Media Money with Julia Boorstin

Starbucks Brewing Up Some Music Innovation

I'm at the Digital Music Forum at the Hollywood Roosevelt Hotel where start ups and music industry honchos are trying to figure out the future of pricing, how to conquer piracy and the role that social networks can play in boosting music revenues.

The representatives of artists and music labels are asking for higher payments from Internet radio and online broadcasters are trying to negotiate rates so they can afford to survive.

One surprise winner: Starbucks, whose entertainment division has emerged as an innovator in the music space. Yesterday, I interviewed Kenneth Lombard, the president of Starbucks Entertainment, whose "Hear Music" label has snagged big name artists--launching with Paul McCartney, adding Bob Dylan, Joni Mitchell and others.

Just this week Starbucks announced a big partnership with Apple --a new service to allow Starbucks customers to connect to iTunes from stores. Called "Now Playing" it allows customers in Starbucks stores who have iPhones, iPod touch, or their laptop to access iTunes through the store's WiFi. Customers can instantly buy what's playing in that moment or any one of the other songs in the iTunes library. This is the only service that let's you instantly buy music you're hearing in a store. To promote the service Starbucks is giving away 50 million songs over the next month--a different song every day.

The service will be rolled out to all of Starbucks stores by the end of 2009. Lombard explained why the partnership with Apple makes so much sense. Apple's a music innovator, with the technology and a strong brand. And the two companies demographics--affluent and tech savvy--very much overlap. If Starbucks was to be considered a music destination, Apple was a natural partner.

Questions?  Comments?