John Timmons looks like what he is. Tall, thin, with blond hair as wild and flowing as a Jimi Hendrix riff, he fits the mental image one might have of a record-store owner. His shop, ear X-tacy, on a trendy stretch of traffic jam in Louisville, Ky., is the perfect backdrop. Music dilutes the noise of CD cases being flipped by listeners scanning for titles. Mixed among the aisles are end-caps with music-themed mugs and toys, and racks with T-shirts that in some places in this conservative town would draw a scowl.
In a nod to the technology that has overtaken his passion since the days of vinyl and large, cardboard jackets, Timmons has installed a Touchsystems listening station at the front of his store that lets customers sample clips of CDs. What he does not have, however, is a kiosk for those customers to download their selections for a fee to a CD or an MP3 player.
"If we put a kiosk in, we would have to sell an ungodly amount to recoup our expenses," Timmons said. "They are very expensive, and the money we would get back for each song would not be very much. I see how money can be made with kiosks, but the financial model doesn't work for me."
That is the dilemma facing potential deployers of music-download kiosks. At the beginning of the decade, the devices promised a fun and convenient way for music fans to take advantage of the confluence of digital music, cheap burning technology and the advent of portable playing devices. Users would gain access to a vast library of songs, even those no longer being published. Deployers would have virtually unlimited, "long-tail" inventory.
But the promise began to fade as fast as a Britney Spears marriage, however, when the market got a load of a new device called an iPod, and suddenly even technophobic senior citizens could take Barry Manilow MP3s with them when they went mall-walking.
Is the music-download kiosk unplugged?
Francie Mendolsohn, president of Summit Research Associates, believes so. She said that digital media kiosks have already matured to their full potential and have little room to grow.
"It doesn't look like a terribly promising thing," said Mendolsohn, who tests and consults on kiosks. "There was a lot of excitement for them at one point, but they won't last all that long."
The demand for kiosks existed before the iPod began to take over the online realm, but by the time manufacturers got enough funding to ramp up deploment, iTunes, Apple's online store, owned 80 percent of the market.
The ripples shot across the industry. In 2004, for example, coffee giant Starbucks unveiled digital music kiosks in several of their highest-grossing stores, including numerous locations in their home city of Seattle and in Santa Monica, Calif. At the time of the launch, Starbucks had plans to expand the rollout to 2,500 locations through 2006, but after two years of testing, the company pulled the machines from 35 of the 40 stores that had them.
Starbucks officials, who would not respond to an interview request, insisted the company was not pulling away or scaling down.
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Digital rights management
The iPod itself was not the only factor, however. Digital-rights management comes into play. According to Bob French, president and COO of Mix and Burn, inter-operability is the biggest hurdle that the music kiosk industry faces. iTunes uses a proprietary system called FairPlay to ensure that iPods play only music downloaded from iTunes. Mix and Burn uses Micosoft's Plays for Sure system, which allows songs burned from their kiosk to be played on a wide range of MP3 players, but not iPods.
"Unless they can make media kiosks universal and able to work with iTunes, they don't have a lot of life left in them," Mendolsohn said.
At Mix and Burn headquarters, in St. Paul, Minn., French works with record companies to acquire music licenses, which he says can be the most daunting task of all. Record labels are reluctant to release their entire catalog for fear of piracy and theft of kiosk hard drives and therefore embed DRM (digital rights management) codes into their music.
According to French, Mix and Burn was one of the first music-burning kiosk companies to acquire DRM licenses from the "Big Five" record labels, Universal, Sony, BMG, EMI and Warner Music Group.
"Acquiring the licenses costs a lot of money, so there is always a lot of pressure for the labels to give up DRM," French said. "Even though the DRM battle will keep going on, it's still better to be in the market."
With iTunes running the online music market and record labels constantly raising the cost their digital rights, French often is asked why Mix and Burn continues to place music kiosks in stores when people can just burn CDs at their own homes.
"Believe it or not, people actually still want to get out of their houses," Bob French said. Making a CD using the music kiosk is an impulse buy people make while shopping.
"There is a place for entertainment in retail. To say its gone is a mistake," French said. "Kiosks are alive and well, and there is a business here."
Brian Abbott would agree. He is a store manager for FYE, whose parent company has parterned with Mix and Burn. His store, in Lexington, Ky., uses a Mix and Burn kiosk with six tablets, or stations. Abbott says the kiosk brings in about 50 CD transactions a week.
While the kiosk does not generate significant business, Abbott sees other upsides.
"There's usually someone sitting over there messing around on it," he said. "So far its been great for selling singles and getting albums that are out-of-stock."
