Great to hear from you!

You could be right…

Best,

Mike

Thanks for the post! Well said, and excellent points all around. I don’t disagree with anything you’ve said here, other than A) I have not read anything that disputes the 2 CD sales per store figure that the Times quoted, which is not impressive no matter how you look at it, and B) I do think that when overall earnings are down, it makes sense to focus on ones core market. Starbucks deal with Apple is one of the most forward thinking retail/distribution strategies out there, but I’m not sure their physical music sales are the reason they have 10,000 locations. One can certainly argue that music is important to their overall brand, but I can see why Howard Schultz might want to pull resources out of the physical music retail business if the revenue is not there, especially in lean times.

Don’t get me wrong – I think corporate branding could play a huge part in the future of the music business. I’m waiting to see how the Jermaine Dupri-led Tag Records initiative works out:

http://www.thedailyswarm.com/headlines/tag-records-proctor-gamble-jermaine-dupri/

Thanks again for the excellent comment.

Even before Starbucks purchased Hear Music they had their own music team on staff, and this team was absorbed into Hear Music at that time. And while I’ve seen some reports that minimize the unit’s impact on Starbucks’ bottom line, just their custom CD business was a multi-million dollar a year revenue source… and that was before Ray Charles, and before the establishment of Starbucks Entertainment, and before they started their own label signing artist like McCartney and James Taylor and Joni Mitchell. An average compilation project ran between 35,000-50,000 units, and there were some CDs which received re-orders, but most of the time Starbucks just developed new packages for sale.

And all the while Starbucks was expanding their retail footprint, growing to over 10,000 locations, and their music operatiosn grew in turn.

The mistake Starbucks made was in thinking “now that we’re growing so big and reaching new consumers, then we must have to broaden out our artistic aesthetic so we can be ‘mainstream.’ Let’s stock more commercial releases! Let’s sign artists!”

Starbucks has been instrumental in showing how music can play an important role in building a brand. If you look at “non-traditional accounts” reporting to Nielsen SoundScan I believe Starbucks and Limited Too (and possibly JCPenney) are the only ones doing so.

For me, the big question has always been “why haven’t other brands, who might otherwise see a musical tie-in as a relevant marketing program, invested in music from a merchandising standpoint? Is music – at least physical product – such an unattractive category for a specialty retailer to wade into?

That the major labels haven’t solved that conundrum says to me they have given up fighting the CD fight and are just staving off their inevitable collapse once the digital and mobile picture shows it can’t sustain these companies as an ongoing business proposition. If not, then where is the next Starbucks? Where is the next chain with a big (or even a medium) footprint where the industry can develop a positive PR story about? Because it’s not as if the biz couldn’t use some good news to report.