Listening to StarbucksAlison Overholt

July 2004

Leah BungoMatt Smith

Melissa Fredette

Hear Music Background• Howard Schultz, chairman at Starbucks,

discovered Hear Music 10 Years ago in Palo Alto, California

• Starbucks purchased Hear Music in 1999 and launched Hear Music Coffeehouse

•Buy CDs and DVDs•Burn CDs from a

collection of Music (150,000 songs)

•Purchase Starbucks Hear Music on ITunes•Listen to music• Promote

independent artists

Why….• Starbucks operates in

the Coffee shop business– Reaching plateau

point?– Market becoming

Saturated?• Redefine their business• Music and coffee go

together– Personalized products– created individually

• Walt Disney (Cartoon Studio)– Theme Park– develops, produces, and

distributes films

• Martha Stewart (caterer)– Multimedia company:

Cookbooks, lifestyle-products, TV show

Redefining Businesses

Concept Roll out• Add CD- burning

capabilities to 10 Starbucks locations in Seattle

• With HP assistance have 1000 Hear Music locations by end of 2005 (mix of coffeehouse and retail)

Other Exclusives

• Artists Choice– Exclusive to Starbucks– Sold 400,000 copies

• Playing for Change– Launches April 28th– Connect people of the

world through music– Benefits (Red) Wire in

the fight against AIDS in Africa

2009 Update• Slower than expected roll out– Closing stores (600 in US)

• Expanded offerings– Promotes CDs, DVDs, and Books at almost all locations– Sold 4.4 million CDs in 2007– “Oprah’s Book Club” feel

• Conclusion– Increases foot traffic and time spent in stores by customers– diversifies revenue stream

Sources

• International Herald Tribune• Hear Music• Trading Markets• Playing for Change• Smart Brief