By Abby Rathbun
In a world filled with controversy over legally and illegally downloaded music, Starbucks has launched a music label. Starbucks could have launched a restaurant chain, kitchenware line, or clothing… but they did not. They launched a music label.
This leads to the question, Starbucks, who until now has followed a very successful business plan that has led to Starbucks in every state and many countries, why a music label? The recording industry has been lamenting the downfall of CD sales for years and blaming it on downloading. However, is it possible that with the launch of this label, that the problem of album sales solvable, by incorporating creative marketing of quality CDs and a an aggressive downloading service?
Recently, Starbucks signed Paul McCartney to a record deal to be their first artist to create full length albums. Previously, they had only created compilations. Also, music from Starbucks’ record label, Hear Music, is available for download at the iTunes Store for a per song fee.
The 100 millionth iPod was sold this month, trumpeting the era of digital music downloaded song by song from the internet. Starbucks is seeking a piece of this pie in addition to maintaining its niche CD sales within its stores.
Due to the ubiquity of Starbucks locations, what does Starbucks have to lose trying what other companies might consider a risky business venture, entering a whole new industry? The company’s board members are almost guaranteed improved profits on all expansions because of the proven success of their business model.
Before the music label, Starbucks had success distributing compilation CDs featuring a collection of famous singers and songwriters such as Norah Jones. They proved then that there was a market for CDs released by a coffeehouse chain. CDs very easily could be an impulse buy at a counter, thus making it a fairly easy sell. In addition, like many bands, Starbucks has loyal groupies, who will buy anything with Starbucks label because they believe it will be superb no matter what it is.
However, if the latter is true, then the problem is not with Starbucks having a music label no matter how weird that sounds, but within the music industry. If Starbucks can have a successful music label, then why can’t the rest of the music industry? As CD sales continue to fall, traditional marketing practices are apparently no longer successful. If record companies want to maintain their share of the dwindling CD sales, they need to form strategic marketing partnerships with organizations that have loyal followings. Record companies simply don’t have the name recognition and following to continue selling CDs conventionally.
Some of the albums Starbucks released before were not of excellent quality, yet they sold fairly well. This proves to some extent that consumers are willing to buy a product simply because a certain name is on it. Consumers have become so gullible that they are willing to accept a Starbucks label no matter what is actually on the CD. Record companies should be paying attention.
Abby Rathbun is a freshman majoring in political science. E-mail her at opinion@louisvillecardinal.com.
