Cover Story (March 2004)

         : setting the digital industry on fire.

Rowe International describes its global digital initiative as about to change the jukebox business and experience.

There is perhaps no other name more revered in the jukebox industry than Rowe Ami, whose product innovations span nearly a century.

A pioneer in the design and manufacture of jukeboxes, vending machines, and money handling devices, Rowe has played a historical role in all segments of the coin-op industry since 1909. Today, a revitalized Rowe is no longer satisfied with being a part of history, but is poised to set the industry ablaze under a new identity, AMi Entertainment(tm), a newly created business unit of Rowe exclusively dedicated to digital entertainment.

Rowe's new logo is seen for the first time on the cover of this magazine. But the changes at Rowe are deeper than colorful new graphics.

The new look is representative of Rowe's fresh ideas. Central to AMi Entertainment's business are the world's most advanced digital jukeboxes, which can operate in stand-alone or Internet-connected formats, and Rowe's robust client/server software system, designed to administer jukebox content. As a truly global company, Rowe has developed the most flexible product with the capability of tailoring it to meet the needs of differing markets.

Photo to right: Rowe takes the distributor open house circuit seriously. 
Here are Betson's Kevin Fritz with Coastal Vending's Joan Frye 
and Mark Balint posing on the left of Rowe's NetStar. 
At the right are Betson's Larry Wilner and 
Rowe's John Margold. 
Coastal has had great success 
with digital jukeboxes and continues to convert 
its route to the newest technology.

Rowe had always been a successful company. It held the industry's largest distribution network and enjoyed a loyal operator base. But the company needed a new business direction to maintain its leadership position in a changing marketplace and to overcome financial difficulties created by a leveraged buyout more than a decade ago.

So the jukebox manufacturer charted an ambitious reorganization course about one year ago, with the objective of creating a worldwide digital entertainment initiative. To realize its new business direction, and create a favorable environment to meet its goals, Rowe made several dramatic moves, including the divestiture of its vending business and seeking a new ownership structure.

Photo to left: At a spotlight show at H.A. Franz's Dallas office, 
Franz Sales Representative James Scales 
proudly shows off Rowe's StarGlo to 
his brother Michael Scales and 
Chris Kellian of Amusements Over Texas.

In November 2003, St.-Louis-based Harbour Group, a private equity firm acquired the company. Harbour and its related companies are engaged in the manufacture and distribution of industrial products. Rowe became part of the firm's new entertainment group, which was launched with Harbour's December 2002 acquisition of Merit Industries Inc., the coin-op industry's leading manufacturer of countertop touch screen video games.

"AMi Entertainment is the crown jewel in the new Rowe organization," said Rowe Chairman and Chief Executive J. Douglas Johnson, who spearheaded the restructuring of the venerable jukebox maker. "It blends Rowe AMi's deeply rooted history with today's information technology and the future's possibilities. Rowe has emerged from a difficult period and will now move forward and flourish in the 21st century."

The company, in fact, has already positioned itself to take the lead in digital entertainment, initially concentrating on the international jukebox market. Rowe's software and hardware products provide operators, equipment distributors, and music suppliers with the freedom to choose from several methods to distribute music, working within the legal controls and telecommunication constraints of most markets around the world. This "open" model, Johnson emphasizes, is critical for the advancement of the digital jukebox workflow model, whose acceptance rate has been slow in the United States and abroad.

Photo to right: J. Douglas Johnson, Rowe Chairman 
and Chief Executive Officer, is leading the new strategic 
direction of the 100-year-old Rowe/AMi organization. 
An important part of the industry's past, 
Rowe is now positioned to make history once again 
with AMi Entertainment, a new business division 
dedicated digital music and amusement products and technology.

Johnson added, "The revitalized Rowe is by a long shot the strongest company in the pay-per-play commercial music sector. Adding to our strength is the fact that Rowe has been in the jukebox business since 1927, and our superior product line, which speaks for itself."

Photo to left: Rowe engineering is incorporating proven, 
well-liked technologies in its next wall digital jukebox. 
Here, skilled electrical engineer Rich VanDyke shows off 
a new box featuring an LED illumination system, 
which was first used in the StarGlo CD-100 Model K. 
Operators say they love the long life of LEDs and 
Rowe listened. Rich, who has been with Rowe since 1975, 
has developed a board that will allow operators to program 
several different light patterns, including 
the popular "flash with the beat of the music" mode.

John Margold, Rowe's Senior Vice President of Sales and Marketing, adds that the Rowe AMi historical experience, engineering know-how, and distributorship support will make AMi Entertainment unique among the world's digital jukebox manufacturers and service providers.

"We have been building jukeboxes for some eight decades and we understand service issues. We understand operators' needs and customers' preferences," he said. "This knowledge will result in differences in our products and services which will greatly impact jukebox performance for the better.

Rowe's Director of Technical Services Gordy Anderson has helped build 
the company's reputation as a factory that listens to and helps operators. 
With the launch of AMi Entertainment, Gordy is increasing the size 
of his technical support staff. The staff expansion will enable 
Rowe to offer immediate customer response. 
Rowe understands that when an operator calls from a location 
with a question, he cannot be placed on hold for a long period of time. 
Rowe is ready to handle the call load from the field.

"We've also learned a good deal about digital jukebox hardware and, therefore, AMi Entertainment operators will benefit from our experience," Margold continued. "We can build better products. And, since we are involved in developing all aspects of a digital jukebox system--hardware, software, and content--we will be able to provide a quality system that can sell at attractive prices.

"Additionally, Rowe's distribution and service network is by far the industry's best. Our top distributors are service-oriented companies that pride themselves on maintaining fully stocked parts departments and well-trained technical staffs to provide frontline support to the operators who purchase Rowe digital jukeboxes."

Over there (and here)

Regional Sales Manager Vaughn Williamson presides 
over a recent Rowe service school held at Lieberman Music 
in Minneapolis, where some 30 operators attended. 
With the rollout of several new digital products, 
Rowe's experienced marketing and technical personnel 
will be working closely with jukebox operators 
at distributorships and on location.

To date, Rowe's digital jukeboxes and technology solutions are gaining rapid acceptance in Australia, New Zealand, Finland, Spain, Greece, Canada, and the United Kingdom. Operators in these countries can manage their music by using onsite data transfers through an AMi Entertainment jukebox's onboard CD-ROM drive.

Rowe and its distributors in these countries are working closely with different performing rights organizations to obtain musical content on a subscription basis. In England, Diamond Time Ltd., a specialist in licenses and music clearances for public locations, is providing programming material.

Key people in charge of the AMi Entertainment 
project meet once a week to review action items, 
exchange progress reports, and explore what must be 
accomplished to meet deadlines. Here, four Rowe 
vice-presidents and several directors participate 
in a Friday afternoon brainstorming session.

In Australia and New Zealand, music is supplied by SBA Music, a producer and distributor of audio and music video programming. Music video content is popular in Australia and New Zealand and AMi Entertainment's jukeboxes have proven ideal vehicles for providing this additional service. Rowe's flexible business and technology models enable operators in these countries to add online capabilities to their jukeboxes.

Domestically, Rowe's digital jukebox business has so far been limited to a hardware role, with the company's NetStar(r) floor and StarLink(r) wall jukebox models supporting Ecast's broadband music service. 

Engineering Vice President Jim Collins and Senior Vice President 
of Sales and Marketing John Margold review the final graphics 
choices for Rowe's new Flame digital jukebox. Flame, which will 
be powered by the new AMi Entertainment operating system, 
has a smaller footprint than Rowe's full-sized jukebox models and 
a smaller price, too. Jim has been with Rowe for more than 25 years. 
John has been in coin -op for nearly 30 years, serving with several 
leading manufacturers and distributors. His career began at Rowe in 1975.

In Mexico, where AMi Entertainment digital systems have been in operation for more than two years, Rowe and its distributor, Guadalajara-based Rincon Musical, have formed an entertainment partnership to obtain music licenses and manage jukebox programming for public performances throughout the country.

Music rights for the FiestaNets(tm), a customized NetStar for the Latin American market, have been secured through Somexfon, a new producers' rights association that monitors and collects performing rights for copyrighted music distributed throughout Mexico.

"Rowe recognizes the challenges of bringing jukeboxes online in different countries and the need to provide different solutions for operators," Johnson said. "The server must be able to communicate with client jukeboxes through different connectivity options, including such broadband services as DSL, cable, and satellite, as well as dialup modems.

"But in cases where online services are not available, the jukebox also must support onsite management alternatives. Despite the advances in global Internet services, we believe it's necessary to provide operators with both local and remote administrative capabilities to ensure a failsafe digital music distribution system."

The best demonstration of AMi Entertainment's flexibility in technology and music distribution can be seen in Canada and Greece, new digital service areas where two different approaches are being applied. An onsite model bringing licensed music to jukebox locations throughout Canada is already in place. A complete client/server marketing model, powering custom-branded StarLinks, will soon change the way music lovers in Greece experience the jukebox.

Last year, Rowe signed an agreement with Hip Coin Inc naming Hip the exclusive distributor for Rowe AMi Entertainment jukeboxes and the chief administrator of its jukebox platform. Hip Coin is the coin-op entertainment division of Hip Interactive, a leading North American provider of electronic entertainment products, including PC games, video games, and movies.

The company, which trades on The Toronto Stock Exchange ("HP"), distributes first-party hardware and software for Sony, Microsoft, and Nintendo, as well as third-party licensed video game software. It also markets proprietary games, branded as Hip Games, and gaming accessories, known as Hip Gear.

With an eye on the future, Hip Coin selected Rowe's AMi Entertainment products, which address the complexities of the Canadian jukebox market. Hip Coin has developed its own digital music subscription service that places Rowe jukeboxes on location with up to 2,000 preloaded songs, and delivers updates on a monthly basis.

For content, Hip Coin partnered with Request It, a leading background music provider specializing in high-fidelity PC-based music programming, which now provides jukebox music that is licensed by the Audio-Video Licensing Agency, a Canadian copyright collective society for master recordings, and the Society of Composers, Authors and Music Publishers of Canada (SOCAN), a performing rights organization.

According to Joe Khoury, Hip Coin's General Manager, Rowe AMi's product suite provided the framework to help launch Hip's new digital jukebox service. "Because the downloading of music to jukeboxes is still illegal in Canada," Khoury explains, "we needed a CD-loading version of the digital model. And, the process of updating music on Rowe digital jukebox is simple: the operator inserts a CD-ROM into a jukebox's CD ROM drive and the loading is automatic."

In Greece, Hellenic Interactive will take full advantage of AMi Entertainment's digital jukebox solutions. The company plans to begin deployment of a branded version of StarLink phonographs, the Arion Jukebox, throughout the country in the third quarter of 2004, before the Summer Olympic Games open in Athens. The jukeboxes, which will operate under a division called Arion Interactive S.A., will be administered by AMi Entertainment's client/server system.

"We contemplated building our own network and platform for jukebox audio services," said Niko Drakoulis, Hellenic Interactive's Chief Executive, "but we looked at the AMi Entertainment system and thought we couldn't do better. Why reinvent what's perfect? We'll do what we're good at: licensing and programming music."

(It's worth noting that Hellenic Interactive certainly could have built its own digital jukebox system. The company--an outgrowth of Hellenic Radio, founded in 1970 as the first Greek broadcasting company outside Greece--specializes in the development of broadcasting and digital media distribution technologies for the home, commercial, and mobile markets.)

According to Drakoulis, AMi Entertainment's technology will provide a seamless solution for Arion Interactive's forthcoming digital jukebox rollout. "The technology is scalable and features skins, which allows us to change the size and appearance of the interface without hindering the jukebox's functionality." The two companies also plan to develop a micro-payment system for the Arion Jukebox to support cashless payment methods using prepaid cards and cell phones.

The Hellenic Interactive Chief Executive anticipates strong demand for the Arion Jukeboxes, which will find homes in Greece's cafes, restaurants, casinos, health clubs, and the tourist-packed cabanas along the Mediterranean beaches. The jukeboxes and central server will be programmed to play everything from local Greek music to popular dance club songs. They'll also be used to distribute customized background music to locations, which will be offered on a fee basis.

Client Server/Server Client

The backbone of AMi Entertainment will be Rowe's client/server technology, which will first be applied to administrate jukebox operations. The versatile management software system, which will enable operators to manage jukeboxes over a secure network, was developed for regions outside of the United States, where Rowe's open architecture digital jukeboxes are already running with the company's proprietary music system software, which is known as the "client."

Sierra Vista Group, LLC, of Waltham, Mass., a leading developer of Web-based applications and e-Business solutions, developed the "server" component of Rowe's AMi Entertainment system. SVG's founder, Shawn Becker Ph.D., is a noted software designer and mechanical engineer whose doctoral research on computer graphics and computer vision at the MIT Media Lab was influential in developing a standard for digital television. Dr. Becker and the SVG software engineering team have created a server application that seamlessly integrates with Rowe's client-side software.

Like other state-of-the-art client/server models managing content, Rowe's system will employ a user-friendly Web management tool. Operating with encrypted communication, the server will be able to archive and manage several million audio and video files in various formats, along with jukebox system programming data, in a secure environment. Its management user interface is browser-based. This interface has been designed to be simple to learn and easy to use. Common features are used on almost all Web pages, and these appear in a consistent manner.

AMi Entertainment's client/server technology, Rowe's Johnson emphasizes, is the next step for the company's global digital entertainment business, which is already gaining momentum in the international markets it serves. Rowe's digital product suite is far-reaching, he explained, offering everything from hardware and sound systems to software and content. The client/server technology completes the digital solution.

"Rowe's client/server system boasts the latest internationalization technology," Johnson added, referring to the process of implementing products and services that can easily be adapted to local languages and cultures. "This capability was critical for Hip Coin in Canada and Hellenic Interactive in Greece."

The internationalization process is sometimes known as translation or localization enablement. Enablement includes such features as space in user interfaces (help pages, online menus, etc.) for translation into typescripts that require more characters; and data space permitting translation from languages with single-byte character codes, such as English, into languages requiring multiple-byte character codes, such as Greek.

The jukeboxes/the client/the field

Rowe's NetStar and StarLink floor and wall-mounting Internet-access jukebox lines employ touch-enabled customer interfaces to create enhanced point-of-sale environments. They feature broadband Internet support; core computers with large capacity hard drives that hold up to 300 albums and cover artwork; uninterruptible power supplies; and credit card and currency acceptance.

In the United States, Rowe's Internet jukeboxes feature a standard 1,000-watt digital amplifier (500-watts per channel); a second 1,000-watt amplifier is optional. The amplifiers on both systems support such advanced features as Rowe's "Studio Sound" package with "Cool Audio," which can drive up to 60 external speakers. In many international markets, these jukeboxes are sold with a standard 250-watt sound system; a 1,000-watt amplifier is offered as an option.

Rowe's digital jukebox was initially designed to support the rollout of Ecast's entertainment network, which uses a broadband administration model to manage and sell musical content. Not long after Rowe International, the largest maker of conventional disc-playing jukeboxes, surprised the industry with the Rowe/Ecast-branded jukebox, it quietly introduced its own music platform, designed for international markets. The first version ran on a Windows 2000 Professional operating system.

As part of the introduction of AMi Entertainment, Rowe will unveil its latest jukebox platform, which was developed with the Windows XP Embedded operating system. XP Embedded offers several advantages over the previous system, including the ability for developers to pick and choose from 10,000 components to power a device such as a jukebox.

The new operating system enabled Rowe's engineers to develop an enhanced, customized system--requiring fewer resources--at a lower cost. The AMi Entertainment jukebox interface itself manages content in encrypted MP3, MPEG 1, MPEG 2 file formats and displays music by album, song titles, artists, categories, popularity, and new releases. Local content, music stored on a jukebox's hard drive, is indexed and searchable. The intuitive graphic user interface allows patrons to search, select, and purchase music by using the jukebox's high-resolution, touch-enabled display.

For the operator, the AMi Entertainment software supports both onsite and remote administration. Music content and software updates can be installed using an external USB device or an onboard CD-ROM drive, transferring new data stored on a disc to a jukebox's hard drive. And, menu-driven service screens provide complete programmability of system settings and options. AMi Entertainment's music software will support advanced remote management capabilities following the activation of Rowe's server. Content additions and deletions, along with system updates, can be controlled from an operator's computer.

Rowe's jukebox hardware and software are the first products under the AMi Entertainment umbrella. And, while they represent the present and future, they're also steeped in tradition, benefiting from 80 years of jukebox know-how. Rowe points out that any jukebox, digital or not, must meet critical expectations in the locations they serve. And the acoustical requirements, Rowe emphasizes, differ from country to country and from location to location.

"To tackle these incongruities," Rowe's Margold explains, "different computer control boards are used for various regions. In all, Rowe makes about eight different Internet jukebox models for the worldwide marketplace it serves."

The patents

In developing its digital music products, Rowe has always recognized the importance of intellectual property. To protect its business, and the business of its operators, the company last year acquired what is regarded as the strongest and oldest patents covering digital downloading jukeboxes. In October, Rowe and Arachnid Inc. signed a licensing agreement that grants Rowe exclusive rights to Arachnid patents and patent applications relating to a digital downloading jukebox in which music and software are updated by a server.

U.S. Patent Nos. 6,381,575 and 6,397,189, which relate to a central management system that handles a plurality of computer jukeboxes through a transmission link, were granted to Arachnid in 2002.

These patents, claiming prior art to 1992, have undergone several improvements. Arachnid, a leading maker of electronic darting equipment and software, updated its earlier patents based on discovery of prior art presented during earlier litigation; re-filed the patent applications in 2000; and was issued those new patents to reflect the discovery of prior art.

According to Rowe, the new Arachnid patents are much "tighter," adding strength and authority to AMi Entertainment. "What lends colossal validity to these new patents is the fact that they were issued after a patent examiner closely investigated prior art," noted Chief Executive Johnson. "And, the patent claims are far-reaching, covering many things relating to the manufacture and administration of digital downloading jukeboxes."

He added that the Rowe patent license gives it the right to challenge unauthorized parties "making, using, or offering for sale" the technology covered by the Arachnid patents.  In all, there are seven patents included in Rowe's license, which cover other functions of a digital downloading jukebox, including downloading advertising images transferred and displayed on a digital jukebox's monitor.

Conclusion

Not long ago the jukebox dominated the music and games industry. Pinball machines, pool tables, and other coin-operated amusement devices were adjuncts to the jukebox business and they were placed in jukebox locations. It was not uncommon--and still is not--for jukebox operators to call themselves Rowe operators. Today, being a Rowe operator is going to take on a whole new meaning!

"Rowe has developed a complete digital music and entertainment system that will provide jukebox operators with greater administrative abilities to deploy customized and secure digital music systems in just about any market," Johnson said. "International operators who are already enjoying the benefits of AMi Entertainment's touch screen digital jukeboxes in unconnected environments can look forward to bringing these systems online in the immediate future.

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