Hey, Juke . . . Take an Old Song and Make It Better

They may not have the elegant lines or nostalgic appeal of a classic Wurlitzer, but a new generation of high-tech jukeboxes is about to invade bars and restaurants throughout America--and the start-up companies behind them are promising they’ll rescue the coin-operated music industry from oblivion.

Touchtunes Jukebox Inc., a Canadian affiliate of fledgling Las Vegas-based Technical Maintenance Corp., this month started a test run of its digital jukebox system in 20 U.S. cities, including Los Angeles. Each machine stores about 500 songs in digital form on a hard disk drive, and thousands of additional titles are available by modem from a centrally located music library.

Meanwhile, New York-based PlayNet Technologies Inc. has recruited legendary Atari Corp. founder Nolan Bushnell to help it launch its own “21st century jukebox.” The PlayNet system will access thousands of songs via the Internet--or, more precisely, a private intranet--and may eventually offer multi-player games as well as other diversions.

Both companies say their systems will offer far more selections than traditional jukeboxes, make it easy to track customers’ tastes and eliminate the cumbersome process of stocking CDs or records by hand. The touch-screen machines could also be used to sell tickets and merchandise.

But the bid to reinvent the jukebox is bucking some discouraging trends. Although Touchtunes refers to the $2-billion jukebox market as “very lucrative,” the coin-operated machines are not nearly as popular as in their 1950s heyday, when an estimated half a million were in use.

First invented as nickel-in-a-slot phonographs in 1889, jukeboxes surged in popularity after World War II, when vinyl records and hi-fi sound became widely available. In 1946, Wurlitzer, a key manufacturer, shipped 60,000 units of its famous “Bubbler” model, which became the best-selling jukebox of all time.

The devices were so important in generating awareness of new pop songs that “a lot of artists demanded that their songs be put on jukeboxes,” Touchtunes President Tony Mastronardi said.

But the market ebbed as consumers bought their own stereo systems and portable cassette players. The rise of FM radio and album-oriented rock music further limited the appeal of machines often stocked with top 40 singles. By the 1980s, only 210,000 boxes remained, although the numbers have climbed a bit since the arrival of CDs, according to the Chicago-based Amusement & Music Operators Assn.

The industry has reacted with interest and some skepticism to the new generation of jukeboxes.

“If [the companies’] claims are true,” the digital jukebox “will have an impact” on the industry, said Steve White, associate editor of the trade magazine Play Meter. “But it’s not going to happen tomorrow.”

He said the 4,000 U.S. operators, many of them small businesses, haven’t always rushed to embrace the latest technology. About half the jukeboxes in use today still use vinyl 45s, he said.

The manufacturers of CD jukeboxes, not surprisingly, take an even dimmer view of their new competitors. Glenn S. Streeter, president of Torrance-based jukebox maker Rock-ola, scoffed at the notion that digital jukeboxes might make his products obsolete. (Sources say Rock-ola divides most of the market with Wurlitzer and Grand Rapids, Mich.-based Rowe International.)

Streeter called the revolutionary claims made for digital jukeboxes “a lot of horsefeathers,” arguing that the technology behind the systems is nothing new. He added that the long-delayed digital versatile discs, or DVDs, will probably have a far greater impact, as they will allow users to play simultaneously both songs and music videos. DVDs are expected to be distributed widely later this year.

But such skepticism has not deterred PlayNet and Touchtunes.

Mastronardi, a former builder in Montreal, said Touchtunes has already spent nearly $3 million to develop the product, including building a new operating system and negotiating rights with the songwriters unions and record companies.

Touchtunes announced last week that it had acquired rights to use copyrighted music from four companies: PolyGram Records, Capitol Records/EMI, Warner Music Group and MCA Records.

The rights issues proved far more complicated than with conventional jukeboxes because license holders were worried about hackers pirating new songs over computer networks. PlayNet responded by developing an encryption process to protect song transmissions, company representatives said.

Both companies have designed their jukeboxes for ease of use. Customers select songs through a touch-screen application and insert money through a dollar-bill changer or coin slot.

For PlayNet, the digital jukebox is just one of an array of new products tied to the Internet, including a counter-top device, designed for bars and restaurants, that allows users to play games and send e-mail.

“Multi-player, networked games and experiences represent the next wave in entertainment,” said Bushnell, who invented the video game industry with Pong and later scored another big success with the Chuck E Cheese restaurants.

By contrast, Touchtunes is linking its fortunes exclusively to the jukebox, a risk Mastronardi believes is justified because of the labor savings and improved efficiency of digital jukeboxes. “The cost-effectiveness has to be stressed,” he said.