Under the Influence with Terry O'Reilly - S8E04 - Vending Machines: Coin-Operated Marketing

Episode Date: January 24, 2019

This week, we explore the fascinating world of vending machines. Vending machines aren’t just soft drink dispensers, they’re marketing machines. They’re portable, branded on all sides and are becoming smarter and smarter. The list of wacky items you can find in vending machines around the world may surprise you.   Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling.

Subscribe now, and don't miss a single beat. From the Under the Influence digital box set, this episode is from Season 8, 2019. You're so king in it. You're lovin' it in town. Your teeth look whiter than noon, noon, noon. You're under the influence with Terry O'Reilly. The first Billboard Top 100 chart appeared in 1955.

Before that, the magazine would determine which songs were the biggest hits by using three factors. Songs most played by radio disc jockeys, the highest selling singles in stores, and most played songs on jukeboxes. Coin-operated jukeboxes played a vital role in popular music for decades and helped usher in rock and roll. There were four major manufacturers of jukeboxes back in the day, and one of the most popular was Rockola. Rockola was a great name for a jukebox.

It sounded like a mix of rock and roll and Victrola. But it wasn't. It was named after the inventor, David Rockola. David Rockola was born in Verdon, Manitoba in 1897. He became a hotel bellboy in Saskatoon at the age of 14, then held various jobs before deciding to move to the big city of Chicago. There he ran a cigar store, and one day he was approached by a salesman to install a trade stimulator, which was a coin-operated trinket dispenser. Raccola agreed and watched with interest

as the machine took in more money than cigars. Sensing that coin-operated machines were the future, Raccola went to work for a slot machine company, assembling the devices, learning as he went along. In 1926, he decided to start his own business and formed the Raccola Scale Company, manufacturing penny weight scales. When he saw the emergence of home scales, he looked for another product. That's when he made a momentous decision.

He would get into the business of making coin-operated jukeboxes. He chose jukeboxes because he felt music never went out of style and wasn't a fad. Everybody loved music. When Prohibition hit, bars closed and speakeasies opened. They couldn't afford live bands, so jukebox sales exploded. When Prohibition was lifted, licensed bars sprang up everywhere. But it was the Depression era. People didn't have much,

but could afford to plug a coin into a jukebox for a welcome diversion. The Rockola Manufacturing Corporation unveiled its first jukebox in 1934, the Rockola Multi-Selector. It was a big success. Rockola was among the first to create small, wall-mounted jukeboxes that diners could play while sitting in restaurant booths.

In 1936, Rockola delivered a jukebox to the Queen Mary for her maiden voyage. Rockola would also develop an interesting product called the Mystic Music Telephone Jukebox. People would put coins into the slot, then an operator would talk to them through a speaker. The customer would request a song, the operator would quickly source it from a vast Rockola library and play the song over the phone line through the jukebox speaker. So instead of just accessing a few songs, you had a choice of hundreds as the jukeboxes were all networked to a central station. Coin-operated jukeboxes were small technical wonders.

They had to handle coins, song selection, record handling, playback, and operate continuously with minimal maintenance. They had to be loud enough to play over the roar of a busy bar and had to withstand the tremors of a busy dance floor. Rockola jukeboxes stood out because they not only contained excellent technology, but were beautifully designed as well. At its peak in the late 1950s, Rokola was making 125 jukeboxes a day. One play for a dime, three for a quarter. Rokola thrived until the advent of the portable transistor radio. Suddenly, teens didn't need jukeboxes anymore to hear the hits. When 45 started to go out of style in the 70s, Rockola suffered again.

It would become the last jukebox company to survive into the late 1980s. David Rockola died in 1993 at the age of 96, but he left his imprint on the world of music, he helped usher in rock and roll, and he was among the first to see the value of a coin-operated device. They're called vending machines. You don't have to walk very far to find one. They are in stores, on street corners, in schools, and even outside churches. Like the jukebox, the vending machine is also a small technical wonder and provides the world with a long list of interesting products.

But make no mistake, a vending machine isn't just a coin-operated dispenser. It's a marketing machine. You're under the influence. Vending machines are a fixture in the modern world. There are nearly 10 million vending machines in North America alone, populating office buildings, schools, airports, and even places of worship. And every day, 100 million people insert their coins, bills, and credit cards into those vending machines, most often in exchange for a refreshing soft drink, snack, or bottle of water. But the very first vending machine ever invented dispensed a different kind of water.

Time to warm up the under-the-influence time machine, Keith. There we go. Destination, 1st century AD. Founded by Alexander the Great, the city of Alexandria in Egypt was the cultural and intellectual hub of the ancient world. It was the most cosmopolitan city of its time. Great minds from across the globe would gather in Alexandria, as it was the leading city

in knowledge. It housed one of the largest libraries in history with nearly a million scrolls and texts lining its shelves. The city was visited by Aristotle and Plato. It was home to Cleopatra and another man named Heron of

Alexandria, also known as Hero. While other major cities focused on war or trade, Alexandria was on the verge of an industrial revolution, and Hero was leading the charge. Hero was a mathematician and inventor, and the brains behind countless technological inventions that are still used today, 2,000 years after his death, including the syringe, the steam engine, and automatic doors.

But the idea for one of Hero's most culturally significant inventions was sparked in the halls of Egyptian temples. There, worshippers would bless themselves with holy water upon entering. But there was a problem. The worshippers were taking too much holy water. That was an issue for the temple. So, Hero came up with a solution. He invented a holy water dispenser.

Worshippers would insert a coin into the machine and a series of levers, strings, and balance beams would dispense a finite and equal amount of holy water every time. A fascinating feat of engineering for its day. That holy water dispenser would become the great, great, great, great grandfather of the vending machine. Between the 16 and 1800s, early variations of the vending machine began surfacing in Europe,

dispensing tobacco, envelopes, and stamps. But unlike Hero's invention, the items were sold in an honor box system. Customers would place their coins into a slot that unlocked a cabinet-like door, revealing the contents of the box entirely. They were then simply trusted to only take what was paid for and lock the box back up. The honor box system was a detour from the technology of the holy water dispenser, a mechanical step backward from the original invention over 1,500 years prior.

It wasn't until 1867 that the first automatic vending machine, reminiscent of Hero's initial invention, was created. Fully functional, without the need for supervision or risk of theft. It was entirely coin-operated. Throughout the Industrial Revolution, vending machines started looking more like the ones we know today. They grew in size and included a pickup slot near the bottom to retrieve the purchased items. By the 20th century,

vending machines had made their way across the pond. They were placed in New York City subway platforms and sold tutti-frutti gum. And manufacturers began covering them with interesting artwork that would draw attention. In the 1920s, soda vending machines came onto the scene, dispensing the drink into a cup. And in 1929, the first bright red Coca-Cola machine stood on four legs. When the U.S. entered World War II, Coca-Cola set up vending machines at army bases.

Post-war, Coke machines got a makeover, upgrading them from all red to the classic two-tone red and white models that became so symbolic of the era. Certainly every salesman for Coca-Cola will view the refreshing look in the million-dollar line of new Vendo coolers exclusively built for Coca-Cola as the selling opportunity of a lifetime in new sales, in replacement sales, and in competitive sales. Eventually, vending machines started dispensing change. By the 60s, vending machines began

accepting dollar bills. Eventually, credit card slots were added. And these days, you can even pay using your smartphone. Today, Coca-Cola sells 15 beverages every second in North America, a large percentage via vending machines. When you talk vending machines, Japan is mission control. There are 127 million people in Japan, and there is one vending machine for every 23 people there. That is the highest ratio per capita on the planet. Annual vending machine sales?

$60 billion. You will see rows upon rows of vending machines on the streets of Tokyo. You'll find them at Buddhist temples and even at the summit of Mount Fuji. There are a number of reasons for this. Japan is an aging country. The average age there is 46, almost double the world average. Combine a low fertility rate with a high life expectancy and you have a country where the sales of adult diapers has surpassed diapers for babies. The population is shrinking, which means there

is a labor shortage, making labor very costly. Along with that, there's another problem. 93% of Japanese people live in cities, making it one of the most population-dense countries in the world. That density has led to sky-high real estate prices. Japan is also a cash-based society, with many stores only accepting cash. It's also a very coin-friendly country, with many high coin denominations. All of this correlates to the

millions of vending machines. They do not require sales clerks, so none of the usual retail store salaries, shifts, or staff recruitment are required, only occasional maintenance and restocking. Another big benefit of vending machines is the fact they don't take up much real estate. The smaller the footprint, the less rent has to be paid. Call it unmanned retail. And some of the products in Japanese vending machines just may surprise you. And we'll be right back after this message.

By virtue of their varied design, vending machines are transportable. All a vending machine needs is an electrical source. That means they can be strategically placed in high-traffic locations or where the products work in creative ways with their surroundings. And in a busy, expensive city like Tokyo, there is a huge desire for convenience. That means you'll find vending machines that sell eggs, hot fish soup, oranges for orange juice, where you can watch oranges being freshly squeezed inside the machine.

There are t-shirt vending machines, in case you spill your orange juice all over yourself. You can buy surgical masks, because the air quality in Japan is an issue. You can enjoy an instant shot of rice wine from a vending machine while you wait for your train after a hard day's work. There are prayer card vending machines at shrines and at airports for those who hate to fly.

I don't know how this works, and maybe I don't want to know how this works, but there are hamburger vending machines in Japan. Just insert your coins, then a one-minute counter appears on the screen, and 60 seconds later, a hamburger drops down. And if you're feeling a little more adventurous, you can enjoy fresh crepes. The vending machines dispense crepes with fruit toppings and pop out in a glass bottle so the crepe doesn't get squashed. There are underwear vending machines

because you never know when you're suddenly going to need fresh underwear. On the street, downtown, there are vending machines that sell party decorations. I do not know why. You can get canned bread, which is apparently very popular in the land of the rising sun.

There is a vending machine that grows and sells 60 heads of lettuce a day. Developed by Japanese advertising agency Dentsu, it doesn't use sunlight or earth, but instead uses fluorescent lighting and hydroponic beds. Business meetings are very formal in Japan, so you must dress accordingly. But if you've dripped some sake on your tie, there are necktie vending machines. There are machines that dispense pantyhose and bras and umbrellas. Heads up, Tim Hortons, there are donut vending machines. There are also condom vending machines right beside energy drink vending machines.

I'll let you connect the dots. Another reason for the success of vending machines in Japan is the low rate of vandalism. Japan has one of the lowest robbery rates in the world. There is an honor system there that is a vital strand of the social fabric. I have a good friend who runs a company in Japan who told me he has left his credit card behind at stores and restaurants and it has always been returned. One of his employees left his cell phone on the train one day.

It was returned to lost and found immediately, and over one million people use that train station every day. Because of those low crime rates of vending machines in Japan is a national fascination with automation and robotics. Technology is valued and trusted there, which explains the high number of vending machine innovations coming out of Japan. For example, many vending machines now have solar panels. Some have eco-friendly green roofs made out of moss and artificial turf that lower surface temperatures.

These next-generation vending machines are beginning to use facial recognition technology that can determine not only your gender and age, but even your mood to within 70% accuracy. These devices also monitor the outside temperature. So, using your gender, age, mood and weather data, these leading-edge machines are capable of recommending a certain type of beverage to you. Cool drinks on hot days, hot drinks on cold days, and comforting drinks when you look tired. They have full HD screens that can display high-definition text, pictures, and 3D animation

with state-of-the-art touchscreen technology, complete with high-speed internet connection so content can be constantly refreshed. When there aren't any customers, the vending machines use animation to attract people passing by. And, by using its anonymous facial recognition, they show advertising content to match the customer's demographic as he or she waits for the product to be dispensed. Smart vending machines don't just sell a product, they sell the company. Because Japan experiences 20% of the world's earthquakes over magnitude 6.0,

these new vending machines have backup battery power and can switch into public safety mode. In the event of an emergency, the machines display earthquake warnings, dispense drinks at no charge, and give stranded commuters information on evacuation routes and other disaster-related instructions. While Japan may be vending machines central, there are some interesting options in other locales. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you.

We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. Pepsi here in North America is rolling out social media vending machines.

You can send drinks to friends complete with text and video messages. Your friend gets a message on their cell phone and is directed to a specific vending machine to collect their goodies. In Pennsylvania, there are wine vending machines. You have to swipe your ID and take a breathalyzer test before you get your bottle. Also at a college in that same state, and I wonder how close it is to the wine machine, there is a vending machine that sells contraceptives and pregnancy testing kits. In the United Arab Emirates, you can actually buy gold.

The vending machines check the value of gold every 10 seconds and dispense bars or coins of up to 10 grams. In Port Elgin, Ontario, there is a french fry vending machine, and I hear they're pretty good. In Singapore, you can enjoy coin-activated mashed potatoes. In Germany, there are Lego vending machines at train stations, in case you want a little something to while away the long commute. A company called Benefit Cosmetics puts makeup into fun vending machines at airports. They know women have time to kill while waiting for planes, or may have run out of makeup during a trip. And these vending machines take the brand out of drugstores so they stand alone,

away from their competitors. In high-end Los Angeles shopping malls, you can purchase a $500 one-ounce can of Beluga caviar from a vending machine. Just don't use coins. Also in L.A., there are Sprinkles cupcake vending machines called Cupcake ATMs. Vending machines have allowed this small company to have many more locations and larger distribution than they could have if they had to rent retail store space. At the Standard Hotel chain in New York, L.A. and Miami, there are vending machines by the pool that sell swimming shorts, bikinis and sunglasses.

It's fun, trendy and creates a lot of good marketing buzz on social media. While vending machines are marketing machines, they can also have a philanthropic mission. In Istanbul, Turkey, there are a lot of stray dogs and cats. There are vending machines there that let you deposit empty plastic bottles and, in return, dispense pet food for the

strays at the foot of the machine, killing two birds with one beautiful stone. In Canada, there are used book vending machines that let you either choose one or deposit one at your leisure, keeping used books out of landfills. There is a Swapp-O-Matic machine in New York that lets you swap items with other people.

Put something in, then take something out. It's a vending machine for the sharing economy. There are even interesting vending machines operated by churches. In Utah, the Church of Jesus Christ of Latter-day Saints have vending machines that offer water, eyeglasses, socks, and first aid kits. Except, you don't receive the item once you pay for it. They are donated to people in need. Patrons can even press a button to purchase a goat or chickens or medication to help families in need in far-off places. It's nice to know that a vending machine not only takes, but can also occasionally give back. Vending machines are ubiquitous in our lives.

They require no staff, little maintenance, and only need a single electrical outlet to work tirelessly 24 hours a day, 365 days a year. They take up a small footprint, so rent is cheap. And Japan aside, they usually stand alone, away from the competitive clutter. Every marketer's dream. They trade in convenience and the kind of novelty that can vacuum coins out of your pocket. Vending machines in the 21st century are square billboards, branded on all four sides, using high-definition imagery, touchscreen interactivity, and high-speed internet connection

so content can be refreshed in seconds. With facial recognition technology, they not only deliver the right product to the right person, but can make quick decisions to deliver targeted advertising to the right demographic. They are portable,

therefore strategic. Cupcake ATMs at college dorms can fuel all-night essay marathons. Necktie vending machines in the financial district can eliminate awkward boardroom meetings. And a vending machine that recycles plastic water bottles and feeds stray animals is a multitasker the world could use more of. Above all, vending machines cater to impulse purchases. You might not have any intention of buying canned bread, but there it is, hot and ready. And before you know it, you've made an unexpected, unplanned purchase prompted by strategic marketing.

Even if you don't succumb to the temptation of a vending machine, just staring at the variety of products in that window may just plant a seed for a future purchase. So, the next time you see a simple vending machine, remember, it's not just a coin-operated device, it's a marketing machine. When you're under the influence. I'm Terry O'Reilly. This episode was recorded in the Terrestrial.

Producer, Debbie O'Reilly. Sound Engineer, Keith Oman. Theme music by Ari Posner and Ian Lefevre. Co-writer, Sidney O'Reilly. Follow me on Twitter at Terry O. Influence for show updates and bonus material. See you next week. Under the Influence.

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Just workouts and classes to strengthen who you are. So no matter your era, make it your best with Peloton. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. We got the mug for you. Go to terryoreilly.ca slash shop.