Starbucks joins Wal-Mart in click-n-rip

DSN Retailing Today, April 5, 2004 by Doug Desjardins

SANTA MONICA, CALIF. -- Starbucks and Wal-Mart are making a push into digital music sales this month through two different routes. Starbucks is taking a bricks-and-mortar approach with its new Music Cafes while Wal-Mart is sticking to the Internet by offering 88-cent downloads on its Web site.

Starbucks opened its first Music Care in Santa Monica, Calif. on March 16 through a joint venture with computer giant Hewlett-Packard. The store is equipped with 70 Hewlett-Packard Tablet PCs, workstations and CD burning and publishing stations where customers can browse a music library with thousands of songs and custom make their own CDs. Starbucks is charging $6.99 for a five-song CD and 99 cents for each additional song. Each CD can hold up to 80 minutes of music.

Walsh said the company plans to open Music Cafes in 10 stores in its hometown of Seattle this spring (no launch date has been set). The Seattle experiment could lead to a larger rollout that could reach up to 2,500 stores.

Although Apple's iTunes service has proved that consumers will pay for music downloads in a post-Napster world, it's yet to be seen whether a retailer can use it to keep customers in its stores and turn a profit.

"It's been tried before without much success," said Charles Van Horn, president of the International Recording Media Association. "But you can never underestimate a company [Starbucks] that convinced people to pay $5 for a cup of coffee."