The only Authorized North American Distributor of Philips CD PRO 2 CD Players

Jukebox Crystal Ball: Autumn ‘07

October 15, 2007 by

What does the future hold for the venerable jukebox? How will this much-loved American icon be shaped in the future?

Clearly, pay-per-play public performance of recorded music still has a vital role to play in our industry and in American culture. And it also seems clear that the predicted technology shift has finally arrived. Digital downloading machines got real traction in 2006 and that momentum has carried forward into 2007. Glen Streeter, Rock-Ola’s proprieter and jukebox visionary, once said that the jukebox will follow the format preferred by consumers. Now that more and more people of all ages are getting comfortable with downloadable music they expect to see similar technology on location. As digital machines replace CD jukes, patrons are spending more money and the new technology is a hit.

But can the current fat-client, hard-drive based system sustain itself, or is it simply an interim technology? Based on a number of meetings that Enco has had recently with some well known telecommunications and media companies, it’s likely that the current technology is interim in nature. The key role today’s digital system plays is pushing the development of the broadband infrastructure that will be needed for the next significant wave in location amusement.

The industry’s current situation is comparable to that of Apple and iTunes. Apple waited patiently for the Dells and Gateways of the world to sell high-performance computers to the average Joe, and then continued to wait as the Baby Bells and cable companies connected those computers to a broadband pipeline. Once convinced the timing was right, Apple began to fill that pipeline with licensed music via iTunes. In a similar way, media companies are waiting for the location network to also become a mature broadband environment before they enter our market. Media companies are keeping an eye on the location amusement industry, but have found the network immature and locations not yet ready to broadcast advertising, which is a key consideration.

As the location broadband infrastructure matures, new players and new technologies are poised to enter the market. Streaming, used in services like Internet radio, is a technology that music copyrights owners favor. This technology would eliminate hard drives and local copies of songs, making piracy much less of an issue. Music owners, such as the major labels, may be interested to sell their music direct via subscription on their own streamable, server-based systems. Such a shift would certainly require a new hardware format on location, and a significant change to the current business model.

There have been plenty of rumblings over the past couple of years about manufacturers going direct to locations, bypassing operators and distributors. In the meetings mentioned above Enco has always discouraged this. The three-tiered distribution system is an integral part of our industry and those looking to circumvent it have almost always failed. However, as technology shifts, the role that each tier plays will also change. In particular for operators, the location will become more and more like an information technology (IT) installation. Operators will have to become more sophisticated and knowledgeable about things like routers and wireless networks.

Operators will maintain and strengthen their relationships with locations in the future by providing IT service and support. But for now, the CD jukebox still looks like a good play while the market and technology sort themselves out. The arrival of new technologies and business models are at least two years away and current music licenses have twelve months or more before they expire. Until further notice, stick with compact disc and keep on keeping more of what you earn.

Categories: Blog