The internet has enabled the jukebox to be much more than a source of sounds. Phil Clegg tracks the progress of the digital revolution

There is no doubt that the jukebox industry has been transformed by the internet.

It has meant that operators can reduce their costs and suppliers can greatly enhance the way in which they deliver their services to those operators. “This has been one of the biggest developments that we have seen in this sector for many years,” said Chris Black, managing director of UK-based manufacturer Sound Leisure.

“The only way to now move a product forward is by using a broadband connection. This not only opens up a product to new features, it also means greater cost savings for the operator, who can change the majority of settings and see real-time information about their sites.”

Richard Elsy, managing director of UK-based JayBox, said: “The internet has been of enormous significance and an ever-increasing number of operators have understood that this is the way, with the right machine, to enhance their offer and their profits.”

Daniel Villa, head of international sales at Grupo Arion in Mexico, agreed. “The internet is now an important tool for all gadgets and also for jukeboxes,” he told InterGame. “Now you can program a jukebox to deliver a mail with all the information an operator needs to know, like collection, jukebox status, music popularity, download advertisements and music and video downloads.”

US-based AMI Entertainment’s vice president of music sales, Terry Lacher, thought the internet had had “an amazingly positive impact on the jukebox industry as a whole.” He added: “Considering the transition from 78RPMs to 45RPMs to CDs, all of which were very significant, the move to digital jukeboxes and their use of the internet is simply immeasurable.”

Marc Felsen, vice president of corporate marketing at US-based TouchTunes, said that the most important thing the internet has done is enable digital music. “This, combined with the era of breakthrough digital music playing devices, has created a new generation of consumers who have become very accustomed to hearing their music wherever and whenever they want. It is that exact consumer behaviour that will allow us to continue to thrive for years to come.”

Dietmar Straubinger, marketing manager at TAB Austria, said: “Getting a favourite song or music video is much easier today thanks to digital technology and the internet. In the past you had to buy the whole CD or record, even when you enjoyed just one song. With our Online Terminal Management you can easily download individual songs to your Max Fire jukebox.

“Today the internet offers a lot of possibilities for us. The Max Fire jukebox HD is always up to date on a daily basis and guests have access to the latest international charts. In addition we are able to supply national Max Fire charts to give the customer and the operator most benefits. This way it is quick and easy to find the songs that have been most requested by patrons. The Max Charts are the patrons’ own charts, national and international.”

The jukebox is a product that is continuing to develop

“Watch this space,” said Sound Leisure’s Black. “When vinyl came out everyone thought that was it. Then CD came and now we are in the digital revolution. Only four or five years ago many people thought that nothing further could be achieved and now we have launched V-Hub and this is pushing the boundaries again - for now.”

Arion’s Villa envisaged the product of the future as a multi-dimensional thing. “Our view of the future is to develop an interactive multimedia machine that will give multiple uses and games to the bar owner and its customers,” he said.

Elsy said that JayBox is “constantly evolving and improving the product in consultation with our customers. Everything is determined by the two key needs - driving the cashbox and reducing operating costs. Our new multi-function control board is a perfect example of an operator demand-driven development and we have others in the pipeline.

“We are great believers in using the technology to meet the two key needs described above, rather than offering features just because it’s technically possible to do so.”

TouchTunes’ Felsen said: “We continue to grow and we expect that trend to continue for the future. Our focus will always be music, but we are also very engaged in finding other non-traditional revenue streams that we can access from our products. We are no longer just music players - we are creating digital entertainment systems that will delight and engage consumers for years to come.”

As long as manufacturers continue to develop exciting, innovative jukeboxes, there is no end to the sector’s development in sight, according to AMI’s Lacher. “There will always be something special about enjoying a cocktail and dropping a coin into a jukebox to hear a song, especially one that brings back many happy memories.”

In the UK and other countries, the bar and pub industry has been hit by venue closures. These are the staple sites for jukeboxes and such venue closures may have led jukebox suppliers to look for different sites, as outlined above by Felsen.

“Clearly the closures in the sector over the last four years in the UK have had a big impact on trade, although this remains the key target market for jukeboxes,” Elsy told InterGame. “There is a restructuring going on which is producing a growing proportion of independent multiple pub operators. Opportunities are also worth exploring in other leisure sectors which we are looking at.”

“Obviously, the home of the jukebox has always been pubs and bars for as long as we can remember,” said Black. “However, we are finding that there are some machines now being located away from what have been traditionally thought of as jukebox locations. One thing that has become apparent over the last few years is that customers prefer to have a choice in the music that they listen to and also that the retailer likes to have control over the music that is being played within the venue.

“The jukebox is the only product that can allow both of these areas to be controlled and as such we are finding that the machines are being placed where a foreground music system would have traditionally been placed.”
Villa stated that new locations are being found all the time.

“Every year the jukebox is finding its way into different locations such as resort hotels, billiards arcades, casinos, karaoke bars and party rentals,” he said.

Lacher said AMI was always on the look-out for new opportunities. “Yes, pubs and bars still remain the strongest locations for jukeboxes, but we constantly seek new locations such as chain restaurants and family fun centres.”

Felsen told InterGame: “The on-premise channel will always be the core of the industry. That being said, as we move our devices from just playing music to potentially delivering so much more, the desire for our products is starting to break those traditional boundaries and we believe there will be much more of that in the future.”

Operators, used to advances in technology, are also becoming more demanding.

“They demand the new music and video releases almost on the same day that they are released from the record companies because the customers who play the music ask for them,” said Villa.

“They also demand reliable software that doesn’t fail with new graphics and fast and intelligent search. If the operator can offer this on their jukebox the result will be a decent income.”

Elsy said the key to a successful jukebox offer is the freshness and depth of the music available instantly to players. “This is what drives the cashbox. Players have become both more discerning and demanding as they know what they can find on the internet.

“Manufacturers have to get this right, as well as offer a product and service that reduce operators’ costs through high reliability and no-cost music delivery.”

“From our point of view very little has changed from what has always been required,” said Black. “Any operator - in fact any customer in any industry - requires the same thing when they are purchasing a product: something that is well designed and built, that is reliable and is backed up by a knowledgeable network of people that can assist and offer advice.”

Lacher said that “operators continually request improvements from jukebox manufacturers that increase revenue through various ways that were not available before digital downloading jukeboxes.”

Now, more than ever, operators demand performance, says Felsen. “The jukebox category is the most important category to them in this ever-changing environment. Five years ago, on-premise gaming and other categories shared equal billing with ours; as consumers have shifted away from those trends, jukeboxes have continued to thrive. We need to ensure our products deliver the maximum opportunity to earn for our operators so that they can continue to succeed in this space.”

Has jukeboxe operation improved?

There was a mixed reaction on the subject of whether jukebox operation has improved and whether machine income has increased over the past few years. “Overall the income has dropped slightly over the past 10 years,” Black told InterGame. “However, some of this can be accounted for in the rise of VAT. But a jukebox still makes much more financial sense than many other machines and some of the takes that we are witnessing on both the Milestones In Music and V-Hub software is fantastic.”

Elsy said: “Since we launched JayBox in 2006 we have seen cashbox takings for our customers increase greatly and remain very steady during the last few years despite falling incomes from other machines. In fact, we have operators who now reckon they get a better return from their JayBoxes than from their AWPs and SWPs.”

According to Villa, when the industry went from CD to digital income increased. “The other story is the economy issue - this hurt the income in the boxes as less people go to bars. Three years ago business had come down from between 25 and 35 per cent. An average machine will make between £300 and £400 a month.”

Lacher said: “You will always see revenues increase with the introduction of new jukeboxes - e.g. 45RPM to CD, CD to digital. Overall, revenues are certainly higher with digital jukeboxes.”

Music licensing and royalty payments

A complex element of jukebox operating, as exemplified by the current legal situation in the UK between manufacturer NSM and the Performing Right Society and PPL.

“This is down to all parties concerned, not only the manufacturer and the operator but also the site/retailer,” said Black. “The responsibility for the music that is produced for use on the box has got to be with the people that supply it. In our case Soundnet provides the content to our machines in the UK and most of Europe and it is their responsibility to ensure that all licences are paid and that the music supplied is legal at point of sale.

“Once the machine is on site it is then up to the operator to ensure that the on-site licences are paid and also the site needs to ensure that they are licensed to play the music within their venue.

“There are two licensing issues that have made the headlines in our trade papers over the past month and these should not be confused. The PPL issue could actually be to the jukebox’s advantage. Expensive live music may encourage more jukebox installs, especially as we can provide dance, 80s, etc playlists.

“With regard to the NSM issue, every legal music supplier in the industry pays PRS and I can assure all our customers that our music content provider Soundnet has always paid them and all of the other required royalties. Nobody is comfortable paying in full when others are not paying their share. It is now up to the courts to decide the line of action to be taken with NSM.

“Over the past three or four years we have been actively involved with helping legal operators and the PPL in the fight against illegal suppliers. Over the same period at least three jukebox manufacturers have been shut down and many operators have either been fined or jailed, with other cases pending now.

“What you tend to find is that the illegal jukeboxes are just the tip of the iceberg. The people that are involved with this are normally defrauding the taxman, buying and selling stolen goods, money laundering and operating illegal AWPs, etc, on a massive scale. These actions affect not just the manufacturers but the other operators that are situated in the same area.

“No one can compete with someone that is not paying for their music or is not paying taxes and this then puts added pressure on the legal operators as their customers begin to question why they seem expensive in comparison with others. These people drag good businesses down as bona fide operators and manufacturers are forced to reduce their terms to compete or lose the business. It can take years to bring a case against an illegal operator and as such can have a devastating effect on all the surrounding businesses.”

As far as Elsy is concerned, there are no problems with music licensing in the UK, provided that the distribution of the music is well planned and implemented. “Clearly, the manufacturer/music provider has the responsibility to ensure that this is the case. We believe that those who break the law should be prosecuted.”

Villa told InterGame that the bar owner or landlord will ask for more music no matter how much music the jukebox has. “They still demand more and more. They don’t realise that the vast majority of the gross income from the jukebox comes from maybe only 300 songs.

“Every country has its own legislation, music licensing laws, rights and royalties covering the variety and quantity of music and videos. They also have different prices and monthly or yearly fees. Sometimes there are different fees for different customers in the same country, as is the case in Ireland with the PPI. The real story is that the record labels have the last word.”

He said that he found the NSM case “very alarming.” He added: “The jukebox industry and manufacturers will learn from this conflict. There is nothing we can do; only the courts can solve this conflict.”

“It is the responsibility of everyone in the ecosystem to ensure that music is delivered to consumers through the right and legal channels,” said Felsen.

Lacher said: “Internationally, the licensing laws vary from country to country, so each must be dealt with separately. In most cases, the responsibility lies with the music content provider, who may or may not also be a jukebox manufacturer. We are strongly opposed to illegal operation and we make every effort to assist operators in policing this issue.”

New technology

This article has concentrated very much on new technology in the sector, but traditional non-digital jukeboxes still exist. Our interviewees all thought such products still have a small chance of a future, but to varying degrees.

“Like many categories, there will always be some appeal for nostalgia, particularly in design,” said Felsen. “The one barrier with that in our category is that the technology and features in our new products make it such a superior consumer experience, it may be hard for consumers to want to go back.”

Elsy agreed. “There is a place for non-digital jukeboxes only for nostalgic reasons,” he said. “Even sites with poor takings on CD jukeboxes will very often surprise when a JayBox is installed.”

Lacher pointed to the home market as the future for such products. “There will always be a place in what we call the home market - jukebox collectors and people who just want a piece of nostalgia in their homes.”

“We believe that when the digital boxes were first released people were struggling to use the machines,” said Villa. “However, with our new intuitive software anybody can search for and find that special song.”

TAB Austria’s Straubinger thinks there is no comparison between today’s boxes and those of the past. He said: “Compared to the jukeboxes that were used before, the floor space required has been reduced enormously due to the fact that the CDs and records took up a lot of room. Also maintenance and transport were extremely time consuming.

“The machines weighed more and were bulky and, last but not least, the reduction in the number of mechanical spare parts also offers significant cost benefits. Due to the low maintenance, guests can use the Max Fire jukebox more often and this positively affects the revenues. The positive feedback from both operators and guests shows us that we are on the right track.”

Black believes that there will always be certain sites that will want to retain their CD machine due to the cost of a new digital box. “However, digital machines have now been in the market place for almost 10 years and Sound Leisure still supports these early units.

“Many customers now send their older machines to us for renovating and use these on their low-take sites. These, matched with Soundnet’s ‘value package,’ allow them to be operated economically and also to attract new customers. It’s not so much whether there is still a place for CD machines on site as to keeping them going. There are many CD machines that are in excess of 10 years old and due to regulation changes some components cannot be supplied any more and, due to the fact that the main production has stopped, it is not worth the manufacturer retooling and redesigning the board.”

We have already touched on the capacity of modern jukeboxes to be more than just sound machines. They can include additional features and advertising opportunities - the question is whether or not operators have fully grasped these opportunities yet. And in any case, the jury is still out on the effectiveness of such additions.

“There are loads of opportunities in the field of advertising and promotion, although there is often a problem with sharing income in this area,” said Elsy. “As to other features, we remain unconvinced that many of these are actually helping to drive the cash box and, indeed, may actually detract from this objective.”

Villa was equally unconvinced. “The advertisers will not offer an important amount of money to the operator and landlord in order to place their publicity at the jukeboxes,” he said. “They will always search for mainstream publicity sources like newspapers, TV and radio.”

Lacher had a different view. “Additional jukebox features like advertising capabilities, cameras, smartphones and Flickr accounts are options embraced by operators as each promotes additional revenue stream possibilities. That is what it is all about.”

“We recognised long ago that the digital market is becoming more and more important and therefore we have set appropriate trends with the Max Fire jukebox HD,” said Straubinger. “People long for diversification; they want to get what they want in an easy and uncomplicated way.

“Our Max Fire, due to its charts feature, top hits function and OTM Shop, adapts well to customer needs. Through these functions operators are able to customise each jukebox to the needs of the premises, which means that operators are able to save a lot of effort and increase profits and customers can individually create their perfect music.”

It’s very much a mixed bag for Black. He told InterGame: “We have had these facilities on our machines for many years and to be honest some operators make great use of them and the sites that are aware of them think that the facilities are superb. Other operators don’t even let the site know that the options are available. All our MIM and V-Hub products have a separate key switch on the side of the machine that gives the site manager access to their own programs, a USB socket so that they can update adverts, etc.”

As far as Felsen is concerned, it all starts with the consumer. “I think we need to ensure an environment that makes it as easy as possible to enjoy our products. The things that we do to surround that experience need to be as organic to it as possible. We understand that and we think our operators understand it as well.”

Felsen believes that what makes TouchTunes products stand out from the crowd is the strength of the brand. He said: “Our goal is clear - to build an army of music lovers who play and prefer to use the TouchTunes brand. Our products are our most important asset in achieving this goal. Our new SmartJuke Virtuo is a testament to this. It is such a huge leap ahead in its design and functionality that we are changing the way consumers consider the jukebox category.

“We also surround our jukeboxes with key consumer enablers such as our myTouchTunes consumer loyalty programme and our iPhone and Android mobile apps. All these experiences combine to give consumers what they want when they are looking to enhance their moment by playing music.”
Villa reckons that Arion’s strong points are its unique two-year warranty, superior payment terms, easy search and graphics and user-friendly software.

AMI’s advantages are, according to Lacher, “versatility, ease of installation, size of viewing screen, availability of various options - bill acceptors, credit card readers, coin acceptors - the flexibility to easily change the ‘skin’ on the new Rowe NGX jukebox and our outstanding 24/7/365 technical support.”

Singing JayBox’s praises, Elsy told InterGame: “Apart from the unique, stylish and robust cabinet, the JayBox has a player feature which allows them to log in and create a playlist and send requests for new tracks, to which they get a reply. Instant access to over 100,000 tracks, with 200 online updates every week, makes a big difference. Because of our high quality embedded technology we have complete backward compatibility; a five-year-old JayBox is updated to the same spec as the new machines.”

Straubinger says that TAB’s Max Fire unit benefits greatly from its daily updates. “Every day, all new and available songs and videos are displayed on the high resolution 32ins touchscreen. Thus it is always optimally adjusted to the needs of the location. The central song database is automatically updated to provide you with the best hits and clips as quickly as possible, saving time and costs. You don’t have to search any more to keep jukeboxes up to date and you don’t have to update with discs or CDs.

“TAB Austria is and always has been a forerunner for new trends and ideas and therefore we support digital technology. The Max Fire is particularly popular and has clear benefits for operators and guests when compared to mechanical jukeboxes. Customers are not restricted to the songs offered on the jukebox. They can choose from a variety of songs and music videos that can be easily downloaded from the database and sent directly to the jukebox. This allows the operator to save time and travel expenses and increase takings.”

Sound Leisure claims to have “the most advanced jukebox on the market.” Black said: “Our latest P23 jukebox that uses the VenueHub technology is the most advanced jukebox on the market, featuring a swipe touchscreen, track previews, over six million tracks when online, a contactless payment option, bingo, quizzes, advertising opportunities, etc.

“There is no other machine on the market with the level of customer interaction or online service capabilities. The V-Hub technology has been designed to encourage people that would not normally play a jukebox to have a go. Traditionally, jukebox players have been chart lovers; the V-Hub is aimed at a much wider audience and the update that we will be launching later this year will further emphasise this.”