Canada Reviewing Starbucks Music Plan

10/02/2005 4:34 PM, AP


The federal government is reviewing Starbucks Corp.'s proposal to establish a retail music business in Toronto and wants to see if it will offer adequate Canadian content and hire plenty of Canadian workers.

Starbucks is proposing an investment under its Hear Music brand, which it acquired in 1999 as two existing music stores in California.

The upscale java retailer has been aggressively expanding its Hear Music operations in the United States. It has a Hear Music coffee house in Santa Monica, Calif., where patrons can mix and match songs to create customized burned CDs. Two more such outlets are planned for Miami and San Antonio by the end of the year.

Starbucks also runs so-called virtual record stores in Seattle and Austin, Texas, where customers can download entire albums for a fee. The company also sells a small selection of CDs at its regular coffee outlets in Canada and the United States.

The Department of Canadian Heritage on Sept. 12 ordered the review under the Investment Canada Act to determine the impact on Canadian culture.

A spokeswoman at the Seattle-based company headquarters would not provide information about the proposed Toronto business, except to say it's not a Hear Music coffee house.

"We're committed to working with the government officials," Sanya Gould said of the application to Canadian Heritage. She said the company's response to the department is under review.

In June, Starbucks struck a deal with Alanis Morissette to exclusively stock an acoustic reissue of her 1995 hit Jagged Little Pill for six weeks.

Rival retailer HMV countered by pulling all Morissette stock from its Canadian shelves "consistent with the views of the majority of our customers," president Humphrey Kadaner said at the time.

Canadian Heritage's review of the Starbucks proposal will include assessing whether it will nurture new Canadian talent, and whether there will be a commitment to "the creation, production, distribution, marketing and preservation of Canadian cultural products in Canada, through traditional and new media," according to a departmental policy document.

Hiring Canadian workers is also a factor in the decision. The policy applies only to cultural investments that are foreign-controlled. Domestic music stores in Canada are free of any regulatory requirement to stock or promote homegrown music.