So have Starbucks given up on music or are they just refocusing their attention?

When it was announced this week that they were to pull out of their record label Hear Music and hand over this business to their partners the Concord Music Group, an obvious reaction was ‘So what went wrong?’

This news was further compounded when it was announced that the entertainment division was to be put under control of the Chief Technology Officer Chris Bruzzo…geeks in charge of creative development? Surely this means that the whole Hear Music exercise has been a failure?

Well, it hasn’t been a failure in my view. For many of the classic artists, it has worked. First Ray Charles sells over 5million units. Paul McCartney sold more than he could have imagined. Meanwhile, Hear Music tempted Joni Mitchell to record again - which in my book is worth the whole exercise in itself. It also started to offer an alternative distribution and marketing solution for many other artists like the immensely talented and underrated Sia.

Has it been a success for Starbucks customers? Well, from a sonic retail perspective, Starbucks can teach many other retailers how to think about the effect of sound on a consumer’s experience in-store (See posts passim).

Starbucks have a head start on other brands in terms of understanding the power of music in the consumer’s connection with their business. Yet, the news clearly suggests that all is not well at Starbucks. So what can we make of the changes?

Shifting away from CD to digital is good business sense, though making the assumption that the CD is completely dead for the Starbucks consumer is a huge one. There are over 6000 options of coffee in Starbucks, so having a choice of formats for the music - “CD or download madam?” - is not a bad idea.

The bigger challenge for the new head of the entertainment division is how to ensure that the experience in-store is not undermined by this move. The danger is that a shift to digital entertainment will leave the coffee-house experience somewhat muted.

One hopes that Starbucks does not retreat, turn it’s music commitment into yet another music download site and forget that sonic branding is felt most of all by their customers in-store. They may be right to consider promoting books in-store (in fact this makes immense sense), yet the power of music could be better harnessed by brands, Starbucks included.

A thought for Starbucks:
Ever thought about getting local artists to play in-store, so supporting local art, giving something fresh to the customers and positioning yourself as the ‘local coffee house’ at the same time? It means acting small, not acting big.

Just came across an interesting article in Business Week It reiterates that, in the face of the online shopping onslaught, bricks and mortar music retailers are suffering. However, it also highlights the green shoots of online success that some smaller independent music retailers are experiencing.  I’m with them on this.

Sites such as Piccadilly Records, Boomkat (both Manchester UK) and Dusty Groove (U.S.) are fantastic. These are quality retailers of music…small is really beautiful

We are witnessing so many young people finding their own path in creating, distributing and marketing their own music. The Punk ethic gone global so to speak. Meanwhile established artists are also finding their own way, be it Simply Red, Paul McCartney or Prince. Some are of the opinion that such artists are past their prime, so have no choice but to find alternatives to the record label support. As Naresh Ramchandani suggested:

Prince is doing what every artist formerly known as good has had to do. He's selling out, and it's never pretty.

However, I think he misses the point. Prince is not formally good. Joni Mitchell is not formally good. Music is about sharing with a community, about story-telling, about sharing life experiences, about representing the community. That is what these artists still do in their own way. These artists are exploring new directions of communicating with their community. They are glorious in their bravery, and should be heralded for trying. Anyone in the music world, be they label, manager or artist, should be cheered for trying new things. If no-one takes risks, the music industry will continue to struggle. Critical to risk-taking is understanding your audience. John Sinclair might not have had all the answers in the 60s, but his view that music binds communities together was bang on. By better understanding the community that the artist connects with will help the artist and their representatives. Some artists take risks and benefit, others are less brave. Part of the bravery of trying something different and exploring their relationship with their community is understanding HOW the artist connects. Over the last few decades, this connection has been driven by the recorded song. As my friend (and honorary citizen) Gauti Sigthorssen pointed out, are we not merely reverting back to a time when the live experience was more important, before vinyl transferred the communal experience of music into a commodity? Many people are looking for a greater emotional connection with artists, not just a throwaway flirtation. The sense of community is stronger than ever. Artists (and brands) that understand their community are the brave ones.

Well, a recent visit to a London Starbucks (Hammersmith Tube) gave me a little surprise. We all now know of the tie-up with Paul McCartney and the fact that they have shifted a fair few of his recent release. Good news for all. In store now the price has dropped to £5.99 which suggests that they are now looking to clear out the release for the next artist. Fair enough. However, I would make one suggestion to Starbucks. Having gone to all the trouble of signing up such a big name as Paul McCartney, it might be best not to be playing John Lennon tunes in store. The shock of hearing 'Woman' made me almost choke on my muffin…just imagine (no pun intended) if Sir Macca heard about this.

Been reading a lot of music books recently.

This one is for any fan of reggae music of the 70s. Bass Culture is brilliantly researched and packed full of insights by Lloyd Bradley

So well written in fact that, as I read it I noted the tunes I had to buy.

Thanks to Selectors Music Emporium, 100b Brixton Hill also for helping to me to part with my money. What a shop!! (more on them later…)

It was another sad day for music retailing last week as the very fine Fopp chain of some 80 stores went into the hands of the receivers. While Tesco, one of the biggest music retailers in the UK, also announced it was not making any money out of CD’s, with chief exec, Terry Leahy, predicting that the record business will “disappear in its current form”. So what sort of future does music retailing have in the UK? Rough Trade, one of the most respected independent retailers with two stores in London, think they have the answer. Later this month they will open the doors of a new 5000 square metre store in Brick Lane in the east of London, which as reported in the Sunday Times will include a top-of-the-range PA system and bespoke furniture, all designed by one of Britain’s top architects. So can Rough Trade turn their new store into a destination, via a coffee shop, free wi-fi access and regular free instore gigs? And it’s not just the forward-thinking independent stores trying to change their retail offering. HMV, the UK’s biggest music retailer, are also planning to turn their stores into more experiential destinations, 'with customers of the future sipping smoothies at “refreshment hubs” while using instore computers to play games, surf the internet and download music”'. What both HMV and Rough Trade are trying to do is get the music experience back into the entertainment retail space. Although I’ve spent a good part of the last 35 years hanging out in record stores, it’s sad to report that many music stores have become soulless retail experiences, more akin to the supermarkets who have been instrumental in changing the landscape of music retailing in the UK. But is this attempt to take the model of the ‘Nike Town’-style retail experience too little too late to save our high street music retailers? Or will it be the music specialists, like Rough Trade, who offer customers good quality service, and those all important recommendations, in a more ‘experiential’ environment, the ones that will survive under the continued onslaught from the supermarkets and online retailers? Let's hope so.

There has been an enormous amount of coverage on the Starbucks/McCartney tie-up. At the Venice Festival of Media, Pete Jenner suggested that Paul McCartney would have been better tying up with Saga Holidays than Starbucks. This may be a fair comment if McCartney wanted to target his new release to what some might feel is his existing and ageing core audience. However, he might have felt that the Starbucks environment offers him a chance to take his light music to a younger audience. We will find out in the near future whether his bet has paid off, but we can't help but take our hats off to him for trying a new avenue. What has he got to lose? As for Starbucks, they are not holding back on this release. When they officially released the latest Paul McCartney album a couple fo weeks ago, the first project on its Hear Music label, the coffee retail giant played the album nonstop, all day long, at its 10,000 shops worldwide. With hundreds of thousands of consumers purchasing their daily java from the chain each day, Starbucks is certainly betting that the audio blitz will drive consumer interest and album sales. But not because they’ve been pummeled into purchasing submission by the heavy rotation in-stores. No, what this strategy demonstrates is a good piece of music PR. The amusing media angle (i.e. playing the album non-stop), the tongue-in-cheek play on the album’s title, Memory Almost Full: the story has managed to generate a significant amount of press coverage this week. However, at a time where most brands are grappling with a move away from the PUSH model of marketing towards a more experiential model, one questions whether the audio blitz has been the right way to encourage the latte drinkers to consider new music from the old master. A little of the ingenuity that goes into creating their coffees flavours would have been welcomed in their communications strategy… All in all, a missed opportunity to do a little more for the HEAR Music label we think.

Nick and I took a trip to Manchester UK to meet up with a number of people. First stop Gary McClarnan. We met up at his great record store Vox Pop. Also sells the best cup of coffee in Manchester plus some great Tees. Then headed off for an evening listening to people discuss the meaning of Internet 2.0 at The Circle Club. On the lanel included a Futurologist no less, whilst in the audience someone introduced himself as a part-time futurologist. Can anyone explain what a part-time futurologist is exactly?

Following on from Andrew Dubber’s blog post on the death of music retail, this month’s Word Magazine has an excellent nine page feature on the subject, with David Hepworth mussing on what we might be missing if the record store dies. Hepworth makes some interesting points:

Our passion for music was bred out of scarcity (talking about the 1960s). The fact that it was so hard to find out about, hear and most of all own music is what fed our fever and placed record shops at the heart of our dreamscapes.

It’s a long time since record stores have been temples. The massively stocked megastores of today stand in the same relationship to the little kiosks of the ’60s as out of town mutliplexes do to the funky little fleapits of our memories. They are efficient, convenient and well-run but they have, let’s be honest, not much in the way of romance about them..

The megastores are now facing a challenge not just from downloading and supermarkets, but also from their own scale. The staggering range of the deep-catalogue retailers can result in customer bewilderment and numbness.

It was interesting that in the same week Simon Fox, the new chief exec of the HMV group, announced a six-point strategy to improve HMV’s financial woes, which saw the retail chain £16.1 million in the red in the six months up to October 28. Their ‘new’ strategy is:

• Drive online growth - HMV online accounts for only 6% of the chain’s sales, but is expected to reach double digits in six months (however what percentage of this will be downloads compared to the online retailing of physical product?)
• Build customer following - by introducing a loyalty card scheme
• Add new product categories
• Create inspiring store formats
• Improve supply chain
• Exploit group synergies

Their online download offering has been less than spectacular, with their subscription service a relative flop (Virgin Megastore’s subscription service grabbing a bigger market share than HMV’s), forcing them to launch a more straightforward a la carte service late last autumn. However, HMV’s share of the download market still pales into insignificance when compared the mighty iTunes store. And with US No. 2 download store, eMusic, now offering a full UK service via a unique subscription offer (I get 90 downloads for £13.99 per month - less than the price of 2 albums from the HMV download offering), it makes we wonder if HMV have overestimated their brand equity, as well as underestimated the competition in the digital space? They must be hoping that the major labels drop DRM asap, as this is one of the few ways to level the playing field, and for HMV to leverage their retail experience.

Fox’s plan does try to attack some of the chains biggest problems - brand equity not translating to online (download) sales, an outdated and less than inspiring in-store experience, high price’s compared to online AND the supermarkets, and the lack of convenience compared to both of these retail channels. However the download market, which will be key to their long-term survival, is becoming increasingly dominated by global or at least
pan-European players. But will these new strategies help them reinvent the physical brand, as well as
stretch HMV’s brand equity in a global digital space?

It’ll be interesting to see if this particular old dog can learn some new tricks and survive, or will it need putting down at some point over the next 10 years?

Nick Watt - Citizen Sound

Really interesting post on the death of music retail by Andrew Dubber, degree leader of Music Industries at UCE Birmingham.

His suggestion is for the independent stores to give up the ghost and go online, creating your community there. Very thoughtful piece from someone who clearly loves the independent store but fears for their future if they do not adapt.