@ MIDEM: MidemNet Day One: Ken Lombard, President, Starbucks Entertainment

[by Mark Frieser] I have to say, I was originally excited for this keynote. Starbucks has been quite innovative in its extension of the consumer experience into music sales, selling 3.5 million units total since last year, and Ken Lombard is an experienced, seasoned and successful builder and marketing of brands, having grown Michael Johnson into a cottage industry. That said and despite the best efforts of interviewer Ted Cohen, the details were few on what they doing in terms of numbers and practical efforts. So let’s just go through what Lomard allowed the audience to glean from his keynote about the Starbucks Entertainment business.

More after the jump


Starbucks has been unique in that it has the power of more than 100K employees and 10,500 stores to serve as a worldwide marketing and distribution point for music. This gives the stores the power in many way traditionally held by a label combined with a brand that inspires trust and loyalty. This has created a great opportunity for Starbucks to both sign artists on exclusives while developing musical products consumers they simply cannot get anywhere else (e.g., Bob Dylan Live). They are in the “people business” states Lombard, and selling coffee, though it is at the code of the company, does not preclude offering services and products outside of coffee to the consumer.

Here’s some stats on the Starbucks people: 35 million customers visiting an average of 18 times per month, a 307% increase in CD sales in 2005, 20 titles at any one time. The emphasis is not to overwhelm the consumer with too many music choices (though for some the coffee choices can be mind-boggling) and to give customers the ability to discover music quickly at the counter (lean-in) and on the couch (lean-back). The company is also looking to diversify into film with a distribution and development deal with Lion’s Gate Film.

That’s all great, but what does this mean for digital? Well, in terms of digital, the company is opening several new “Hear Music” stores that allow custom burning of CDs (there was a lot of that in the 1990s) and sometime in the future – a fill up of hard drives and devices. This seems fairly simple to implement – but the company has only three locations with the burning capability available and no drive fill capability, so the mobile/digital picture, in a practical sense is non-existent. It will be interesting to see if at the end of the day Starbucks will provide more than lip service to digital in 2006.

LATimes: The company will move into in-store music downloading and allow customers to transfer songs onto MP3 players. It hasn’t yet set a date for moving into MP3 downloads and is still talking to various companies about the technology.

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