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First Take: Electric Jukebox Aims To Take Digital Music To The Mainstream

Photo of Mark Mulligan
by Mark Mulligan

Back in 2009 I wrote a report at Forrester entitled 'Taking Digital Music To The Mainstream: The Music Product Features For The Living Room’.  In it I outlined a vision for a standalone, affordable connected hi-fi for the living room that came pre-packaged with all the music in the world.  An out-of-the-box, easy to use music experience for the mainstream consumer. This was a time when Spotify was only just beginning to get going, iTunes still dominated the digital marketplace and most digital music listening either happened on computers or iPods.  It was also however the start of a renaissance in TV tech, the flat screen boom.  Consumer electronics spending was shifting firmly away from the hi-fi to the TV, which was also growing an increasingly large appendage of various connected boxes.

The PlayBox

I was so serious about the opportunity that I even explored setting up my own business to pursue it, going as far as creating detailed spreadsheets and a business plan.  But it quickly became clear that the structural dynamics of the day made it an unlikely bet.  Manufacturing costs were high and the big CE companies had a strangle hold on manufacturing.  Distribution was challenging and the music rights were excessively costly (back then preloading the device with a hefty amount of downloads was necessary to deliver an out-of-the-box experience for the mass market home).  But I didn’t give up on the idea and I revisited a streaming-era version of the concept in my book ‘Awakening: The Music Industry In The Digital Era’, this time calling it the PlayBox.  Now with production costs so much lower, distribution much more practical and streaming subscriptions providing the out-of-the-box music, the product concept is more practicable and affordable.  (I suggested in my book that it should retail at just below $200.)

The Electric Jukebox

Now fast forward to 2015 and we have the launch of the Electric Jukebox, a device for the mainstream living room that delivers an out-of-the-box music experience for $199 for a years’ worth of music.  Founded by former Omnifone CEO Rob Lewis Electric Jukebox is a bid to take digital music to the mainstream with product features for the living room.  It comprises a dongle that plugs into the TV and a year’s access to a curated on demand music service with playlists programmed by celebs with a mainstream bent (e.g. Mr and Mrs Robbie Williams, Sheryl Crow etc.)

Given my ‘previous’ in this space you will not be surprised to hear that I am enthusiastic about the approach.  Music is indeed disappearing out of the living room and the mainstream music buyer is getting left behind by the digital music bandwagon.  As we revealed on Monday 43% of consumers still buy CDs, a far bigger number than buy any digital music product, downloads included.  So there is a clear opportunity for the mainstream music consumer and the living room is probably the right place to start.  These are not consumers that are streaming music to their phones or building big playlist collections.

Content Connectors Present A Key Challenge

But the path to these consumers is not straight forward.  They are passive music fans who do not spend regularly on music, so a $200 investment will be a big ask for them.  This is why Electric Jukebox are aiming for the super mainstream, the consumers who used to / still buy CDs regularly but aren’t yet one of the world’s 50 million music subscribers.  How many of them are strong prospect for an integrated streaming / hardware product though is less clear.  There are two key reasons for this:

 The rise of Content Connectors: Content Connectors like Apple TV, Google’s Chromecast and Kindle Fire Stick have created an entirely new battle for the living room.  Most living rooms are two disconnected siloes: the smart devices on people’s laps usually has no interaction with the dumb device they’re viewing on.  Content Connectors transform dumb devices into smart devices for the mainstream household.  Think of it as an iPad moment for the mainstream living room, joining the dots between disconnected consumption siloes.  Not only do they cost as little as $30 they are also multimedia devices that power music, video and games experiences.  By contrast a $200 music-only device can appear a more limited proposition.  Though that hasn’t stopped Google creating an audio-only version of Chromecast (see our take here).  The big advantage Chromecast Audio and other Content Connectors have is that they are service agnostic, so you can get all the music in the world for free from YouTube. What they sacrifice in terms of user experience (added complexity, ads etc.) they make up for in price.  The key question is will consumers consider the convenience and value of a curated music service worth the extra $170?  For more on Content Creators see our report: "Content Connectors How the Coming Digital Content Revolution Will Change Everything" The TV: the problem with trying to usurp the TV with a device that plugs directly into the TV is that you are, well, dependent on the TV.  TV’s are designed for viewing content on (whether that be TV, online video, photos or games).  When we turn on a TV we expect to view.  This is not to say consumers cannot be educated into entirely new behaviours but music is always at an inherent disadvantage when it relies on a TV as its home.  There is no small risk that Chromecast Audio and Electric Jukebox become forgotten about appendages sticking out of the back of TVs used solely for viewing.

The home audio space is hotting up, as evidenced by Sonos’ and Google’s recent product launches and there is no doubt that there is money to be made and that Electric Jukebox has an addressable audience.  But that audience is finite.  Whatever some bullish music industry execs might say, the recorded music industry is never returning to its apogee.  The days of music spending as a mainstream behaviour are gone. Growth will come from making more money out of the super fans and rescuing the spending of the super mainstream who either are falling out of the habit of buying CDs or downloads. 10 years ago that would  have meant no more new music on demand.  Now there is always a YouTube safety blanket.  That is perhaps the biggest change in the music world since I first conceived my audio concept and one of the biggest challenges to any attempt to monetize digital music.

For an exhaustive assessment of the Connected Home Audio market, including vendor profiles, market forecasts, pricing and vendor market shares check out the MIDiA Research report ‘Connected Home Audio Forecasts, 2015 to 2020:The Reinvention Of Hi-Fi’.  Email us at info AT midiaresearch DOT COM for more info.

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