Starbucks Is Losing Its Religion

To Reclaim Humble Roots, Coffee Company Should Keep an Ear to the Ground and Support Local Arts Scenes

By Published on .

Photo: Greg Palmer
Lately, Starbucks' chairman, CEO and president Howard Schultz has been grabbing the coffee giant by the scruffs and yelling, "Remember where ya came from, kid!" like some cheesy ringside boxing coach in an '80s action flick. And so, we now have the original mermaid logo -- sans nipples -- on the cups and the new Pike's Peak roast, named after the original Seattle store. SBX made its biggest dip in four years last week, and now the grizzled coffee vet in the corner has announced that the company will be scaling back operations of its Hear Music label and handing day-to-day control over to indie label Concord. Also, Starbucks' head of entertainment, Ken Lombard, is out.

So what will happen to the cultural cred they've built with music fans? Maybe they spent it already with that Kenny G release -- the guy has serious fans, but, like Kim Jong-Il, he's an anathema to the rest of us -- but we all have musical skeletons in our closets, and we all deserve forgiveness for buying those Phish records in college. Like the rest of its business, Starbucks doesn't need to pare down so much as re-focus, and that applies to its music selections too. Instead of tackling Dunkin Donuts and McDonald's with mass appeal, Starbucks needs to reclaim its coffee-shop smarts with some music smarts. And then sell both to the masses like it's been doing all along.

Artists like Joni Mitchell and Paul McCartney are safe and perfectly acceptable, although anyone's mother could have picked them. The couple other newcomers, like the neo-soul singer Sia, aren't on the same caliber of artistry, but they point to the direction Starbucks should be heading with its music strategy: innovation, expertise and hipness. I'm not suggesting Starbucks sign up the latest noise acts or chase down the latest Shins tearing up the blogosphere, but the costs of signing up these undercover acts would be far cheaper than signing up an ex-Beatle or James-frickin'-Taylor for an exclusive, and savvy choices (like the kind Apple seems to make in its TV spots) could reap bigger rewards. It just takes an adventurous ear, and, luckily, musical talent is frequently right past your doorstep.

Maybe it's too late, but Starbucks can still bring back its cafe culture; the one where people go to chat or read and bask in the sparks of life. This happens all over the country at smaller coffee shops where -- gasp! -- there are local music performances and coffee proprietors take an active interest in their local arts scenes. I went to college in Iowa City, Iowa, where the local coffee shop hosted the public radio station once a week and people could still pick up a guitar and entertain people while they gossiped and sipped lattes. This will never go out of style, and you will never get it at a fast-food restaurant.

I went to Starbucks' My Idea site to see what people were saying about music and found a post advocating Starbucks' interest in local music. Not much of a surprise, and it's "under review," so the idea at least has some traction. And it can be done by a national chain; Borders -- which also operates its own cafes -- frequently brings in local acts and sells their CDs in stores and has been doing this for many years.

Whether its a local act or an unsigned or under-signed indie act, Starbucks can reclaim its musical aspirations with smarter decisions and better branding. But what about the business of selling recorded music? Starbucks has been selling, on average, less than two discs per store per day. So, like any other record label, Starbucks should be putting their eggs into a digital distribution strategy. Setting up the iTunes store on iPhones and iTunes was a genius idea toward this end, and Starbucks should continue making it as easy as possible to hear new music in the store -- some now have rather large TV screens to tell you -- and buy it at a reasonable price.

Starbucks has the potential for a much better brand experience in their stores, and pushing even harder to improve the sonic experience is a cost-effective way to do it. If Howard Schultz really wants to get back to the fundamentals of a traditional coffee shop, new espresso machines or splash sticks aren't going to get him there. And neither is putting your chief technology officer in charge of the Starbucks Entertainment division. Rather than aping Sony BMG and effectively replicating its failure in selling records, Starbucks should be thinking like a (profitable, miniature) indie record store, keeping an ear to the ground and giving customers a reason to stop and smell the coffee.

UPDATE: Peter Kohan of the Appetite for Destruction blog, seems to agree that Starbucks needs to focus, not give up.
Most Popular