ELMHURST, IL -- NSM Music Inc. has announced two major changes to its American jukebox business, which recently was closely tied to the now-defunct Ecast Inc. These changes will impact music services and jukebox hardware sales.
First, NSM said it will offer a variable-percentage revenue share option for subscribers to its music services. This means that the percentage of jukebox revenue that operators pay for music can be reduced depending on the number of jukeboxes they operate. Previously, the company required a $199 monthly fee, which offset costs associated with licenses paid to record labels and music publishers.
"We heard repeatedly from customers that our one-size-fits-all approach does not work for them, as they have locations that earn at various rates," said NSM senior vice-president Bob Cooney. "We want to be flexible enough to work with our customers so that they can consider NSM jukeboxes for any of their music locations."
Second, NSM is dramatically scaling back its direct-sales program and is seeking to work with industry distribution in certain territories. Cooney said the company is negotiating with distributors who will sell NSM jukeboxes in exclusive markets.
"Where we have support and coverage from the operator and distributor channels, we will not sell to locations", Cooney explained. "Where we have no support, we will offer our product to whomever wants to buy it."
According to the NSM senior vice-president, NSM and Ecast executed a one-year extension of their content supply agreement in September 2010, and at that time Ecast strongly suggested that it would be the last renewal. Ecast was well into the development of its Revo jukebox, which was being positioned to directly compete with NSM's Icon. Cooney said that NSM Music faced a critical decision: shutter the U.S. business after 40 years or directly license its own music and bring the international version of NSM's software platform to the U.S. market.
"We did a realistic assessment of NSM's market opportunity at the time," Cooney said. "With three well entrenched and institutionally financed music suppliers, we knew we had limited opportunities to successfully penetrate the operator market. The decision to sell to locations was made for us by Ecast."
And NSM took a lot of heat after it announced its direct sales program in December 2010. | SEE STORY
"We failed to adequately communicate the reasons behind our decisions, and then exacerbated the situation with a marketing message that some operators deemed dismissive of their value," Cooney said. "We should have told the whole story, focused on improving our product offering, and communicated our value proposition. I apologize to any operators we may have offended."
Cooney termed NSM's new approach to the jukebox market more realistic. "We are thankful that some longstanding NSM operators want to continue doing business with us," he said. "We have a committed team of employees with over 70 years of combined industry experience. Our music catalog is growing, our software platform is maturing and we offer a different way of doing business than the competition. We believe that there is room in the landscape for NSM, and there are ways in which we can all work together to everyone's benefit."
Cooney said NSM's changes in music fees and product distribution are the first responses to feedback received from operators during March's Amusement Expo in Las Vegas. "NSM music had an enlightening few days at the Amusement Expo," he said. "We exhibited in order to engage in an open dialogue with operators and distributors, and directly address some of the confusion in the market following Ecast's closure, as well as concerns that operators have had about NSM's go-to-market strategy." | SEE STORY
NSM Music was founded in Germany in 1951 and is now headquartered in Leeds, England. In addition to the UK and U.S., NSM maintains offices in Dubai and Germany. Among its early innovations was the invention of a mechanism that played 45-RPM records from a horizontal stack and used different tone arms for their A and B sides. Today, NSM Music administers a music distribution server in the UK. It was the first jukebox manufacturer to be awarded the Phonographic Performance License for dubbing and downloading music in Europe.
Bob Cooney officially joined NSM Music Inc. in late 2011 as the senior vice-president responsible for U.S. operations. Prior to this official role, Cooney had been consulting with the company for more than a year. Prior to joining NSM, he served seven years at Ecast, where he was oversaw product management, strategic market planning, manufacturing partnerships, brand development, communications and creative design. At Ecast, he held the title of vice-president of marketing and business development. Additionally, Cooney was vice-president of business development of Global VR, a videogame maker, and was chief executive of Laser Storm, a publicly traded location-based laser tag company.