THE MUSIC MAN OF STARBUCKS

How Ken Lombard Mixes Entertainment and Coffee

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Who: Ken Lombard, president of Starbucks Entertainment

Age: 50

Credentials: Mr. Lombard joined Starbucks Entertainment in May after serving as president of Johnson Development Corp./Magic
Ken Lombard, president of Starbucks Entertainment.

Johnson Theatres and co-managing partner of the Canyon Johnson Urban Fund. While there, he successfully negotiated joint ventures with Loews Cineplex Entertainment (Magic Johnson Theatres), Starbucks Coffee Co. (Urban Coffee Opportunities), and T.G.I. Friday's (Magic Johnson's T.G.I. Friday's), among others.

What is Starbucks' M&V play? It's been five years since Starbucks Corp. acquired music retailer Hear Music, promptly expanding its reputation in music marketing beyond having a cool in-store playlist and a few custom CDs. On the heels of co-producing its first platinum album, Ray Charles' Genius Loves Company, the coffeehouse chain has launched the first of its Hear Music media bars. In 15 stores in Seattle and 30 more in Austin, Texas, consumers can burn their own CDs from the Hear Music catalog for about $10 in the time it takes to make a latte. Ultimately, Starbucks intends to be an "entertainment concierge" as a natural offshoot of the coffeehouse experience for the 30 million-plus customers that visit its coffee shops around the world each week.

What are your goals for the entertainment unit? "There's such a natural fit between Starbucks and music, and with the current state of the [music] industry and [its need for a] viable retail option that it doesn't have right now, there's a huge opportunity."

Is Starbucks a coffeehouse or a medium? "Starbucks is one of the most frequently visited retailers in the world. Couple that with the natural fit that music and coffeehouses have ... those assets give us a unique advantage. If you provide the music lover and the Starbucks customer an opportunity to discover and acquire music in a place that is already part of their daily routine, it is such a natural fit."

Any worry about losing merchandising focus? "We don't want consumers coming in and feeling their favorite coffee store has turned into a music store. We want to stay true to the fact that we're a coffee company. Whatever business evolves beyond music will continue to be done in a way that just further enhances the coffee experience."

How much of what you're doing in music is a learning opportunity vs. a development strategy? "As you look at the acquisition of Hear Music in 1999, there's been five years that Starbucks has taken to really understand the business. This is not an on-the-job approach as much as it is a disciplined approach that we are phasing in. All the [plans to branch into other entertainment platforms like films and video games] are very much on the road map."

How do you plan to stay ahead of evolving technology in providing entertainment options for customers? "We have an advantage with our tech partner HP [Hewlett-Packard], which provides us with cutting-edge opportunities. Everything that we could even begin to dream of is on HP's radar screen. We spend a tremendous amount of time studying the competitive landscape and with the format wars going on right now and all devices coming out, we've wanted to be device agnostic. We also feel Wi-Fi will have a prevalent role in what our fill-up strategy is going to be. [Wi-Fi is] currently in 3,200 stores and that number will continue to grow."

Now that others are copying your business model, how will stay ahead of the game? "Starbucks is focused on enhancing the experience. If we execute to the level we know we can, our customer support will take care of itself."