There are clear parallels between the way Starbucks is developing this new music business and the way Schultz developed the core coffee business over the past two decades. Though his ambitions are global and his product is mass market, each coffee drink is personalized and created individually. Like all Starbucks executives, Saunders, the marketing chief, worked in a store when she first arrived on the job. "I waited on hundreds of customers while working the cash register and was struck by how every single one of them ordered something different," she says. "A flavor shot, extra hot, half-caf, maybe all those things together. Every single person coming in here has a different experience, designed the way they want it."
At the Hear Music Coffeehouse, the personalization is even more . . . personal. Choose your cover art. Create an album title. Select your songs. Move them around into a different order. Pick music by mood, by artist, or by genre -- it's your choice. "We have a marketing tagline on the wall to reinforce how important we think that personalized experience is," says Saunders. "It reads: 'It'll be your favorite CD because you picked every song.' " And the product itself is high quality and perfectly packaged. "So many people aren't ready for digital music if they approach it on their own," says MacKinnon. "Here, there is no barrier to exploration, and you take something home that is tangible and beautiful."
And here's who MacKinnon has in mind: a woman with a head of unruly gray hair who has been tapping intently on a screen at the music bar for nearly two hours now. It's Mother's Day, and Kerry Smallwood, 47, just received a gift certificate to the store. A friend brought her here when the Hear Music Coffeehouse first opened. Today is her sixth visit. "I pretty much just listen to the CDs I make here now," Smallwood says. Her playlist so far has songs by Norah Jones, Rufus Wainwright, Sting, and Oscar Petersen.
Has she ever burned a CD for herself on a computer at home? Smallwood's expression is completely blank. "No, no, I've never done that. I don't know how." She's exactly why Starbucks thinks it can go up against Apple's more technology-oriented iTunes service. Smallwood will never know that there is a mini server farm hidden behind the service door at the back of the store. She just knows that for $6.99 for her first five tracks and $1 for each additional song, plus about a five-minute wait, she gets another beautifully packaged, personalized CD.
It's all very smooth, it's all very seamless, and it all seems to make so much sense. But does it? Can Schultz and his team carry off a transformation like this? Is it really a smart move for a coffee company to reimagine itself as a lifestyle-entertainment enterprise and to start by serving up music? After all, the mere fact that a certain sort of music and a certain sort of coffee appeal to the same sort of customer doesn't necessarily mean that they should be sold at the same store. By such logic, what would stop Starbucks from selling, say, hiking shoes, or take-'em-home versions of the new-agey furniture in its stores, or earth-friendly kids' toys? That's why Mohr, Davidow Ventures' Moore cautions Schultz to tread carefully. "It's a very interesting experiment, but if I was on their board of directors, I'd be more concerned that they not corrupt the brand," he says. "If Starbucks is just trying to find more ways to monetize the traffic that comes through, this is a bad idea. At some point the customers will start to feel abused."
Though he acknowledges the risk, Schultz sees his company poised at a turning point -- and he's confident the music service is the next step along Starbucks' path toward becoming, yes, the world's biggest brand. "The hardest thing is to stay small while you get big, to figure out how to stay intimate with your customers and your people, even as your reach gets bigger. We want to be a respectful merchant so that we're not trying to sell anything that would in any way dilute the experience," he says. The music business won't do that, he vows; rather, it will enhance that experience. "Great retailers recognize that they're in the business of constantly surprising and delighting their customers," he says. This big, bold push into music, he expects, will do both.
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