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From Digital Music Piracy To AMOA Culture, Andy Shaffer Is Candid And Cautious On Key Issues

Posted On: 7/6/2012

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vending business, vending machine, jukebox, juke box, coin machine, coin-op equipment, Amusement and Music Operators Association, jukebox operator, Andy Shaffer, Shaffer Services, digital music, music piracy, NSM Music, Amusement Expo, Recording Industry Association of America, ASCAP, BMI, SESAC, Amusement and Music Owners Association of New York, NSM Music Inc., AMI Entertainment, TouchTunes, Bob Fay

COLUMBUS, OH -- Before assuming leadership of the Amusement and Music Operators Association in mid-March, Andy Shaffer promised that the operators' organization would "put on its boxing gloves" (see VT, March). By that, he meant AMOA would lobby vigorously -- and sometimes publicly -- whenever and wherever major regional and national issues arose that threaten operators' interests. Shaffer has come out punching. But his style relies less on boxing gloves than on an "iron fist in a velvet glove."

Whether the issue is direct sales by jukebox makers to locations or the prospect of lower legal prize limits for redemption games and merchandisers, the AMOA president is clear and unapologetic about defending operators. At the same time, he avoids being inflammatory or controversial.

In a recent interview with Vending Times, Shaffer put AMOA on the record with respect to several of the industry's current hot-button issues. His comments and criticisms were clear and direct, yet he was careful to temper his remarks with a low-key tone, diplomatic language and reasonable qualifiers.

Efforts by CEC Entertainment Inc., the Irving, TX-based corporate parent of the Chuck E. Cheese's pizza-arcade chain, to reduce legal redemption prize values in California to $10 could have widespread impact. "AMOA is opposed to any legislation at all regarding limits on prizes for skill games and merchandisers," Shaffer said. "Obviously if it happens in California, it could spread across the country."

Leaders from AMOA, AAMA and the amusement park association in California have been in discussions with CEC executives to voice their concerns and weigh options. Shaffer told VT that the conversation is ongoing.

Referring to NSM Music's move into direct sales to U.S. locations, Shaffer told VT that AMOA does not condone a business model that bypasses the operator. But he pointed out that the association is "not in the enforcement business" and cannot "finger-point and tell NSM or anyone else how to run their companies."

Shaffer said NSM was not barred from exhibiting at this spring's Amusement Expo, despite suggestions from some operators that it should have been. NSM is a member in good standing of both AMOA and the American Amusement Machine Association, which own the trade show, he said.


NSM Music Offers Jukebox Operators Variable Revenue-Share Option, Clarifies And Scales Back Direct Sales Program

How NSM Music Can Earn The Jukebox Operator's Business | Viewpoint by AMOA-NY's Danny Frank

Shaffer said he has committed the association to combatting music piracy with a two-pronged strategy.

First, AMOA supports operators who are gathering on-the-ground intelligence about suspected cases of jukeboxes with unlicensed music. This information is being forwarded to the Recording Industry Association of America and performing rights organizations, which include ASCAP, BMI and SESAC. "They are very aware of what we are doing," Shaffer said. "One idea we have is to pursue a piracy reporting hotline for operators."

Another idea would be to ask all digital music providers to provide licensing documentation showing that their music is fully in compliance with all requirements relevant to music labels, PROs and other music industry groups.

At present, the scope of the jukebox music piracy problem appears to be limited to a handful of states including Indiana, Florida and Ohio, said Shaffer. Under previous AMOA presidents, operators in New York and California also reported having to compete with jukeboxes that played unlicensed music.

A strategic ally in AMOA's intelligence-gathering effort and communication with the recording industry is Bob Fay, director of government relations at AMI Entertainment Network. Fay is a former FBI agent with extensive experience in battling intellectual property crimes. Shaffer said Fay has been instrumental in the current campaign against unlicensed music played on jukeboxes.

"My goal," said Shaffer, "is to have full transparency on licensure from all music providers and digital jukebox manufacturers." He suggests creating a protocol that allows operators to report "rogue jukeboxes" or "potential black markets" when they discover them. "We want to ensure that there is an organization -- not AMOA -- to monitor that reporting," he said.

Andy Shaffer

"AMOA can be a portal for information. But it can never assume a police role," he explained. "We are not the DEA, the FBI or the state liquor board. Our job is to represent operators, distributors and manufacturers under a united banner as a single trade association."

Photo: Andy Shaffer of Shaffer Services (center) is pictured with emissaries from Ohio and other states during AMOA's Affiliated States Council.

Shaffer emphasized his belief that goodwill and public diplomacy can be as -- or more -- effective courting controversy.

"I've told operators who are concerned about this issue that it's not AMOA's job to police every jukebox in the country, nor could we," he said. "That is what the PROs, the RIAA and other music industry organizations are supposed to do."

Improving AMOA communication is among Shaffer's top goals. He wants to ensure that rank and file operators are well informed about AMOA's plans and policies regarding important issues, as well as the opinions of its leadership team.

Shaffer has adopted several methods for doing this. First, he has made himself available to the trade press (as for this article), and has been unusually candid about AMOA's positions and actions on sensitive issues. Second, he is taking the same open approach to inviting questions when visiting state operator associations and other industry events.

"I just attended my first state operator show, in Oregon," he said. "My schedule for the rest of this summer looks like a rock-and-roll tour, starting with Minnesota in June. I am excited about giving people at these and other industry forums a chance to ask direct questions of me and AMOA executive vice-president Jack Kelleher."

Efforts to make AMOA more transparent run against a longstanding tradition, Shaffer acknowledged.

"Our industry has guarded information carefully as a matter of course for many decades, whether about AMOA business or separately about our own routes, like collection data," he said. "There is often good reason to be guarded. But one person's privacy is another person's secrecy. In any case, we have been restraining ourselves from full and free communication in many instances."

Shaffer is setting the example that could help create a standard for a more forthcoming AMOA and industry. "If I can open myself personally and professionally as AMOA's lead representative for the next 10 months, hopefully everyone can feel comfortable about following," he said.

In one act of candor, Shaffer admitted during his interview with VT that his operation, Shaffer Services (Columbus, OH), has reduced its staff from 55 employees five years ago to 36 people today. Many operators would be reluctant to divulge this information, but AMOA's president volunteered it.

Shaffer Services' 35% workforce reduction over the past five years matches losses experienced by other operating concerns in most parts of the country. Workforce reductions in the manufacturing and distribution segments during the same period are reportedly higher.

"Many operators, distributors and manufacturers have gone through this process of reducing overhead and consolidating to cope with the tough economy," Shaffer said. "AMOA has been adjusting and evolving for many years."

In his run-up to becoming AMOA president, Shaffer indicated that he wants to streamline the association and see it be more decisive. When faced with urgent issues, it is not uncommon for the association to get bogged down in long, drawn-out debate before taking action.

His success two months into his term has been mixed, he admits. "Speedy decision-making is very difficult when you only have one year as president to implement your ideas and passions," he said.

Shaffer reports that the operators association has revised its bylaws to reduce its 48-person board of directors in the coming years, albeit through attrition rather than immediate action. Additionally, he hopes AMOA can eliminate or consolidate some of its many committees and subcommittees when it holds its midyear board meeting this fall in Colorado.

"That is where we may begin an elimination process, to look hard and determine what we really need," he said. "This may be necessary to reflect the consolidation of the industry, and I think it can also help speed up AMOA's decision-making."

In the meantime, said Shaffer, he will focus on increasing the efficiency of his work with AMOA's permanent staff.

Pronounced dead by some industry leaders, the dollar coin is back on the industry's agenda. Competing measures have been introduced in the U.S. Senate and House of Representatives over the past year that seek to eliminate the $1 bill in favor of the $1 coin -- and vice versa.

A bipartisan group of Senators led by Tom Harkin (D-IA) and John McCain (R-AZ) has authored legislation designed to encourage wider circulation of dollar coins and set a timetable to phase out the $1 banknote. Titled the Currency Optimization, Innovation and National Savings Act (COINS), S.2049 was introduced in the Senate in January. Sens. Tom Coburn (R-OK) and Mike Enzi (R-WY) joined the bill's authors in the introduction.

Shaffer said AMOA has resurrected its interest in the $1 coin since AAMA has made it a priority. Lobbying for the dollar coin -- actually the elimination of the banknote equivalent -- took precedence during several recent visits to Capitol Hill made by AAMA officials.

However, the National Bulk Vendors Association is the only organization in vending and coin-op that has teamed up with other leading stakeholders in the Dollar Coin Alliance, which was formed to counter attempts in Congress to halt production of the high-denomination coins, and to promote efforts to increase their circulation. Since bulk vending almost exclusively relies on coins for transactions, many vendors in this sector are staking their futures on increased circulation of high-denomination coins.

In the full-line food and beverage segment, the National Automatic Merchandising Association, on the other hand, is no longer actively lobbying for legislation that supports greater use of the $1 coin. NAMA was once a leading advocate for promoting high-denomination coins.

And so was AMOA, but today its members are divided on the issue, Shaffer said.

Stepping back to comment on his first two months in the president's job, Shaffer said that he has received a fresh shot of enthusiasm for the industry based on the people he meets while traveling on AMOA's behalf. "Our industry has the greatest people in the world," he said.