Following the story that ran in Fast Company, I went back to the Santa Monica pilot store to check it out again. The concept is really cool and the store was picked with people buying music; almost all of them drinking from a Starbucks cup.
I truly think that if Schultz moves quickly and gets this program rolled out, they could wind up being the brick and mortar digital music store. Truly, not everyone is willing to move past CDs into digital music players, but they will change quickly as the equipment becomes less and less expensive.
The differentiating factors for digital music stores are ease of use and exclusive content. Starbucks has a very compelling distribution network to sell to the record labels; I see the biggest growth opportunities for exclusive tracks in the live recordings arena. If Starbucks was the only place to get the live tracks of the concert that you saw on Saturday night, you would probably go into Starbucks to download them.
The wireless high-speed Internet infrastructure is already built into the majority of Starbucks locations; conceivably Starbucks could create a free Intranet (Starbucksnet or something like it) that was free to "Power users" who want to download tracks themselves and recharge their Starbucks cards in the stores. Assuming they went to an Intranet model, Starbucks could theoretically only charge users to access Internet sites; all Intranet activities would be free (imagine the sponsor partnership opportunities on the Intranet page).
My only concern about the music store concept is size. A lot of Starbucks that I have been into a rather small; customized to fit into the space available. The Santa Monica location is extraordinarily large in comparison to the majority of the stores I've been into. Having spent more time observing the Santa Monica location, I think the physical space plays a big part in the customer experience.
Down the road, if the music model works, I can easily see video being an easy addition. Imagine, stop off at Starbucks for your coffee and get a DVD of the Friends episode that you missed last night while you are waiting for your coffee.
The great thing about Starbucks is their willingness to rapidly prototype and to fail. The web is littered with information about different programs that Starbucks has pursued and have failed. However, I guarantee that Starbucks has more knowledge from those failures than companies that have had similar ideas, but have shied away from trying them.
I do know this: it's going to be very interesting to watch.