Tuesday, June 15, 2004

"Thinking Outside the Cup"

That's the name of the article on Starbucks in this month's Fast Company (you may need to be a subscriber to read it).  One of the interesting things in the article is the description of the Starbucks music/coffee store on the 3rd Street Promenade in Santa Monica.  Here's the description from the article: 

"It's awesome indeed, this new-concept music store on the trendy Third Street Promenade in Santa Monica, California. It's a beautiful space with warm lighting and wood paneling -- a place where you can buy regular old CDs, or linger with a drink while you listen to music and sift through thousands of songs stored in a computer database to create your very own personalized, mixed-CD masterpiece. In about five minutes, a freshly burned CD, complete with your chosen title and funky artwork on both the disc and the jacket (plus liner notes!) will be ready to take home. It all happens very smoothly, and yet it's a novel and startling experience. But what's most startling about this remarkable new place to buy music is this: It's a Starbucks."

Now here's my description of that same store from my post on May 17, 2004:

  • They take your order outside right along the Promenade and then you go inside to pick up your order.  What I didn't hear was the normal banter (yelling) between the people taking the orders and the people making orders because the Health Department had obviously mandated swinging glass doors be put between the outdoor ordering area and the indoor prep area.  Takes away from some of the "scene".
  • They did not write on the cups!  No, I'm not kidding.  Instead they have a fancy new touchscreen computer system that prints the label with your exact order and name back in the prep area.  Perhaps this is a function of the unique configuration of this particular store, but it was kind of a bummer not to see the doctor's prescription-like scribbles on the back of the cup that somehow manage to generate the perfect beverage of your choice.  Takes away more from the "scene".
  • There were Tablet PCs encased in stainless-steel housing on the outdoor counter area from which you could create your own CD that presumably printed out somewhere inside.  I like the Tablet PC and music idea -- very cool.
  • On entering the inside of the "coffee shop" (if it could be called that), I found myself standing at the typically small order pick-up area and in the middle of a music shop.  CDs adorned the walls and a bar with Tablet PCs at every stool; what I assumed to be a point of sale system and an array of CD burners were behind the bar.  Sure there were still some tables and chairs, but it wasn't the light cherry trimmed with stainless-steel typically cookie cutter inside of a Starbucks.  What's happened?

In answer to my question, Fast Company reports that the 3rd Street location is known as the "Hear Music Coffeehouse," and is the first of several of the same type shops in other areas throughout the country.  Visit Hearmusic.com and note that you are redirected to this page on Starbucks.com; that's because Hear Music is a wholly-owned subsidiary of Starbucks corporation.

What are they thinking long-term?  From the article:

"Chairman and chief global strategist Howard Schultz's ambitions for this new business operation are vast; it's not just about selling a few CDs from a coffee shop (Starbucks has been doing that, successfully, for about five years already). Schultz wants Starbucks customers to make their own CDs, yes, but he also thinks they will someday use Starbucks' enormous Wi-Fi footprint to buy and store music from the network on any device imaginable -- from laptops and iPods to phones and PDAs. He hopes record labels will develop proprietary material just for the Starbucks network. And that Starbucks itself may help break new artists and develop original material. Indeed, Howard Schultz plans nothing less than to turn the entire music industry upside down."

Just look at what happened when Steve Jobs tried to turn the entire music industry upside down; one of the most successful online music stores and the best portable music device.  Schultz has certainly got a great idea, and if he gets the kind of exclusive content that he's looking for, he may even be able to beat Apple at its own digital music game.  Live acoustic performance at Starbucks that you want to listen to in your car?  Sorry, you can only buy the tracks by visiting your local Starbucks.

So this is the massive reinvention of Starbucks from coffee shop/wireless Internet access point to an integrated, Internet-enabled, caffeinated music store.  Pretty cool stuff.

If you don't subscribe to Fast Company, pick up an issue at a news stand -- there's an online access code inside.

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