A Coffee Shop or a Record Store?

The Rolling Stones recently announced a deal to sell a new CD of rare songs in Starbucks locations. The CD, entitled Rarities 1971-2003 , will also be marketed in traditional record-selling venues such as record stores and discount retail chains.

Whoever thought of this is a marketing genius! I know that this is not the first time that Starbucks will be carrying a CD, but I think the Stones got the formula right. By working out an agreement with Starbucks to carry the CD - but not excluding their other distribution partners, they are basically extending the base of available consumers for their product. The article states that Starbucks had a similar non-exclusive deal on a Ray Charles CD and sold more than 730,000 copies of the total 3.1 million copies sold. While in Ray's case this doesn't matter as much, but the recording industry celebrates the sales of 500,000 copies of a CD as a moderate commercial success (gold album). That means that marketing music through Starbucks could make a huge impact on recording artists.

Why Starbucks? I'd love to see their demographics, but I bet they include a variety of age ranges - and we know that if someone can afford a $3.20 Grande Pumpkin Spice latte, they may be willing to throw in a copy of the latest copy of whatever CD is gracing the serving station and playing on the stereo system while they wait the insufferable long time it takes to make that Grande Pumpkin Spice latte as well. Music stores categorize their selections - Country, Rock, Hip Hop, Jazz, Folk - and if people are just browsing, the usually go to the section with the music they like to listen to and see what they find. Starbucks eliminates that categorization, which could eliminate some pre-conceived notions about a particular genre of music.

Do you think the "Starbucks Strategy" will help to extend the market for music CDs? What economic impact will that have on the music industry? Record stores? Starbucks?