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Starbucks commits to music

April 7, 2005

The nation’s coffee giant is starting to come to terms with the enormous potential of its Hear Music acquisition. Slowly and purposefully the company is using its massive physical network of 4,300 stores to forge intriguing relationships with consumers in the music space.

While Starbucks’s name might not yet be in the same league as Apple, in terms of music innovation, it has every intention of getting there, albeit via a very different route.

As we’ve mentioned previously at Influx, the Starbucks is using music to enhance its overall lifestyle offering and its slow step change philosophy has made this move appear almost natural and seamless from the consumer’s perspective.

The offering is expanding from its base of selling branded CDs, to the music burning service it developed together with HP through to a satellite radio station on XM. The company is ready and poised to move with the innovation in the category to offer the right suite of services for the consumers, this is likely to mean embracing downloads for MP3 players, something it doesn’t yet currently support in-store.

The most recent development was the launch of a new line of Hear Music CDs under the Hear Music Debut label. To date, Hear Music had been all about re-packaging the back catalog and influences of established talent. Last year’s Ray Charles CD sold close to 3 million units.

In May, the new label will release a live acoustic performance by Antigone Rising, an all female quintet.

In its own way, Starbucks is trying to exploit the growing discontinuities in the music business, turning them to its advantage. Starbuck’s vast size and scale and brand following allows it to strike profitable deals with the labels, it has massive bargaining power, so much so, it is probably frequently turning down offers. In additon, there is likely a paid for media component that the company also can offer the labels. For example, Starbucks was the first retailer to get Beck’s new album, receiving it a week prior to the offical release date.

Speaking on the release of the Hear Music Debut Antigone Rising album, Starbucks Entertainment president Ken Lombard said, “We are not here to try to do anything other than bring a unique set of assets that will help the music business connect with its disenfranchised customers.”

Starbucks has the potential to play a critical role in the future of music just by simply leveraging its physical assets and emotional brand connection with the consumer. In practice, the environment is very conducive to selling music selling; it flows seamlessly with the experience.

Where Starbucks will have to be careful is in trying too hard to exploit the breadth of the digital revolution. There is obviously one school of thought that believes, once the infrastructure is in place, the company can deliver any conceivable digital asset, be it a MP3 file or a PSP title.

Music is already a huge move for the coffee giant and one that fits perfectly with the brand experience. Getting music right has to be the priority and the opportunity.

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