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Downloading Changes The Art Of Music Category Management

Posted On: 6/16/2006

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U.S.A. -- Programming a jukebox, according to the old school of jukebox operations, used to be a pretty simple chore. Load up your basics -- Sinatra, the Stones, maybe a little Elvis -- and then add the obvious local variations. Country hits in a western bar, R&B in urban locations, classic and Top 40 rock in college joints. Top it off with "Happy Birthday" and few compilation discs and she was ready to go.

After that, it was just a matter of taking requests. Or, if the operator was really ambitious, he might keep an eye on the Billboard charts or get a recommendation from his one-stop now and then.

How things have changed. Once upon a time, in the CD era, customers could only choose which song they wanted to play. In the downloading era, some operators -- by no means all -- increasingly allow the players' behavior to dictate larger and larger sectors of the music library that resides permanently in the jukebox.

Today a small number of more-advanced operators (or their in-house programmers, in a large operation) pour over the endless statistics that they can get online from their music provider, studying which tunes are downloaded to what jukes, and how often. Based on that data, they make an ongoing series of carefully calibrated adjustments that are intended to keep the percentages of stored and customer-downloaded music within very strict parameters. Using the right approach, even a jukebox in a smaller city can consistently generate $900 a week in a good location.

Welcome to the brave new world of jukebox programming and music category management. It's a world where information is more available than ever before -- and a universe where operators' decisions about what to do with all that information have stronger repercussions than ever before, too.

One of those "percentage-driven" operators is Paul Mimeault of Modern Amusements (Bakersfield, CA). At first, he sounds like he could be a 1947 operator of a Wurlitzer "1015" that's running 78rpm records: "Jukeboxes are the meat of the meat and potatoes of this business," he said. "Programming is simple: give the customers what they want to hear. That's all it is."

But give him a few minutes to warm up to his theme, and Mimeault begins to sing a different tune. He spouts a scientific-sounding philosophy of music management that could have come from the computer data banks of the A.C. Nielsen Ratings Service. "With a downloading jukebox, local songs on the hard drive cost 50¢ to play and should run 70% of your total income," he said. "The Single Song Download feature costs $1 per song and should be about 28% of total plays. Make Mine First, which is new and an awesome feature, should run 1% or 2%."

Keeping each category of play within those target zones is not just an arbitrary exercise, Mimeault explained. Going too high or too low with any one of the numbers has specific, real-world consequences -- including a dip in the cashbox.

"If you have too many local plays, you have too much music on the jukebox and you are sacrificing potential additional income from Single Song Downloading," Mimeault pointed out. "On the other hand, if you have too many Single Song Downloads, you are not giving customers their money's worth. So I keep an eye on the performance of each jukebox using my online tracking tools. If percentages start going wacky, like there are too many Single Song Downloads, I'll see what is being downloaded frequently and just add those tunes onto the hard drive. The players are happier and percentages return to the target level."

Mimeault also has a carefully reasoned rationale for charging high prices for the Make Mine First option. "Make Mine First is a feature that just a handful of customers will pay to have," he said. "I make sure it doesn't go higher than 1% or 2% of total income, because it can annoy the rest of the people in the bar who are used to 'first paid is first played' after generations of that system. But you make it a premium cost to bump the other guy's music in line. I charge four additional credits, another $2 a vend, to let a player Make Mine First. If somebody wants to hear their song that badly, right now, they will pay the total cost of $2.50 to get theirs promoted to the front of the line."

If Mimeault takes a numbers-centric approach, then certain other operators, the real music lovers, combine a hi-tech, numbers-savvy approach with the most old-fashioned methodology in the book. They go into locations with paper and pencil, draw up a chair, and jaw for an hour with the bartender and the beer drinkers. They chat about what music they like, what they want, what's played, what's hot, what's cool, what's not. Then they go back to their office and program that specific jukebox with a little online wizardry to give the customers what they believe will please the most people -- and, by extension, what will make the most money.

"Programming music and talking to customers is my favorite part of my job," said  Earl Rizzo of Area Amusement (San Marcos, CA), with a smile. "I just love sitting down with a bartender, kicking ideas back and forth, tailoring a list and putting that music on the jukebox -- especially seeing it jump to the top of the popularity chart. I just love that."

Owner vs. Patrons' music style

Rizzo, a second-generation operator whose music route is 15% downloading equipment, revealed that one headache about operating jukeboxes has not changed in the downloading era (although the operator may now have a better option of how to respond). The problem? Location owners and bartenders who demand the operator program the jukebox exclusively with a type of music that is totally at odds with what most of the customers in the place want.

When this happens, the operator is stuck between a rock and a hard place. If he gives the client what he or she wants on the music library, then the operator won't be doing all he can to generate the kind of income that the jukebox could and should make.

Downloading jukeboxes do not automatically solve this problem, Rizzo says, but they do provide the operator stronger ammunition to convince the location owner to take a broader view of his or her programming policies.

"We once set a jukebox in a bar that I didn't realize, at first, had a clientele that was 50% Hispanic," Rizzo recounted. "The owner specifically told me she didn't want Hispanic music on her downloading jukebox. For three months it didn't make any money. Finally when I asked the owner what's the problem, she said people can't understand it. I took a look at the customers in the bar, turned on the Spanish Language text instructions feature, and the jukebox earnings almost doubled the next month."

With this undeniable success to point to, Rizzo was now in a position to suggest the location owner rethink her original position. "Her customers were downloading a lot of Latin music and the jukebox was really making money," he recalled. "I talked to the owner about it. When I pointed out what was happening, she allowed me to put on Latin music. At first, she had not wished to cater to this clientele, for whatever reason, but now she has realized that she really doesn't have a choice. Sometimes we are our own worst enemies. Today she's okay with Spanish language music -- and with her largely Mexican clientele. She has accepted it because everything is revenue-driven."

That bottom-line mentality cuts through a lot of the fog, as Bakerfield's Mimeault tells it. "Whenever I run across any conflict of tastes between the staff versus the bar customers, my own answer is: How much money do you want to make in your jukebox? My first priority is to entertain the customer. Hopefully that is the attitude of the staff as well. The best situation is to have an adult location with a wide-open library, all genres and explicit lyrics. That pleases the customer and makes the most money. It is a matter of the owner's intent. Maybe I personally don't approve or like certain music, but it's not my dollar that's causing it to be played."

For Mimeault, this simple approach of honoring the customers' wishes solves many potential headaches. "In the old days we would put a selection together and hope it pleased most of the customers," he recounted. "With downloading, once you have a broad music selection, what happens is that you instantly maximize the income because you have covered everything. You don't have to guess what customers want to play. It's all available and they start playing it. At that point it becomes a question of service and price."

Quite a few jukebox operators admit encountering surprises of a sort other than owner-customer conflict. And that is the phenomenon of genre crossover. In one town, a bar that many would have assumed was a "pure country" place also supports a steady smattering of (the milder variety of) hip-hop. Elsewhere, customers in a seemingly made-to-order classic rock joint also pay steadily to hear reggae -- or Sinatra -- or even, wonder of wonders, Hank Williams Sr.

One juke expert who is familiar with this crossover phenomenon is Rob Taylor, the fulltime music programmer for the expansive route of A.H. Entertainers (Rolling Meadows, IL). He has acquired an extremely sophisticated take on the music scene after 14 years with A.H., preceded by 18 years as a music buyer for a rack jobber (a music merchant who buys directly from labels and sells to mass market retail chains). So, while he acknowledges the "crossover" factor, he is careful to qualify the observation in a nuanced fashion.

"I think the standard music categories will always be with us," Taylor mused. "There has always been a certain amount of crossover. I remember as a kid Marty Robbins crossing from country to pop with 'El Paso,' so it's not a new phenomenon." He also admits that crossover programming is a very popular topic in the media these days. Breathless headlines and TV news stories gush endlessly about how certain satellite channels and broadcast radio formats have begun to emulate the iPod Music Shuffle format and the "surprise me" playlists of podcasting, but he believes this is more of a fad than a long-lasting trend.

Still, with careful thought, Taylor noted that locations should not be pigeonholed or stereotyped in terms of their customers' perceived musical tastes. "In general," he said, "I am frequently surprised by how well some rap music does -- for those few customers who allow it and encourage it in our area. This is seen on both CD and downloading machines."

Rizzo has run into the same basic circumstances. "We may have a jukebox location that leans to classic rock but has a little country, a little hip-hop. It's not cut and dried; each location is different," he observed. "A good jukebox has to have a little bit of everything on it because there are a lot of different types of clientele in a location."

Mimeault agrees: "The funny thing is that in some places, they will play any and every type of music. I think it's just when you're a rocker in a country bar, you don't usually talk about it very loudly. But you're okay to play your country music in that rocker bar sometimes, because the jukebox is an anonymous machine."

A Blend Of Approaches

Like Rizzo, Mimeault cheerfully blends the old-fashioned, people-oriented approach with the newer, online data-oriented system of music programming. "There are a couple of ways to find out what they want to hear," he pointed out. "First, you have to spend time with them, sit down and get to know them -- the bartenders, the owners, the customers.

"Some operators don't even like bars," Mimeault added with a tone of wonderment. "They get their money and they are in and out. I get to know the people and they tell me what they want. You have to have rules; you can't give them everything or they don't appreciate it."

CD box history in individual locations is a goldmine that the operator can use when he upgrades to downloading, said Mimeault. "When I go to set up a location, hopefully I'll have had a CD box in there already," he explained. "That gives me a chance to figure out what music genres those customers like. I try to match the downloading programming to the CD as much as possible, then add more choices where there are holes in the music. The Ecast system starts with 150 albums and we just go from there, adding new music on the hard drive as the players' behavior tells us to."

Serving a market with a heavily Hispanic population, Mimeault noted, "There are some questions about literacy. One thing Ecast and TouchTunes have done is use pictures of artists and of the album covers. Back in the 1980s we found there was a big increase when we went from 45s to CDs, especially in Spanish-speaking locations, because you had that picture, the album cover. Ecast and TouchTunes both have this on screen now. We have had great success in some Latino locations and I think that has something to do with it, although you still must have reading skills to understand the onscreen text instructions."

'Money I'D Never Expect'

Area Amusement's Rizzo says that today's downloading jukeboxes are "making the kind of money I would never expect. If somebody had walked in here a few years ago and promised this result in the cashbox, I would have said, 'get out of here.' But it's happening."

The technology doesn't make programming a downloading juke a no-brainer, Rizzo stresses. The operator has to follow rule number one: pay attention. "Many operators buy music out there and never track it," he said, speaking of both CD and networked jukes. "I'll bet most have no idea what is actually being played. For my CD boxes, which are still the majority of our route, we got this software program years ago called CDM97 from Premier Data. It is a basic inventory program that lists all the CDs. I have a list of music with the slots the CDs are in for each juke, so I know what CDs are on each machine. I go in and do a popularity ranking so I know exactly what they are playing in each location. I put the top 50 or 60 CDs from across the route on each and every juke.

"When choosing music for a downloading box," Rizzo continued, "I take the current readings from that location's CD data history on the Premier program, because each location is different with special requirements, and I match that with the music provider's downloading data and suggestions. And, I add that music to the jukebox. Also, I use the popularity report of all my downloading jukes and hand-pick from that which songs should go in what locations."

Rizzo says operators can be misled by trusting feedback from location owners who don't actually pay sufficient attention to their customers and venues. "I used to take a list of songs that were preprogrammed onto the hard drive, go to customers, and ask them to add and subtract what they wanted and didn't want," he outlined. "But over time I realized many customers don't know what they needed. I got information on what they were actually playing from the CD jukebox, and now I get it from going on my computer and checking the readings on the downloading jukebox. Either way, the information is just amazing. I can go in and tell the customers what their most popular music is. If I get requests, fulfill them and find they are not being played, then I know that person is not giving us good requests."

To many, it may seem the most obvious way to program a jukebox is to examine the venue's demographics, then offer music that matches that perceived clientele. But Rizzo says it is often better to "reverse engineer" this procedure -- that is, to infer the player demographics of a particular location by the actual playing statistics on each individual jukebox.

"I can't hang out at all the locations," Rizzo pointed out. "I'm familiar with who patronizes some locations, but the actual play on the jukebox dictates the kind of music they require. That is the true indicator."

But Rizzo prefers to keep refining his understanding of location demographics with input from a real-live human being, if possible. "I may get a request from a bartender and will put it on," he explained. "Maybe it's her favorite song, but if she simply doesn't play the jukebox, it won't make money. It really helps when you have a bartender who is interested in promoting the jukebox. Then I can sit with him or her and go over the list and say: 'Look, you are getting good play on this song; how about adding this other title from the same genre?' They say 'yes, great.' If I have someone to work with, it makes my job a lot easier. I ask locations for a request list anytime I'm putting in a new jukebox or whenever there is a new bartender. I say: 'Please talk to those people who are putting in $5 or $10 a night. Found out what their favorite music is because that's what we want to put on the jukebox.'"

Once Rizzo takes into consideration the human component, he goes back yet again to the machine-generated data. "Once I set a downloading jukebox, then I can track online what the Single Song Downloads are, and what music they're going to the database to upload. From that list I can choose what needs to be added to the hard drive. I will take the top three or four and add it to the hard drive every month; I want the most played popular music on the hard drive. I don't want them paying a buck to repeatedly download a song they're playing that is on the Top 40 radio. But the point is, customer behavior influences my hard drive programming. If they play it enough that it goes near the top of the list, I'll put it on the hard drive."

Influence Of Music Trends

Back in Greater Chicago, A.H.'s Taylor says he believes that possessing deep musical knowledge is "essential for the job of a jukebox music programmer. My job involves fulfilling customer requests, which are often ambiguous at best. You glean a little information from them -- a song title, part of a lyric, part of an artist's name -- then find it. So that background in music is essential."

Taylor says that online music tools can help him program his route's CD boxes as well. "The tools that the downloading boxes offer in terms of most played music not only aids in programming the downloading boxes, but I definitely take that information and apply it to our CD boxes," he said. "We may have a customer who operates a CD jukebox and says, 'Gosh it's been a while since our music was updated; send me the top CDs out there.' In response, rather than refer to a magazine chart or other tool that would have been used in the past, today I run a check on my downloaded music and that list helps me compile CDs for this location. It works the other way as well: If I see a lot of requests for a particular artist on CD boxes, I may double-check and add it to the hard drive of a downloading box."

Locations often don't know just what their customers want to hear, agreed Taylor, but with a little prompting they can become valuable information sources for the operator. "In terms of programming jukeboxes, one needs a feel for the demographics of the customers that you are programming the music for. I talk to some of our staff who are familiar with the account, or directly to the location, to learn what their perception of their customer is, and program music accordingly.

"I like locations to provide specific requests when they can," Taylor continued. "Often when you ask that question, there is a long pause on the other end of the line. Locations have lots of other things to worry about beyond what is the most popular music. So I encourage them to survey their customers. If I am going to program 150 albums on a hard drive, if they can provide me with even 15 album names it is a good start in the right direction."

Some music remains universal in its appeal, Taylor remarked. "There are about 50 core albums that work in almost any location," he said. "[For instance,] nobody tells me to take off Frank Sinatra's greatest hits. To expand on that, if you have the background in music purchasing and programming, you know the classic pop and rock titles that people always want and start with that. You have to be familiar with what is currently popular, add that to the mix. Then specific requests from the customer will pretty well round out a good setup."

Ask Taylor which tools he especially likes from Ecast for category management, and you are likely to hear a long list: "I have a music popularity report that I can go to; I can check most and least played music for different time periods, for specific accounts or all accounts. I can access them by album, by title, by local titles on the hard drive, and by Single Song Downloads in each location. So there are many variables," he said.

PROFITABLE Programming

One industry source who speaks to many dozens of operators each week is Ecast jukebox product manager Eric Thomas. He pointed toward patterns of results common to most operators nationwide that do yield some general principles for good music management in the downloading era.

He ticks them off simply: "New music makes more money," he began. "We can document that fresh music does help drive revenues. It is a common misconception that the average jukebox customer is a middle-aged person who only wants Elvis and Sinatra. People are influenced by what is being marketed, what is on the radio, and if you serve it up on the jukebox, it may be surprising how much play it gets. Recently when the rap artist Fifty Cent came out with a new album, it was our most popular Single Song Download across the board. Many operators may not have put it on their jukebox hard drives because they thought hip-hop had a narrow appeal. It's hard to grasp that people are not always as tied to a single genre as we might think."

Thomas's second principle echoes Rizzo's basic "pay attention" dictum: "When the operator takes a proactive approach to music programming, it makes locations happier, the jukebox earns more money, and the operator can find his route actually grows as a direct result," he noted.

As product manager, Thomas focuses on the user interface -- what the player experiences when he walks up to the jukebox. He also deals with music content and seeks to understand customer demand, with an eye toward ensuring that customer-desired music is available to players -- "even if it's Hawaiian or polka music," he says -- he and his team work with Ecast manufacturing partners like Rock-Ola and NSM.

Just as the jukebox manufacturers work hard to make sure their cabinet designs are attention-getting and attractive, Ecast seeks to create the same results with the words and graphics that it puts on the monitor. "I've been looking at the data on our side," Thomas described, "performing experiments to see how it affects earnings when you move albums around, add and remove albums. For many locations, the face and personality of a jukebox are still very important and, to a degree, that's part of what's on the hard drive and the monitor. People are visually oriented. They are more likely to go up and start touching the screen if there are big pictures. It is very much like what happens with a traditional CD jukebox when you flip through pages and look at album covers."

Thomas confirms what operators say about musical genre crossover success in seemingly well-defined, limited settings. "We've seen mixes that would shock outsiders," he said. "But there is some stuff that cuts across the demographics."

Ecast is also working to find better ways to help operators get a handle on the demographics of each location. "Talking to people who have been around the industry for a while, we hear there is not good data on this," said Thomas. "We are reverse-engineering it in a sense: looking at what music is being played and working backwards to find out who is playing it. Knowing the bar's zip code doesn't always tell you what you have to know. And, a single bar may have very different crowds at different times of the day. These issues are of interest to advertisers; we just started with Heineken, for example. We have used fun, little quizzes for players [to take] on the touchscreen monitor that also helped get some reliable data. We might ask, 'What is the average age of the people in this bar?'"

As a music content provider, Ecast is working to go beyond being a passive provider of tools that it "hopes" operators will use to program their machines. Recognizing that different operators have different needs, the company is moving toward offering more programming services from its central headquarters to those operators who are willing (or eager) to hand over this chore.

"We see a broad spectrum of operators," Thomas said. "Certainly we like to see those aggressive operators who take charge of their own destiny. At the same time, we see that many are too busy to spend enough time programming. Still others believe that programming does not affect earnings enough to be worth the time and effort. So, yes, we have a lot of sophisticated data tools available for those who want them."

"In addition," Thomas continued, "we are working on automating some of this, offering operators the choice of having Ecast manage the programming, because many operators don't have the time or the staff to devote to these issues. Some locations may object, but as long as locations' specific requests are met, and the earnings are strong, we think this will be a popular option."