Venti Americano With Room For Sir Paul McCartney

Someday soon we may be using the term “big five” when referring to major labels. The hugely successful coffee retail chain, Starbucks, has decided to use its marketing prowess to launch a record and distribution label. Just to show industry moguls that they mean business, Starbucks has come out of the box swinging big by signing Sir Paul McCartney to a one project contract, now that he is free from his Capitol Records contract.  

While Starbucks has been criticized for signing Paul McCartney to launch the label, it is hard to question the marketing success that Starbucks has enjoyed. Starbucks knows how to run a business, something that most people believe the “Big Four” have become incapable of doing due to their disconnection with how Generation Y wants to buy music. Starbucks business model is fairly obvious and critics of the majors have been shouting for years that the solution to getting record label stock out of the toilet would be a model similar to Starbucks. Initially the company will start by selling CD’s, with the intention to “outfit stores with equipment that would allow coffee drinkers to plug in their MP3 devices and fill up with music while ordering a latte.” This is the future, the CD business is over. We have watched it progressively drop off.

 

            Starbucks knows that you can’t build a successful business model on an outdated product that the next generation doesn’t want. So why sign Paul McCartney if you’re looking to get the next generations attention? Couldn’t Starbucks have gone after a Generation Y artist if that is the intended demographic?

 

            Starbucks at least knows that the future of the music industry is digital, the new “record store” is iTunes. Now maybe Starbucks and other destination locations where socialization and other consumption is going on may be the new “record store.” The new radio is social networking and likely Internet radio once WiFI is widely available. Starbucks, unlike the majors, doesn’t need terrestrial radio to push its artists. Let’s not forget also that Starbucks already sells a lot of music in CD format. If Starbucks experiment is successful, which it likely will be, then one must wonder if the newcomer to the record industry will have its own answer to the RIAA suing customers who steal music. Perhaps the skilled mixologist at Starbucks will “scald music pirates with hot coffee” as a cheaper solution then hiring lawyers.