Starbucks Entertainment President: “We’re Still A Coffee Company”

Authored by Jay Baage on October 3, 2007 - 2:08pm.

Digital Music Forum West 2007 – Wednesday's keynote interview with Ken Lombard, President of Starbucks Entertainment, gave the audience an idea of new models for distributing and monetizing music - combining physical and digital elements. While Lombard insisted that Starbucks “is still a coffee company” he also claimed that they are making good money from selling music.

In a deal that was recently announced, Starbucks has teamed up with Apple’s iTunes for a co-branding initiative to sell music. To kick off the partnership, the companies will be giving away 50 million songs on iTunes to customers who visit one of Starbucks’ 1000's of stores in the US.

It is a big promotion that surely will drive foot-traffic into Starbucks’ stores. For Starbucks it’s a great deal, they are pretty much given the songs by the labels and artists, Lombard revealed, although he did not go into details. So what is in it for the labels and artists?

Starbucks recently started a record company and signed Paul McCartney as their first artist. It is a sign of the times. With physical retail stores quickly disappearing, getting distribution in Starbucks is great for an artist, no matter whether they sell CDs, iTunes downloads or giftcards.

Lombard revealed that 45% of all U. S. sales of McCartney’s latest album was done in Starbucks. Joni Mitchell sold 40,000 copies of her latest album through Starbucks, more than she has sold in years.

With the average Starbucks customer coming into the store 18 times a month, Starbucks has become an ideal point of promotion and sales for music. While Lombard insists that selling and giving away music is not a loss-leader for Starbucks, he notes that Starbuck’s is still a coffee company first, everything else comes second.

As far a discovery goes, Starbucks provides a physical discovery and listening experience not available online and it will certainly drive some sales of music. But it is hardly the model that is going to save the music industry and the question is, really, how much money will ultimately trickle down to the artists? Remember, Starbucks is still a coffee company.

Joakim Baage

Published in DMW Daily, October 4, 2007

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Comments

I think Starbucks has done

Submitted by scottcave (not verified) on October 4, 2007 - 7:08pm.

I think Starbucks has done something very significant for the heritage of the music industry. With their "scratch and win" cards they've brought the opportunity for kids who are almost exclusively consuming digital music to experience piracy the way it was meant to be done: Good ol' fashioned shoplifting.