From today’s New York Times:
In 2005, Starbucks looked like it was going to do for undiscovered music what it had done for the nonfat latte. The company decided to stock “Careless Love,” a CD of sophisticated pop-jazz songs by Madeleine Peyroux, who had attracted only a modest following in this country, plying her craft in small bars. Ms. Peyroux soon found herself at No. 81 on the Billboard chart, and has become a mainstay of jazz.
Starbucks was betting that its eclectic taste played to the upscale atmosphere of its coffee shops, where it enticed customers to pay $4 for their daily caffeine fix. And record companies saw Starbucks at the vanguard of a new class of unconventional sales outlets that could keep the CD alive in an age of digital downloads.
But the ardor for Starbucks has gone the way of yesterday morning’s grounds. Critics in the music industry say the company squandered its cachet by mismanaging the effort to broaden its music mix. The choices that reflect its early taste for the offbeat — like an album from Lizz Wright, a torchy pop singer — are now squeezed in with offerings not unlike those at Wal-Mart, including the latest releases from Alicia Keys and James Blunt. The shift has not been lost on some customers.
The music offering “is more popular now,” said Hazel Delgado, 33, a social worker and Starbucks regular from San Bernardino, Calif., who attended a recent concert presented in front of one of its coffee shops by another act on the company’s label, the singer Sia. “I want to come in and be surprised,” she said. “If they do get more mainstream, why bother?”
Along the way, Starbucks has alienated business partners who contend that it has demanded too big a cut of music revenue. The company’s shift in direction has also prompted upheaval within — including the departures of half a dozen senior executives from its entertainment unit.
Starbucks, of Seattle, said its music sales are healthy: it reports selling 4.4 million CDs in North America last year, up some 22 percent from the year before. Still, it opened hundreds of shops in the same period, increasing stores in the United States by 18 percent.
Despite adopting a broader musical approach, Starbucks on average sells only two CDs a store each day at company-owned shops, according to people briefed on its business. Starbucks disputed that figure but declined to provide a different one.
Read the full article here.
5 responses so far ↓
1 Winston Smith // Mar 17, 2008 at 2:22 PM
Two CD’s / Store / Day
6,800 Stores
In the advertising world you talk about converting leads to customers. What’s the conversion ratio here? I gotta make lot of assumptions but hey, assumptions are fun.
Open Hours: 10 / Day
Espresso Drink Time: 1 minute (high)
Busyness Factor: 25%? That’s a tough one. It leads to one espresso drink (customer) every 4 minutes. This number changes dramatically for busy urban stores vs. lower traffic suburban stores I’m sure. It’s just a guess.
Customers: 15 / Hour or 150/Day
Coversion Ratio: 2/150 = 1.33% [edited] of Espresso customers covert to music customers.
From where I sit this failure is only too obvious. When was the last time you walked into a “specialty” store of ANY SORT and purchased something that, arguably, had nothing to do with the reason you walked into the store?
How many record store customers are interested in buying a coffee while they shop? Anyone have experience running a record store?
When I lived in Maine we always laughed at the mom & pop side of the road businesses that combined two totally disparate product lines in order to try to stay in business. “Homemade quilts and Exhaust Sytems” was one I remember fondly. To see it played out in corporate America has been interesting to say the least.
2 Winston Smith // Mar 17, 2008 at 4:20 PM
My math is wrong of course (move the decimal point), but the thought still stands.
Just a few weeks ago Starbucks admitted that they no longer knew HOW TO MAKE COFFEE.
3 spitballarmy // Mar 17, 2008 at 3:38 PM
A regular of my store used to say frequently, “All you need is a little coffee bar right here in the corner!” And if I felt that I wanted to add “barrista” to my duties, I would have agreed with him. But, in our case, there was a coffeehouse two doors away, and they did a bang-up job of selling coffee. That wasn’t my business, as selling music isn’t theirs (I even tried to convince the owner to carry a handful of coffee-related music titles, but he felt the same about his business as I did about mine). Starbucks has been under the illusion that carrying a handful of titles in their 6,800 locations will make them a major player in the music industry, but all it has done is muddy the waters and confuse the public. And now they have apparently gotten lazy.
4 spitballarmy // Mar 17, 2008 at 4:24 PM
Is that New England humor? If not, I totally missed that news flash. Anyway, at least Starbucks knows how to burn coffee. They’ve got the market cornered on that.
5 Winston Smith // Mar 18, 2008 at 4:57 AM
It’s New England humor all right – which tends to have some basis in truth.
http://money.cnn.com/2008/02/25/news/companies/starbucks/index.htm?cnn=yes
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