Music industry tunes in to Starbucks' CD sales
There are many paths to Grammy glory the world's grand concert halls, the elite recording studios of Los Angeles, Nashville's storied Music Row. But the caffeinated confines...
Los Angeles Times
There are many paths to Grammy glory the world's grand concert halls, the elite recording studios of Los Angeles, Nashville's storied Music Row.
But the caffeinated confines of your neighborhood Starbucks?
When "Genius Loves Company," the duets album that became the final work of the late Ray Charles, garnered nominations in the marquee Grammy categories of album and record of the year, it not only added to the 2004 outpouring of appreciation for the singer, but also marked the first time a Grammy contender was brewed up to be sold alongside mocha Frappuccinos and grande nonfat lattes.
Starbucks, a partner in the financing and marketing of "Genius," has sold more copies of the CD than any other individual retailer. The fact that the coffee purveyor has rung up more than 350,000 copies of "Genius" (and, at $15.95, sold them at a steeper price than most mainstream music retailers) has been eye-opening for some music industry stalwarts.
"It's another nail in the coffin of traditional music retailers," said one major-label executive who asked not to be named because he is a voting member in the National Academy of Recording Arts and Sciences, which awards the Grammys. "They take this as yet another party taking a bite at their apple."
Or maybe not.
Geoff Mayfield, the director of charts for Billboard, the music trade publication, said the buyer who picks up "Genius" in Starbucks is likely one who otherwise might not buy it.
"The market they isolate there is people who don't spend a lot of time in music stores, and it's an impulse purchase," Mayfield said. "I haven't heard a lot of protest from traditional retailers."
Besides, Mayfield said, diligent music fans probably would not pay the coffee chain's top-tier prices for CDs.
"Genius" has sold 1.3 million copies, and the role of Starbucks in that platinum success story is more than just purchase-point trivia it represents the all-bets-are-off landscape of the music marketplace.
Starbucks and its Hear Music imprint have gone well beyond the typical model by partnering in "Genius" with the small jazz label Concord Records. The closest similar effort might be Best Buy's involvement in new albums by classic rock acts, but Best Buy is a major music retailer, not a brewer of coffee.
"It's a unique collaboration, and it's at a time when the traditional way of the music business is in turmoil," said Ken Lombard, president of music and entertainment for Starbucks.
Starbucks created the art for the album and created much of its marketing program. The chain also gave the music intense airplay within its 6,100 U.S. locations from Maine to Maui.
"The way people discover and buy their music is evolving," Lombard said, "and a big part of our model is to make it comfortable for discovery."
The idea of Starbucks as music boutique makes some independent retailers roll their eyes.
But one Rand Foster, owner of Fingerprints in Long Beach, Calif. said the Hear Music selections are well done. He likes "seeing people buy good music," he said.
"Although, as a music store owner, clearly I don't like seeing more competition," Foster said.
A board member of the Coalition of Independent Music Stores and a merchant who shares a shopping corridor with two Starbucks, said the chain's limited number of titles and top-tier prices make them far less a threat to small shops than the mass-merchandisers who sell albums at a loss.
"It is clear, though, that they were really serious with this Charles CD," Foster said. "They were more aggressive with it than anything they had done before."
At any Starbucks, customers are greeted by small counter racks that hold CDs from Christmas classics to the Artist's Choice series, which features well-known music stars putting together CDs of songs they consider their personal influences and favorites.
"Genius," released in September, was a quick hit it debuted at No. 2 on the nation's pop charts in its first week. The album sold so briskly in its first week that many Starbucks locations sold out.
A number of factors made it the perfect release to follow the Starbucks path: The success of "Ray," this year's Hollywood biopic of acclaim, and the outpouring of attention and affection that marked the June death of the 73-year-old singer caught fans' ears in a big way, and the duet disc features Norah Jones, Bonnie Raitt, Elton John and other artists who are strong draws for the coffee chain's demographic.
Was "Genius" a singular success or a template for the future? It may not take long to find out.
"It has caught the attention of a lot of people in the music industry and a lot of artists, and we've been hearing from them," Lombard said, but he declined to cite specific projects.
In Seattle and Austin, Texas, some Starbucks are experimenting with kiosks that allow customers to peruse a selection of 200,000 songs and pick and choose tracks for a tailored CD. The disc is produced on the spot and paid for with the swipe of a credit card.
The company has announced plans to put the CD burners in 2,500 stores in the next few years and has said it plans to have 30,000 stores worldwide triple its total today. That could make Starbucks a heftier player in shrinking world of music retail.
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