With Apple Promo, Starbucks Names the Tune

Starbucks will give away some 50 million downloads to promote its tie-up with Apple to provide access to WiFi hotspots at 10,000 locations nationwide from which iPhone, iPod touch users will be able to connect to Apple's new wireless iTunes music service.

"Getting free access to the iTunes WiFi Music Store and the 'Now Playing' service at Starbucks is a great way for customers to discover new music," said Steve Jobs, Apple's CEO. "Imagine walking into a participating Starbucks, hearing a great song, and being able to instantly download it onto your iPod or iPhone. We think this is very cool."

Grande Perk

During the promotion, which will last until Nov. 7, the coffeemaker will distribute Song of the Day cards that consumers can redeem through the end of the year via the iTunes Music Store for one song from a list of 37 featured artists. The first song will be Bob Dylan's "Joker Man." Other participating artists include Bebel Gilberto and Keith Urban

The music giveaway coincides with the debut of the iTunes WiFi Music Store, which will be available at more than 600 Starbucks locations in New York and Seattle. The nationwide rollout of the service will continue Nov. 7 when 350 Starbucks coffee houses in the San Francisco Bay area will be hooked up to the service.

Apple and Starbucks will continue expanding the service's availability in 2008 with 500 stores in Los Angeles linked in by early February and 300 locations in Chicago joining the network in March. Other markets throughout the country will be gradually connected to the service throughout the year.

When customers with an iPhone, iPod touch or laptop running iTunes are within range of a participating location, their device will automatically recognize the wireless iTunes store and the Starbucks icon will light up. They will be able to use the WiFi network to browse, search and freely preview songs available at the music download store, including "Now Playing" service that will display the name of the song currently playing at that Starbucks location.

"Introducing this new service is a natural extension of our music strategy, which only enhances the retail coffee experience for customers by helping them discover and acquire new music instantly," said Howard Schultz, chairman, Starbucks Coffee Company.

The coffee pusher will also begin selling iTunes digital release cards that enable consumers to download an entire CD plus bonus material. First up will be KT Tunstall's "Drastic Fantastic" and the soundtrack from the upcoming Sean Penn film "Into the Wild." The digital albums will sell for US$14.99 and $11.99, respectively. In addition, the company will also offer a reloadable purchasing card. The limited-edition card also comes with two free iTunes downloads once users have registered their card.

Coffee House Divas

With the promotion, Starbucks and Apple are hoping that the concentrated attention will bring the coffee company's 24- to 40-year-old demographic into the fold and excited about using the new iTunes store.

"While the demographic is a perfect fit between iTunes and Starbucks, it's a demographic that needs to be courted actively since everyone else wants their attention as well," James McQuivey, a Forrester Research analyst, told MacNewsWorld. "So it's not surprising that Starbucks would choose to go after them at first."

The WiFi store is one of those things that a consumer, even one with an iPod touch or iPhone, might not think to try, especially if they have to pay for it, Josh Martin, a Yankee Group analyst, told MacNewsWorld.

"If it's offered for free, they may try it, and if they like it they may use it in the future when it comes time to pay for it," he said.

Although the service will initially be available in a very limited area, Martin pointed out that it the goal is to "get people to use the service first."

"No one is going to run out and buy an iPod because they are giving away free music all of a sudden, but they might try a feature they wouldn't have tried otherwise," he continued. "Or maybe they go to Stabucks an extra time because they can get free music and they go and buy an extra cup of coffee, or they go and buy a coffee when they weren't expecting to."

The real hope, however, is that once a few million people catch on, that word of mouth will do the rest of the work, McQuivey pointed out.

"From Starbucks' perspective, they could pay once up front and let the momentum kick in, or trickle the money out over a year and possibly never get the buzz they want."

Both Starbucks and iTunes will benefit from the promotion, according to Martin, who added that as the service is unveiled in additional cities, the two companies could repeat the promotion on a smaller scale for consumers within those markets.