Flat Fee vs. Percentage of Revenue?

February 5, 2011 by

As we prepare for Amusement Expo in Las Vegas, I have a question for all the operators and other industry insiders who generously give me a few minutes to read this blog:

Would jukebox operators in the United States prefer to pay a flat fee for music, or a percentage of gross revenue?

The question came up as the Enco team once again traveled to London this past January to visit the EAG Expo. Jukebox was represented by Sound Leisure, NSM, Mexico’s Arion, and a small UK company called JayBox. Of particular note this year was the growing popularity of flat-fee pricing models for digital jukebox music. We talked to manufacturers and a number of operators at the show, and found that the UK, Europe and many other parts of the world seem to have embraced this pricing scheme.

With a flat-fee model, an operator pays a monthly subscription per location to the music provider. Flat-fee locations then theoretically have unlimited access to the provider’s entire music library. With a percentage-based model, which is dominant in the States, an operator is charged a percentage of the gross revenue generated by each jukebox.

To broaden the comparison, operators of CD and vinyl jukes, by purchasing music directly from a retailer or one-stop, determine their own cost of music for each location. This seems to have some similarities to the flat-fee model.

I’d like to know what you think. Would operators prefer a flat-fee pricing model for music, or a percentage-of-revenue model? Leave a comment or send an email to chris@encosystems.net.

And now a couple bonus pictures of the Enco team talking music in London…

Chris Bisha with Simon Davis of Soundnet at EAG

Chris Bisha with Simon Davis of Soundnet at EAG

Old friends Joel Friedman and Alan Black of Sound Leisure at EAG

Old friends Joel Friedman and Alan Black of Sound Leisure at EAG

Thanks. See you in Vegas.

Categories: Blog, Jukebox