Last week the jukebox in the corner of the bar sparked a conversation about the business of digital jukes. TouchTunes, the brand on our box, boasts ”38,000 restaurants, bars, retailers, and other businesses throughout the US and Canada.”
38,000 units installed. I’m curious about how they’re exploiting that position. I had a few immediate questions about my situation that night.
- Why I’m not choosing and paying for songs with my phone?
- Why I’m not paying to vote on the current song?
- Why don’t my selections go into my FourSquare, Twitter, and Facebook feeds?
- Why can’t I pay to play the latest single my band recorded in the basement? (bartender gets a kill-switch)
In search of some answers I researched the “competition” and ran some crap calculations to see what I was up against.
I found TouchTunes only slightly behind the curve. The jukebox down the street has a URL on their social network: http://www.mytouchtunes.com/.
Good stuff on MyTouchTunes:
- shared play lists
- latest MyTouchTunes selection list
- bar-specific trends
Bad stuff about MyTouchTunes
- don’t see any FourSquare, Twitter, Facebook, MySpace integration
- don’t see what non-members selected
- should be able to buy the current song from iPhone right now
- no real-time stream of selections
- can’t listen at home to my favorite bar (can’t even pay to do that)
MyTouchTunes, a very exciting product, plays second fiddle to the jukebox itself. MyTouchTunes underutilizes its presence in nearly 40,000 venues.
I through together an off the shelf hardware package to “kill” TouchTunes.
- $160: MSI Wind Nettop 100 Desktop PC
- $40: Credit Card Swipe
- $50: USB 3G Modem
- $200: iPod Touch
- $60/mo: 2yr 3G Data Contract
The bolted-down iPod Touch acts as an on-site aide to train customers on how to use the system. With the credit card swipe it facilitates non-iPhone customers. Sign with your finger please.
Seems too pricey to disrupt the incumbent. A bit of hacking could help that out. Remove the nettop and 3G Modem. Then upgrade the Touch to an iPhone. The subscription is still there, but it spreads out over 24 months.
My skepticism is kicking in. Time to make up some numbers.
I assumed a bar with one bartender will have a hard time serving more than three drinks per minute at peak load. I guess they might hit that level for one hour three nights of the week. Beyond that I’ll give this made-up bar %20 efficiency the rest of their hours on those three days and %10 for the remainder of the week.
Peak load @ %100 for one hour is 180 drinks served. Three hours of peak make 540. 27 hours at %20 make 972 drinks and 40 hours at %10 make 720 drinks served for a total of 2232 drinks sold in a week. That comes to 116,064 drinks in a year. At five dollars each drink my bar has $580,320 revenue from the liquor license.
For context, if my bar had monthly expenses of $20,000 and only made a %50 margin on those drinks I’d better start considering adding a kitchen and a dinner menu.
Next I wanted to look at revenue on the jukebox. Let’s say I have my customers love their music and hate their quarters. I charge 50 cents a selection and they play 50 songs a night all year long!
The jukebox made $9,125.
Not shabby. But I feel those numbers are optimistic.
If I wanted to take on the big boys, I’d need a product that sold drinks. Not music.