Starbucks Spreading Its CD 'Bars'

10/16/2004 10:12 AM, Reuters
Brian Garrity

Starbucks is pushing its new digital music offering into Seattle and Austin in the next month.

The Hear Music media bar is an in-store kiosk that allows consumers to buy customizable CDs.

The new locations mark an expansion of the on-demand service, which was unveiled in March at Starbucks' Santa Monica, Calif., location, along with its new Hear Music Coffeehouse store. Each Hear Music Coffeehouse stocks 15,000 current and catalog CDs in addition to the media bar's digital music offerings.

Rollout of the media bar begins Monday (Oct. 18) in Seattle and Oct. 25 in Austin. The company expects a total of 45 stores in those markets to be equipped with kiosks by the middle of next month.

Starbucks says it plans to move the Hear Music media bar into additional markets in mid-2005.

Ken Lombard, president of Starbucks Entertainment, told Billboard that the company sees the digital music initiative as an opportunity to reach underserved adult consumers who are not interested in top 40 music.

"Our customers have really given us permission to play a significant role in how they discover and purchase their music," he said. "This is a smart and strategic move for Starbucks. We're going to enhance the Starbucks experience while developing a new business channel."

A timetable has not been set for further expansion of the Hear Music Coffeehouse concept.

Each media-bar-enabled store is expected to have three to six Hewlett-Packard tablet PCs -- the devices used for browsing and purchasing -- in its seating area.

Starbucks is offering seven songs for $8.99. Additional songs cost 99 cents each.

The company has a catalog of 150,000 tracks and content deals with all four major labels and 40 independents.

The media bar will also feature content exclusives, as well as Hear Music editorial features and recommendations.

Starbucks, which successly drove sales of Ray Charles' "Genius Loves Company" through a partnership with Concord Records, recently launched a Starbucks Hear Music Channel on XM Satellite Radio.

The company is continuing with its branded-CD initiative. Starbucks bought independent retail chain Hear Music five years ago and has been pushing branded compilations in its stores under the Hear Music banner. These include the Artist's Choice compilation CD series. It recently released an Emmylou Harris compilation, and one from Norah Jones is due early next month.

Reuters/Billboard