Starbucks and iTunes: The new click-and-mortar channel for music?

I wasn’t fortunate enough to be in Seattle or New York today, the initial two cities selected for the launch of the iTunes / Starbucks wifi store. The news is that the user experience is smooth, even if there were a few initial glitches along with one usability complaint reported by this reviewer. Frankly I am not surprised that there were a few glitches with this one. The baristas pull a mean espresso, but I doubt the T-Mobile gear has on-site expertise.

I think this is a brilliant move for both Starbucks and Apple. Starbucks has been aspiring for a few years now to become a third place, somewhere we can all just go and hang out between home and work. It has wifi, unlimited use of its couches, comfy chairs, working desks, and a supply of coffee and sweets limited only by the balance on one of your plastic cards.

And of course Starbucks is monetizing this third place. Now it is looking to expand its access to a market segment totally distinct from coffee and sweets: music distribution. But why create another HMV or Virgin Record store? Instead, it is serving up iTunes Store for free through its T-Mobile wifi connections. I need to dig for some info on the relative monetary value projected for music vs. coffee. Please send me a note if you have any info or links to such info.

I still get noticed when I pull out my iPhone and take a picture, check my mail, or just call someone. But today I was wishing that Apple and Starbucks had chosen the San Francisco bay area to launch its partnership, and I would have been there to write up the experience. It wasn’t to be.

Instead, I was in Monterey today, and went into Starbucks to tease the baristas for not being among the launch stores. As they were making my espresso macchiato, I discovered yet another co-marketing action: The Digital Release!

Here’s the concept: Starbucks promotes a shiny card looking like a CD cover, which is actually a coupon you can purchase at Starbucks to allow you to go home (or to your laptop in the store) and redeem the coupon for an album at the iTunes Store. Here are a couple of pictures of the cards I bought.


Not having my laptop with me, and not being able to use the iTunes store on my iPhone, I waited until I got back to Belmont, and typed in the code for KT Tungstall, Drastic Fantastic. I’m listening to Hopeless now as I type.

Will this method of distribution work? I’m skeptical. What is the benefit for the buyer of these shiny little cards? I had to buy one. OK, I bought two. It’s a business expense for me to check out the workflow, test out the concept, and write about it. 😉 Not sure my partners would agree, but after all I only spent $25.

But here’s the thing. I don’t get anything extra by buying this card versus just buying the Deluxe version of the same album on iTunes. So really the only thing this little card does is to serve as an advertisement for this particular album, and perhaps an ad for purchasing digital music. But if I want the next album they advertise, I likely won’t buy the card. I could lose the card before I got to my laptop.

Maybe I am missing the point? Maybe Starbucks gets a larger cut for the shiny cards because it can say that it legitimately influenced the purchase. Or perhaps it allows Starbucks to advertise more “Starbucky music” with less cost of materials. But these all seem like benefits to the seller, not to the buyer.

I don’t think there is much future for the shiny little cards. I will of course keep mine in a safe place to show my kids years from now, alongside the 8 tracks, cassette tapes, and vinyl records ,and even CDs and DVDs that they will laugh at in a few years. Perhaps I have in my possession one of the rarest forms of music distribution ever! Seriously, I don’t think it will last. But I’ll be watching, and I hope you’ll let me know if you disagree.

But iTunes Store over wifi? That will be a huge win. If only I could get myself to a city where they offer it this month.


5 responses to “Starbucks and iTunes: The new click-and-mortar channel for music?

  1. The cards are maybe positioned as an impulse buy – so it’s good for iTunes as it’s bringing in revenue it may not have had. It’s also highlighting the fact that certain acts have a new album out that you may not know about.

    On the Starbucks side, apart from revenue share, they are able to align themselves with music and a certain type of music that you may want to listen to in a third place. Doesn’t this make Starbucks more exciting? What a cool third place. This can build buzz before IMS arrives, and once it does you can by the voucher at the counter and plug the number directly into iTouch/iPhone – from a PM point of view you’re making the transaction easier to perform. Then sit back, drink your coffee and listen to your third place music…

  2. Well put Richard. I agree that the cards can serve an interesting marketing purpose to position bands and albums. Do you think they will sell many cards though?

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  4. The one thing that the virtual CD cards could be great for is gifts. With standard iTunes gift cards, you can buy downloads for someone but they choose the music. The virtual CD cards let you buy someone a specific CD, maybe one that you know they wanted or that you think they’d really like, but with the convenience of delivering it to iTunes. I bet they’ll sell a bunch during the holiday season, but I wouldn’t be surprised to see them discontinued early next year.

  5. Hi Beth. I think you’re right … they have gift potential.

    Another thought … As I was typing in my gift code for redemption, I realized also that the use case is very tedious. I had to type in a long combination of digits and letters, and I generally dislike doing that. There is a barcode, and most newer computers have a camera … I wonder if Apple might consider using the cam as an option to scan in the barcode.

    Thanks for your comment Beth.