame promotion program incorporated a point redemption catalog and thousands of consumer prizes. The ADDY Awards is the world's largest advertising competition with over 50,000 entries annually. Founded in Florida in 1960, it was adopted by the American Advertising Federation, a not-for-profit association, as a national competition in 1968.

Shaffer Services has worked with C+A since its founding and continues to receive highly valuable marketing and program assistance from C+A in its own outreach to Ohio locations, Shaffer said.

"Brad Circone's dynamic understanding of the operating business makes him uniquely talented," he said. "It's easy to find marketing companies, but I have yet to find another one that understands the operator-distributor-manufacturer relationship that AMOA wants to support. That is what turned AMOA on to Circone + Associates. Brad grew up on the back of a truck, washing coin machines."

C+A helped engineer Shaffer Services' current brand, effectively separating it from competitors. It designs most of Shaffer's communications, including strategy, copy and graphics that are used to promote the company's entertainment offerings to locations and league players.

C+A and Shaffer have developed a few successful family entertainment concepts together, as well. Most prominent of these is RULE 3, which was named Best Global New Bowling Center, 2009-2010, by Bowlers Journal International.

They co-authored a number of on-premise programs like MusiCares (TouchTunes), Killian's Regular Invitational (Incredible Technologies) and Get Lucky Tonight and Score (TournaMaxx, formerly by Merit, now AMI). The latter program earned a direct marketing Addy Award and was the first promotional program recognized as a "Merit Endorsed Third Party Promotion." The TournaMaxx touchscreen videogame promotion program incorporated a point redemption catalog and thousands of consumer prizes.

"Having that catalog physically on the game and now entirely online allows winning players to redeem prizes like ordering from a Brookstone or Sharper Image catalog," Shaffer said. "It is a powerful marketing tool. We started that here eight years ago and now it's gone national. Promo Nation is using our points catalog as an active online shopping mall for players and an effective marketing instrument for its operators."

Promo Nation is a national alliance of 22 operators, including Shaffer Services, that cooperate on videogame tournaments, promotions and contests, incorporating a proprietary point system that allows consumers to earn points through playing games and then redeem those points for prizes -- all tracked and maintained online.

C+A AND AMOA
C+A was behind AMOA's recent "Add Value, Add AMOA" marketing campaign, in which the association reached out to members in the form of a survey, in order to evaluate its range of programs and their effectiveness. C+A has produced editorial placements in industry trade magazines to help build and announce the reengineered AMOA brand as a supplement to AMOA's own marketing efforts, Shaffer said.

In the works from C+A and the AMOA, said Shaffer, is an AMOA Advantage Membership Program, which will offer members some tangible benefits through purchases from participating factories and distributors.

For at least two years, some AMOA leaders have been quietly working on putting together a buyers' consortium that would negotiate discount group purchases on equipment and supplies for all operator members -- perhaps something like Club Lucky's group buying program.

However, Shaffer said AMOA Advantage is not to be understood as a buyer's consortium in this mold. He also said he had not heard any discussion about such a consortium in AMOA leadership circles and that it is "not on my radar."

Another AMOA outreach effort in recent times has been its webinar program. To date, the association has offered four: legislative affairs by association lobbyist Michael Zolandz of SNR Denton; pool table maintenance and repair by David Courington of Valley-Dynamo; bill validator service tips by MEI's Dan Adams; and redemption for street operations by Frank Seninsky.

Between 30 and 75 operators logged in for each of these sessions. Topics and speakers for future webinars are under discussion, he said. Music licensing, leagues and a state association issues roundup are among the prospective topics.

EMBRACING NEW TECHNOLOGY
Webinars are just one way that operators can leverage knowledge about new technology to improve their businesses, Shaffer said. But operators, AMOA and the industry must do much more in this regard, he insisted.

New technology can be a source of competition that cripples the music and games industry, or it can be a powerful new tool employed to promote the industry and create greater excitement and involvement among players, Shaffer said.

"Either get on the bus or get run over by it," he said. "The 'hi-tech bus' has been banging on our door for years now."

So far, the industry has experienced strong pros and cons of high-tech forces, he noted.

"When I go into bars, I see guys showing off their latest phone app to a buddy or girlfriend because it's cool," he said. "They are sitting three feet from a jukebox or touchscreen video, but many patrons don't think our machines as cool. I'd like to see us find a way to regenerate that excitement by leveraging new technology on our own behalf."

Shaffer praises the chief executives of two of the industry's most influential organizations. TouchTunes' Charles Goldstuck comes from the recording industry via Sony Music, and AMI Entertainment's Mike Maas brings years of experience from IBM and Microsoft. "They come from far outside our industry and that is a good thing because they bring new perspectives," he said. "Being an 'industry outsider' is only bad if someone doesn't want to learn the business, but leaders like Goldstuck and Maas have shown that they do.

"Based on lessons they learned from the corporate entertainment industry," Shaffer continued, "executives like these are giving the amusement industry a badly needed infusion of new ideas. We need precisely this kind of person to continually enter our industry, break down barriers and create new opportunities for manufacturers, distributors and operators alike."

BIGGEST BUZZ IN 20 YEARS
The myTouchTunes mobile app is an example of the kind of innovation that the industry badly needs, Shaffer claimed. "This app has revolutionized our music route," he declared. "I have not seen a buzz in the bar industry like this since the launch of Golden Tee 20 years ago. It has probably increased play on our jukeboxes by 10% to 15% minimum across the board."

Integrating the app into Shaffer's music operation wasn't easy, but the payoff was very significant, he said. MyTouchTunes is available for iPhone and Android smartphones, and permits custom music programming by means of location-selectable background music channels. It can integrate social networks with jukebox locations.

"We've done enormous business by getting our customers comfortable with that app," Shaffer said. "That is new money, found revenue and play that we did not have before. Everyone has a cellphone today; the app is easy for locations and players to use."

The result is that the Ohio operation is now riding the wave of new technology rather than drowning underneath it, Shaffer said. He said he hopes that his own company's positive experience with the app is a prelude to similar successes for many other manufacturers and operators.

SHAKING IT UP
If it seems that Andy Shaffer is determined to be a change agent for AMOA and the industry, that's because he is. He believes not only in adapting to change that is imposed from the outside, but in volunteering for change and staying ahead of the curve.

"We have a saying around Shaffer Services that we got from a former company president, Tom Baldwin," Shaffer said. "Tom used to say, 'If it isn't broke, break it.'

"He meant we should not wait around until our programs or company become completely dysfunctional before we move to update them," Shaffer explained. "Instead, we should be proactive and take the initiative to create and adopt new ideas and programs on our own timetable. It's about leading the market, not following the crowd."

Shaffer said he is convinced that this same aggressive philosophy will translate well to AMOA.

"It's a progressive strategy, even if -- for some people -- it may seem intimidating," AMOA's new chief said. "Bringing this style of leadership to AMOA won't be easy. But the new people coming into the industry will bring this new philosophy with them as a matter of course. It requires a lot of confidence and judgment, of course. It's not about making changes for change's sake. At the same time, as long as we keep the industry's good foremost in mind, we will continue to find a valuable and profitable place in the American entertainment scene."


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