Coin Machine Review (& Pacific ...)

Issue: 1939 February

INSURING PERMANENCY of the
AUTOMATIC MUSIC BUSINESS
TI
O MANY PHONOGRAPHS .. . too
uch competition between opera-
ors .. . too much effort for too little
eturn . . . these are some of the
things haunting the minds of opera-
tors who can look back on the days of
music operating when it was a highly
profitable business, the minds of young-
er men in the business who have a de-
termination to build something stable
and lasting, the minds of all men in the
automatic music industry who think
constructively on the economic situation.
Recognizedly one of the strongest or-
ganizations of its kind, one of the pio-
neers and leaders in thought, the As-
sociation of Phonograph Operators of
Eastern Pennsylvania and New Jersey
has given thorough consideration to the
proble m of stability of the music busi-
ness. Their findings and recommenda-
tions are given herewith as a matter of
united opinion of members of the body,
and publication here does not necessar-
ily mean that the COIN MACHINE RE-
VIEW endorses these views.
The factors in the problem are :
1. The public;
2. The operator;
3. The record manufacture r; and
4. The phonograph manufacturer.
I. The Public (the ultimate consumer
who buys the music sold automatically);
The history of automatic music opera-
tion and the fact that many men have
operated automatic music equipment
continuously for years is proof of the
permanency of the business if it is con-
ducted properly. That is, the public will
patronize automatic music equipment a s
long as it gets its money 's worth.
2. The Operator (who supplies the equip-
ment for the public's entertainment) :
Unquestionably, at this time the num-
ber of operators of automatic phono-
graphs is the greatest in the history of
the automatic music business, as is the
number of pieces of equipment being
operated. On the average, however, the
number of pieces per operator is no
greater than it has always been, due to
the continual entrance of new operators
into the business. Therefore, the average
operator cannot make more than a fair
living, while the large operator may
show a small profit. The history of the
business does not show that it has
made operators rich. Since there are
enough operators in the business today
to more than handle the existing loca-
tions, expansion is possible only by
taking locations from other operators.
Thus the high-commission and low aver-
ages on machines, causing slow re-
placement of old equipment, slow pay-

out of obligations, and refinancing of
equipment by manufacturers in many
cases.
3. The Record Manufacture r and Distri-
butor (who supplies the music for the
public's entertainment):
The record companies lost most of
their record sales when home phono-
graphs were displaced by radios. The
fully-selective automatic phonograph,
in conjunction with home radio-phono-
graph combinations, operated to bring
music to the public most conveniently,
as a business revived record manufac-
turing so that the sale of records today
is probably the greatest in history. Au-
tomatic phonographs, the radio and the
movies popularize songs so rapidly that
recordings become old in the space of a
few weeks, with the record manufac-
turers producing new discs at the rate
of about fifty a week, and quickly ob-
soleting most previous recordings. It
is said that approximately eighty per-
cent of all the "popular" recordings,
that is, the quickly-popular, short-life
records, are sold to automatic phono-
graph operators .
A good automatic music operation
(one that really caters to its cus tomers,
the public) must make an expenditure
of about forty-five cents per phonograph
per week for new records. With a
quarter-of-a-million phonographs in u s e ,
there is available a potential annual
business volum e to record manufactur-
ers from phonograph operators of over
five million dollars.
4. The Automatic Phonograph Manufac-
turer (who supplies the operator's equip-
ment for reproducing music for the
public's entertainment):
There are approximately 250,000 au-
tomatic phonographs in use today. There
cannot be much question that with the
amount of money represented in the
cost of an automatic phonograph, the
depreciation period should be at least
five years. This would mean a twenty
per-cent replacement annually for the
manufacturer's market, or about 50,000
phonographs per year at an annual cost
of over $10,000,000.
Summarizing this analysis, it would
seem that the public would probably
continue to play automatic phonographs
indefinitely ii operators, through the co-
operation of record manufacturers and
manufacturers of automatic phono-
graphs, will give the public music that
is worth the money it pays; but, while
the average operator could make a fair
living and a small profit, the record com-
panies and phonograph manufacturers
stand to benefit the most since their
Method suggested and unanimously approved by
the ASSOCIATION OF PHONOGRAPH OPERA-
TORS OF EASTERN PENNSYLVANIA & NEW
number is very small for the volume of
business available to them.
Therefore, it would seem, the least the
manufacturers could do is to cooperate
with and protect the operators of auto-
matic phonographs to insure their own
markets.
What Is The Present Situation?
1. The cooperation of the public, even
in its present poor financial condition,
is very satisfactory.
2. The cooperation of operators with
other operators is rapidly improving,
due to the realization of the ultimate
outcome of the business, unless con-
ditions are corrected. Formation of many
voluntary fair-trade groups of operators
in the past year proves this fact.
3. The cooperation of record manu-
facturers with the operators of phono-
graphs thus far, indicates that the op-
erators need fear no trouble from that
direction, as continuation of volume
sales of records is highly desirable.
4. The cooperation of phonograph
manufacturers can be greatly increased.
Recent announcements by certain man-
ufacturers are evidence that better co-
operation will follow to improve the
following conditions :
(a) Saturation-Heavy total unit pur-
chases by operators during 1936 and
1937 has resulted in practically all
worthwhile locations being supplied
with phonographs today.
(b) Returns - Intake averages de-
creased, a s more locations were s up-
plied with phonographs.
(c) Obligations-Most operators are
still paying off notes on 1937 and 1938
purchases, and they are having a
hard time meeting their payments at
present. Elimination of unfair competi-
tion, establishment of no new opera-
tors and a general improvement of
economic conditions would eliminate
this situation.
Some phonograph manufacturers, rec-
ognizing the foregoing analysis, have
introduced a "trade-in" policy enabling
operators having antiquated and very
old phonographs, to trade in this ob-
solete equipment for new music ma-
chines; and they have been refinancing
accounts to help deserving operators
with their payments. Some manufac-
turers have also gone on record as not
selling to locations, and limiting their
sales to established music operators.
The real problem is that phonograph
manufacturers, by accident or design ,
have practically saturated their market
in the past four years, thereby causing
a "lag" in replacement by at least one
year for normal depreciation of phono-
35
COIN
MACHINE
REVIEW

JER SEY, and given exclusively to HARRY BORT-
NICK, Pennsylvania correspondent for the COIN
MACHINE REVIEW.
https://elibrary.arcade-museum.com
36
COIN
MACHINE
REVIEW
graphs bought in 1934; and, coupled
with this, is the fact that many phono-
graphs older than four years which
s hould have been fully depreciated, are
still on location, with their operator-
owners seemingly unwilling to replace
them , due to failure to get proper re-
turns to date on their investment.
Since operators who have only phono-
graphs that are less than four years
old naturally require at leas t one more
year of operation to depreciate their
oldest equipment fully and are , there-
fore , not in the market for any substan-
tial numbe r of new phonographs , the
phonograph manufacturer must look to
lhe operator of equipment more than
four years old for his present business,
in order to keep his plant running. This
can be handled to a certain extent by
operators who purchase new equipment,
trading-in the old equipment of other
operators not wanting to purchase new
machines.
Obviously, if the operators look to the
phonograph manufacturers to cooperate
with them by selling only to e stablished
music operators good phonographs at
reasonable prices, then certainly the
operators must show a ready willing-
ness to cooperate with the manufactur-
ers by seeing to it that they, the op-
erators, replace at leas t twenty percent
of their total equipment e very year, so
that the factorie s can plan on a steady
replacement program with which to
keep production schedules moving.
The operator and the manufacturer
have a common goal-to stabilize and
make the automatic music business per-
manent by giving the public the most
in automatic music for their money at a
reasonable and steady profit. The op-
erator cannot achieve this aim ii the
manufacturer forces him to take less
than live years depreciation on his
equipment; neither can the manufac-
turer reach his, ii the operator insists
on operating antiquated machines and
refuses to modernize to give the public
better music, as well as giving the man-
ufacturer a steady business.
How To Solve This Problem-Two-Way
Publicity-Announced Policies.
1. Manufacturers to figure their year-
ly production on a basis of not more
than twenty percent of their own-made
units owned by their operator-customers.
2. Operators to replace twenty per-
cent of their equipment each year.
Those not doing so, not to be sold in
the future by the manufacturers.
3. Manufacturers to agree, through
their association, on only one change of
models per year, all announced at the
same time.
4. No new operators to be created
or established. No public advertising. No
sales to locations by manufacturers or
by operators. If the latter violates this
clause, he is not to be sold by the man-
ufacturer (or through any agency) in
the future.
5. Manufacturers and operators to as-
sist each other in lighting adverse legis-
lation and other detrimental matters.
. . .
e
Dusty: ,,"I believe in calling a spade
a spade.
Rusty: "I believe it's the safest policy
myself. I once tried to pass off a spade
as a club. That's how I got my two
fingers shot off."
BRUNSWICK
Every Artist an ARTIST!
Music Operators'
Association, Inc. of Houston
President - F. S. CLANCY; Vice-president -
SAM AYO; Treasurer-LESTER HEARN; Execu-
tive Secretary-W. A. NIEMACKL, ll05 Broad-
way, Houston, Texas.
By JOHN G. WRIGHT
Music Operators' Association of Hous-
ton set two new records-a new high
for attendance and a 100% vote pres-
ent-at the first business meeting of
1939 held at Texas State Hotel the eve-
ning of January 6. Every operating firm
was represented, making 100% voting
strength and only live were lacking to
make literally a 100% attendance.
Two applications for membership in
M. 0. A. of H. were read and voted on.
One, that of Harold Daily for operating
members hip, was accepted. The other
application was rejected.
A motion providing that a member
who had withdrawn from the organiza-
tion be charged not less than $100 nor
more than $1000 to be reinstated, was
defeated.
Election of officers was held, and a s
provided by the constitution, officers
were nominated from the floor and el-
ected by popular vote.
Those slated to guide the organiza-
tion during 1939 are: president, F. S.
Clancy; vice-president, Sam Ayo; treas-
urer, Lestern Hearn (re-elected); execu-
tive secretary, W. A. Niemackl. Board of
Directors: J. W . Williams, Fred McClure ,
William Peacock, Lester Hearn and Jack
Armstrong.
After the new officers had been
seated Herbert L. Heatly, by a unani-
mous vote, was elected honorary asso-
ciate member, and appointed legal ad-
visor. Such an honor has been conferred
only once before, when John G. Wright,
Texas representative for the COIN MA-
CHINE REVIEW, was elected honorary
associate member of the Association.
0. L. Bickley, Vice-President of Local
I.B.O.E. introduced L. W. Merchant, busi-
ness manager of same local, who had
been invited to explain the workings of
the union to the Association. President
Clancy read from the portfoilo of I. A. E.
P. 0. , explaining how phonograph oper-
ators had been inducted into different
branches of organized labor, and finally
into the one organization especially cre-
ated for them, the International Assn. of
Electrical Phonograph Operators.
George Cunningham spoke against
making any sort of union labor connec-
tions whatsoever. D. W . Willett spoke
in favor of affiliating with I.A.O.E.P.O.
After a committee of E. M. Gates, Lester
Hearn and F. S. Clancy had been ap-
pointed to meet with representatives of
I.B.O.E. , the matter was carried over
until next meeting.
Rarely is any business of a serious
nature transacted at a social meeting of
Music Operators' Association of Hous-
ton. Due to the fact, however, that the
group is still undecided as to the union
question, time was taken out at the Jan-
uary 19 social gathering to read aloud
WANTED
To Buy For Cash
Used 32 volt Motors and Converters for
Wurlitzer and Seeburg Phonographs.
ADVISE WHAT YOU HAVE
BICKLEY DISTRIBUTING CO.
3322 Harrisburg Blvd.
Houston, Texas
to all present the article, "Musicm'en
Unite," on page 53 of the January issue
of COIN MACHINE REVIEW.
Commenting on the story, officials of
the organization said: "Judging from
this write-up, appearing in a magazine
that is an authority on operators' asso-
ciations over the whole country, those
operators in California have identically
the same set-up as Houston Operators
want."
e
A little girl of five was entertaining
while her mother was getting ready.
One of the ladies remarked to the other
with a significant look, "Not very
p-r-e-t-t-y," spelling the last word.
"No," said the child quickly, "but
awful s-m-a-r-1. "
lnanaediate
RECORD SERVICE
Within a few hours of you is an Authorized
RCA-Victor Distributor who understands the
specialized needs of Phonograph Operators
and is equipped to give you immediate
record service.
ATLANTA, GA. - - - - ,
Polk Musical Supply Company
29 Pryor Street, North East
.----BOSTON, MASS.----,
Eastern Company
620 Memorial Dr., Cambridge
DENVER, COLO.
Hendrie and Bolthoff Mfg. & Sup.
Co.
1635 17th St.
-
MILWAUKEE, WIS. -
Taylor Electric Company
112 North Broadway
NEWARK, N. J. - - ~
Krich-Radisco, Inc.
422 Elizabeth Avenue
NEW YORK, N:Y. - - ~
Bruno-New York, Incorporated
460 West 34th Street
-
OKLAHOMA CITY, OKLA. -
Hales-Mullaly, Incorporated
1-7 North East 6th Street
-
PHILADELPHIA, PA. -
Raymond Rosen & Company
32nd and Walnut Streets
- - - WASHINGTON, D. C. -
Southern Wholesalers, Inc.
1519 "L" St., N.W.
1511 Guilford St., Baltimore, Md.
It Pays to Use
VICTOR and
BLUEBIRD
RECORDS
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