Starbucks Rolls Broadened Music Strategy, Giveaways

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Starbucks rolled a number of music-focused initiatives this week, including a much-anticipated, $50 million iTunes Store giveaway.

Already, millions of freebie download cards have been distributed, and each day features a fresh song.  Discussing the play on Wednesday, Starbucks Entertainment president Ken Lombard hailed the program as a boost to the broader coffee-buying experience.  “Everything we’ve done with music is about the experience,” Lombard said during a keynote interview at the Digital Music Forum in Hollywood on Wednesday.

That means happier coffee customers, and a competitive edge, though Lombard was quick to dismiss loss-leader strategies.  “Everything we approach is business positive,” Lombard said.  “We’re not interested in a loss-leader philosophy.”  Accordingly, labels and artists are footing the bill on the play, a detail that Lombard characterized as “tremendously supportive”.

Additionally, Starbucks is also positioning album download cards for sale, an easy stocking stuffer.  Once purchased, the buyer – or gift recipient – can redeem the download on iTunes.  That is part of a growing Apple partnership, one that also includes open WiFi access for iPhone-based iTunes purchases at select locations.  The gratis wireless program also enables on-the-spot downloads of music currently playing in the store.

Starbucks certainly has the traffic, and a broader retail imprint than any other in the space.  But is that translating into meaningful sales?  Inaugural Starbucks label artist Paul McCartney achieved sales of roughly 500,000 on his release, Memory Almost Full, a result that seems lukewarm given the comprehensive, global marketing and sales blitz.  Lombard credited Starbucks for contributing roughly 45 percent of total McCartney sales, though deeper questions related to the pre-recorded CD remain.

Meanwhile, the executive pointed to strong sales on a recently-released Joni Mitchell album, and promised younger signings ahead.  “We know eventually we are going to sign an artist under 60 years old,” Lombard joked.

Report by editor Paul Resnikoff in Los Angeles.