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Starbucks is a media player

February 11, 2006

Paidcontent.org has some great factoids from a presentation given at MIDEM by Ken Lombard, Starbucks head of entertainment. Lombard explains in detail some of the highlights of his company’s venture in the music and media space.

Here they are:

- 100,000 employees and 10,500 stores serve as a distribution point for music
- Starbucks signs deals to develop exclusive content for its customer
- 35 million customers visit an average of 18 times per month
- 307% increase in CD sales in 2005
- Sell 20 titles at a time- want to provide consumers with an edited selection
- The company plans to move into movies and has just signed a deal with Lion?s Gate for promotion

Starbucks is huge, it can use its power wisely or it can abuse it. The secret for is for them to continue to use media to add value to its customer experience. As soon as it turns the stores into giant billboards for movies or asks its baristas and tellers to ask customers if they would like a DVD or CD with their coffee, it has lost it and the serious backlash begins. This will probably depend on how greedy the company gets and if they demand continued triple digit growth from the media division.

Grant McCracken has an interesting perspective on the potential downside of Starbucks new strategy. He higlights the dangers of “commoditizing the magic.”

It looks as if Starbuck’s might have plans to build its own Wi-Fi internet network, perhaps this becomes a platform to bring media to its customers. So it has a 360degree connection to the consumer in both the physical and virtual space.



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