The End Of An Era: Starbucks Will Soon Stop Selling CDs

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Starbucks announced yesterday that it will stop selling CDs in their 21,000 retail stores by the end of March. Once you’ve lost Starbucks, you’ve lost the game. CDs are done. MacBook Pros don’t come with CD drives anymore. Fewer new cars are coming with CD players. And with the seamless integration of Spotify, Pandora, and iTunes from the phone to the car (and smart TVs), CDs are becoming more of a hassle and offering less convenience than they once did.

Last year, Americans bought 257 million albums – an 11% drop from 2013. Of those, 140.8 million were CDs (a 15% drop from 2013). And only two CDs went platinum (Taylor Swift’s 1989 and the Frozen soundtrack). However, 9.2 million vinyl records were sold – a 51.8% increase from 2013. And now vinyl accounts for 6% of ALL album sales.

+The Future Of Music Is Not Downloads… Or Streams

2014 will mark the last year CDs surpass digital album sales. And this drop will be drastic. Target’s CD sales dropped 19% last year. How much longer will they hold onto the format? I give them 1-2 years.

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Vinyl sales will continue to rise.

Barnes and Noble, Urban Outfitters, Whole Foods and Hot Topic have recently gotten into the vinyl game. And my money is on Starbucks to follow. Vinyl sales will never make up for the drop in CD and digital sales, however, at least there is a growing niche group of Millennials (myself included) who are engaging in a full-on, tactile-accompanied, active listening experience.

Streaming, of course, is the dominant format in which most are listening to music. In 2014 there were 476 million “albums sold” – according to Billboard’s new system of 1,500 streams = one album sale.

And this will only increase. Fighting streaming has been a losing battle and it’s quite embarrassing how many are still on their anti-streaming rampage. Fighting for higher royalties from streaming services is noble. Hoping they would all just die so we could return to the age of $18 CDs is just stupid.

+Why Other Musicians Shouldn’t Copy Taylor Swift

Starbucks And Music

Since purchasing Hear Music in 1999, Starbucks has jumped head first into the music business. They even created their own label and released original material from Paul McCartney, Joni Mitchell, Alanis Morissette, James Taylor, Sia, Carly Simon and Ray Charles, along with many compilation albums. They started offering their Song of The Day download cards in 2007 and the program has continued with Pick of The Week download cards which now include apps. Starbucks has no plans to end this program anytime soon.

With the revamp of their smart phone app, not only can you pay for a coffee by scanning the barcode within the app on your phone, but you can download the Pick of The Week seamlessly.

“Starbucks continually seeks to redefine the experience in our retail stores to meet the evolving needs of our customers. Music will remain a key component of our coffeehouse and retail experience, however we will continue to evolve the format of our music offerings to ensure we’re offering relevant options for our customers. As a leader in music curation, we will continue to strive to select unique and compelling artists from a broad range of genres we think will resonate with our customers.” – Starbucks rep

Offering CDs in Starbucks stores was never intended to be a money maker for the coffee chain. It was to enhance the experience for their customer. By offering CDs at the register, it encouraged a conversation with the barista (“Partner”) and the customer. When I worked at Starbucks back in 2007, I’m pretty sure more CDs were stolen than purchased. And our manager wasn’t too concerned about it. I remember her saying that Starbucks built theft into the price.

Starbucks has always been a leader in progress. From their healthcare offerings to employees working just 20 hours a week (long before Obamacare), to the Create Jobs For USA bracelets which raised money for small business growth, to paying for their Partners’ college education. Progress, however, does not include antiquated plastic discs.

Ari Herstand is a Los Angeles based singer/songwriter and the creator of the music biz advice blog Ari’s Take. Follow him on Twitter: @aristake

Photo by Piatus from Flickr and used with the Creative Commons License

28 Responses

  1. Chris

    Sucks for CDs, but I also think that the vinyl sales this past year are NOT going to keep rising. They may trend upwards for another year or two, but I still don’t see any evidence that the huge vinyl explosion is much more than a fad/trend.

    Reply
    • Paul Lanning

      I’ve patronized Starbuck’s every day for longer than I can remember. Many different locations (all NYC area), and have almost NEVER seen anyone buy a CD.

      Reply
  2. Remi Swierczek

    If we convert Shazam style music PIMPS to cash registers of the music industry Sturbucks can become large music store.

    Proper DJs can make cash for Starbacks and serve as a jumpstart platform for new artists.

    Reply
  3. Esol Esek

    Fine with me. If vinyl is the way to go, at least the path and results are clear. Meanwhile, F*** streaming. I’m not signing my rights away in perpetuity to a bunch of no-talent geek jerk anoles profitting off of the sweat of others. And I’m a shopping cart coder myself, so I can hate on these geek MBAs til the cows come home. If I want exposure, I know a type of streaming to use – it’s called COLLEGE RADIO! and my resounding F you now also includes Beatport. Sellouts. Starting Musicians need to get together like IRving Azoff is doing for the stars. Kill the parasitic MBA worms.

    Reply
    • Anonymous

      So do you think your music is: A) Valuable enough to have a label produce enough expensive vinyl for you and that you would sell enough to recoup said expense? or B) Your music is SO valuable that your music isn’t suited for streaming, even though most top artists have their content available on said services.

      Considering you took the time to complain about this issue, I’m guessing neither?

      Reply
      • Cowboy

        No need to be an asshole. I’ll never understand why punks like you leave pissy comments and replies on websites, but you’d never speak that way to another man in person. Reply, fine. Have a comment, fine. Why be a dick?

        Reply
    • Anonymous

      Fine with me. If vinyl is the way to go, at least the path and results are clear. Meanwhile, F*** streaming. I’m not signing my rights away in perpetuity to a bunch of no-talent geek jerk anoles profitting off of the sweat of others. And I’m a shopping cart coder myself, so I can hate on these geek MBAs til the cows come home. If I want exposure, I know a type of streaming to use – it’s called COLLEGE RADIO! and my resounding F you now also includes Beatport. Sellouts. Starting Musicians need to get together like IRving Azoff is doing for the stars. Kill the parasitic MBA worms.

      In perpetuity??

      It doesn’t work like that, there’s terms and you can terminate them, some anytime, some after a set term, usually fairly short…

      College Radio is hardly included in any scans for spins that pay anything, and it costs money and time to not only get it there but then to also do any following up.

      When taking the college radio play i’ve gotten and compare it to the streaming, i prefer the streaming, as the streaming actually pays something and costs very little, sometimes no upfront fee, depending on how you get it distributed.,.

      Now, if you are mounting up some tour or are a touring artist or musician, then perhaps keeping it off streaming and the net as much as possible after the initial release and pandemonium, other then perhaps iTunes, while you instead get radio play in the cities youre hitting to draw people to shows, while maybe trying to push it national, which aint easy, and then try to sell the higher margin physical goods, vinyl cd’s etc. while you can , well now, that may be a smarter play, but once that is over, streaming is way better…

      There are problems with it, there are many things i can go at them hard about, however, when removing yourself and any interests from the situation, become unbiased and forget the possible problem it may create for the music business more long term, then streaming is pretty darn good…

      My main beef is sadly the value i put on my property is not reflective of the tangible stats and data or comparable to any major, of which i think my music is oftentimes significantly better, value in the music business sense, because of realities i wont discuss, and i lack the muscle and gargantuan body of property to throw my weight around, so therefore i cant hold the hammer down and leverage for a master license fee from them, which is infuriating, but what it is…

      otherwise, streaming is about the best yet weve seen in many ways… The reality is, if you can get anything for a tiny wee digital file in this day and age that is great, as theres no reason every last person couldnt easily steal any and every song they wanted, so perhaps by the next generation of artists and musos things will have increased to a sustainable point that it once again becomes an actually tangible career to chase down…

      Reply
  4. What's the fuss all about?

    Still plenty of ways to buy a CD. Sure, its’ days as the dominant format are over, but for the consumer, this is a golden age of price/availability/ease of access. Enjoy!

    Reply
  5. There is something...

    Oh com’on ! Not again one of those “vinyl will save us” post !

    It’s been over 10 years I hear CD is dead… But it’s still here and even declining, it make money because a large portion of dedicated fans still want a physical product. So if you kill CD, want will you sell to those fans ? Vinyl ? Get real: I still buy 2-3 CD / month but there is no way I switch back to vinyl because 1. CD is convenient (goes to my iTines library in a few seconds) 2. I don’t get the point of buying Vinyl from digitally recorded / mixed / mastered music…

    When the hipsters get a new toy to replace vinyl, you’ll see sales going back to what they were 5 years ago.

    Reply
    • RobG

      Pretty sure the author isn’t claiming vinyl will “save us.” He clearly said:
      Vinyl sales will never make up for the drop in CD and digital sales

      Reply
      • There is something...

        Read the post. It’s about how Vinyl is “the future” when CD are supposed to be “dead”… Anyway, this whole post is total BS. Never bought a CD at Starbucks. I only buy coffee.

        Reply
  6. Big Swifty

    Will Whole Foods be next?

    I don’t know about you but I would rather they stop playing the hip 40 something music in the store. Yes I get it WholeFoods Starbucks you’re hip, your customers are hip etc. but all it does for me is make me want to leave the store. Don’t get me wrong I love music but not the kind that has been curated by a corporate marketing committee

    Reply
    • Remi Swierczek

      If the would be a music store you would see your tunes too!
      Their must DJ would create mix to make you happy and clean your pocket at the same time!

      Music industry has all the assets to be $100 billion tomorrow!
      Why labels are so persistent and inefficient with OWN SUICIDE?
      Let’s have some HONOR & SELFRESPECT!

      Reply
  7. Mr. Pink

    I know this is off topic but I hate Starbucks

    Actually, I take that back, I hate the attitude of the cashiers at Starbucks. Or any other cashier (it’s mostly the take out food service industry) that expects a tip before the goods or service is rendered.

    Can anyone name another service where the customer is expected to tip before receiving the goods or service? Help me out here

    Reply
      • Mr. Pink

        Almost.

        Strippers will come over for free. If you want them to stay you have to tip

        Reply
    • FarePlay

      Hey hot dog. I go to Starbucks almost everyday and rarely leave a tip. I know everyone who works in the store and have always felt welcome. Why? Because I don’t have an attitude and treat them with respect.

      Reply
  8. FarePlay

    Am I the only one that finds it odd that a musician would write a post about the demise of the sale of physical product without any remorse? Does anyone see a correlation between the demise of physical product sales and a significant rise in revenue for streaming radio?

    I wonder what Ari will say in 5 years from now when most of these streaming companies collapse under the weight of all the debt their incurring. I mean really, Spotify is approaching 1 billion in debt ( never did hear about the last $500 M they were looking for ) with 20% free equity going to their suppliers on top of that. At least the financial institutions behind the housing collapse and cratering of the stock market were able to conceal their house of cards until the whole thing came crashing down.

    Five years from now, Taylor Swift and Apple Music may just be the last ones standing or making money from their music.

    Reply
    • Anonymous

      Five years from now, Taylor Swift and Apple Music may just be the last ones standing or making money from their music.

      Universal has a 30% global music share…

      Vivendi is making BILLIONS of dollars of profit, profit, not revenue, PROFIT…

      yeah, oh no, they are in such trouble, oh my, it’s all crumbling down…

      Reply
  9. RickyLopezGMT

    The final nail could be Spotify in the car… but that is a generation of technology away. I get the impressing on this forum that old media is hated by some posters. It’s a choice. Put it this way… CDs will outlast whatever Spotify ét al does (40 years – ish) and as for vinyl…It’s a hundred years old. …more if you can be bothered to wiki the early versions. It should be embarrassed that it’s even on the up (albeit small victories)

    Reply
  10. JAIO

    I have bluetooth capability in my car. I’ve played a cd in my car maybe six times in the past yr. Other than the cds sent to me by bands looking for airplay or booking, I never purchase them. Once I rip a cd, I discard them. What’s vinyl? (snark)

    Reply
  11. Maurice Oliver

    This is not surprising you can’t sell music like you sell Lattes? The choices were to narrow, and restricted, and white bread, who will miss more Bette Midler CD’s? Really!!!

    Reply
  12. cipher

    I read about vinyl with interest…as an old audio engineer here is my view for what it is worth….vinyl is rubbish if you have a poor quality pressing and play it on cheap gear …too many “things” to go wrong starting with the LP quality..the turntable…stylus…belt ( if it has a belt drive) etc.. plus you need a quality valve amp. However, vinyl played with quality gear is the very best. Don’t forget the room you are playing it in…great gear can sound poor if the room has poor sound reproduction. Digital is very convenient …try playing vinyl in your car.
    Simply…vinyl played on quality gear superb …Digital for convenience. They both have a place in our life.
    Cost of reasonable vinyl playing gear….from turntable to speakers from $5000 up .Digital from $10 up.
    The law of diminishing returns is very prevalent in the sound reproduction world.

    Reply
    • Jeffrey Barkin (@JeffreyBarkin)

      Contrary to the constant claims of the demise of CDs; Amazon’s sales continue to climb and with little competition. Manufacturing costs have plumeted in recent years and where else can artists easily merchandise their musicwith branding elements?

      Perhaps it won’t be long before there are more Ameoba Music style shops to service this market. Books and magazines survived the tech internet age quite well.

      Starbucks started their CD program as a promotional branded compilation program spearheaded by Tim Jones, that eventually morphed into its own label: Hear Music. It was a branding identity tool that helped successfully distinguish Starbucks from other coffee chains and neighbourhood shops. As branded premiums, the discs were inexpensive with attractive margins, and possessed the tracks that were tailored to their audience. Although making profits from CDs may not have been a priority, it’s hard to lose in this game with the atractive brand building and client ambience benefits.

      Reply

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