Posted by Mike McCready | February 20th, 2015 | No responses
Starbucks, the coffee giant with over 21,000 retail stores throughout the world, will stop stocking and selling physical compact discs, Billboard has confirmed, with the CD clean-out due to start next month.
“We will stop selling physical CDs in our stores at the end of March,” a rep for the Seattle-based company tells Billboard, adding: “Starbucks continually seeks to redefine the experience in our retail stores to meet the evolving needs of our customers. Music will remain a key component of our coffeehouse and retail experience, however we will continue to evolve the format of our music offerings to ensure we’re offering relevant options for our customers.
The decision follows a tough environment for the format, which saw a sales decline of 15 percent in 2014. Music has been one of the few items offered at Starbucks stores that didn’t have to do with coffee, tea or food, the chain’s main revenue streams, and was often at the center of various programs and cultural initiatives.
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Starbucks’ investment in music began when the company acquired the music retailer Hear Music. With the aim of compiling collections to spur music discovery, the wholly-owned subsidiary was first staffed with Starbucks employees in 1999 and saw significant growth over the next five years.
Indeed, a Billboard article from 2006 cites annual album sales of 3.6 million units or approximately $65 million in music revenue. That same year, Starbucks announced a partnership with William Morris to help identify music to feature in their stores. To support the 20 or fewer titles the chain would stock regularly, Hear Music also hosted several performance series based around the coffeehouse singer-songwriter concept and launched a Sirius XM station to play Starbucks-friendy tunes.
Around the mid-aughts, and with much fanfare, Starbucks CEO Howard Schultz boasted of a slew of exclusive music releases in partnership with Concord Music Group, including albums by Paul McCartney, Joni Mitchell and Alanis Morissette, whose Jagged Little Pill acoustic album was initially sold only in Starbucks stores to mark the breakout record’s 10th anniversary in 2005.
Among the albums that Starbucks has given prime positioning to in recent months were: Taylor Swift’s 1989, the Frozen soundtrack and a jazz compilation called Blue Note Blends, released as recently as Feb. 10.
In one interview with Fast Company from 2004, Schultz noted of Starbucks’ jump into music: “The nature of shopping for a CD or a piece of music at a traditional record store is, at its best, a very poor consumer experience. … The Starbucks customer [who] might want to find a Diana Krall album, a Tony Bennett album, or anything that was not being played on the radio, well, they would have a hard time going into Tower Records. Maybe they’d find the album there, but they could not find someone who could talk to them about it. That consumer has disposable income and has had a long history of buying and enjoying music, but they have nowhere to go.”
Other music offerings at Starbucks included themed compilations (like their long-running holiday album series) and single-song downloads, the latter of which are offered via promotional cards that are expected to continue. Digital music will have a presence in the stores of Starbucks’ future, but in what form, sources don’t yet know.
Mike McCready is an entrepreneur at the crossroads of music and technology. He pioneered the introduction of Hit Song Science into the music industry and followed up with Music Xray, the company he co-founded and serves as CEO. His companies have been the subject of case studies at Harvard Business School, IESE and he frequently guest speaks at many of the top business schools around the world. He helps the music industry identify high potential songs and talent and helps musicians get deals, get fans, & get better: http://musicxray.com