March 16, 2004

Starbucks and Music

Starbucks tries out musical blend

By Dean Takahashi


Now you can have Jessica Simpson with your grande decaf non-fat no-foam latte.

Teaming up with Hewlett-Packard, Starbucks is opening a coffee house in Santa Monica today that doubles as a music store where customers can create their own custom CDs.

Starbucks calls the new-concept cafe the Hear Music Coffee House, after the company's chain of four music stores. Palo Alto-based HP will provide the technology to create the in-store CDs, including 68 tablet-style portable computers that customers will use to select the music they want burned.

The hybrid music store-coffee house will feature "listening bars" where patrons can sip coffee and listen to music on head phones. The stores also will feature stages for live performances.

If the concept works, Starbucks will build more Hear Music stores and add CD-burning capability to more of its own Starbucks coffee houses. Already, Starbucks has plans to equip 10 Starbucks coffee houses in Seattle with the CD-burning kiosks.

"Part of the reason for doing this is there is a lot of excitement about going digital," said Don MacKinnon, vice president of music and entertainment at Seattle-based Starbucks. "You can make your own compilation of songs from hundreds of thousands of choices."

Customers can browse music and videos stored on the tablet PCs, which are touch-screen laptops. They then can order the songs they would like to put on a CD. Within three minutes, the store's computer will create the CD and the customer can take it home. The cost is $11.99 for a 10-song CD, and $12.95 for a complete album. The computer will allow someone to choose their own graphics for the CD and put their name and a label on the disk as well.

So far the Santa Monica store offers a selection of 20,000 songs. By the time more Starbucks houses are brought aboard, MacKinnon estimates 150,000 songs will be available. Through Hear Music, Starbucks has licensing deals in place with four of the five major record labels: Sony, Warner Music, Universal and BMI. Those agreements allow consumers to pick songs from different artists and mix them on the same CD. Starbucks remains in negotiations with the fifth big label, BMG.

MacKinnon said the new concept might encourage people to stay in stores longer and buy more coffee. But he said the music business alone represents a good opportunity for Starbucks.

The technology will be limited in some ways to make sure that experience is friendly for general consumers, said Felice Swatt, HP's director of strategic initiatives.

MacKinnon said the tablet computers won't be Internet-equipped, but the store will offer wireless online access for customers' own laptops.

Customers also won't be able to create CDs using the popular MP3 format. MacKinnon said the Hear Music CDs will be like standard store-bought CDs, with no special copyright restrictions.

Over time, Starbucks plans to expand the music experience at its stores, MacKinnon said. "There are a lot of places this can go," he said.

Contra Costa Times | 03/16/2004 | Starbucks tries out musical blend

Posted by Craig at March 16, 2004 04:11 PM