In 1999, Starbucks bought Hear Music label with two objectives:
- "Enhance the customer experience through expanded in-store programming, new music offerings and live performances" (Annual report 1999)
- "Help our customers explore music they might not find elsewhere" (id)
Starbucks had chosen to re-launch the legendary jazz label Blue Note - and allow its customers to discover niche music. This is how they actually launched Madeleine Peyroux and in 2004 released the album "Genious Loves Company" by Ray Charles. From 1999 Don MacKinnon, who had created the Hear Music label, spoke of "niche music that people do not get through regular commercial channels ... these little surprises can be one of the most rewarding things for customers."
In April 2008, Howard Schultz, seeing that diversifying into music did not have the expected results and was the focus of criticism from the press, dismissed Ken Lombard, president of the "entertainment unit", who he had himself recruited in 2004.
What has happened since then?
Of course Starbucks produced and distributed the new Paul McCartney album "Memory Almost Full" in 2007, which was a huge success. But Don MacKinnon left the company in early 2006 and the Starbuck musical offers have grown from 5 to 20 CDs per year to 6 to 8 new albums per month. Jazz, blues, niche music is past history. The Starbucks music offer has turned mainstream: there are CDs of Alicia Keys, James Blunt, Il Divo ... one is far from the "surprises" proclaimed in 1999!
The error of Starbucks is obvious: the brand has lost sight of one of the key factors of success for premium brands, the organization of rarity. All luxury brands have faced the same question: how far can the brand be exploited? The answer was always the same: there is a "yellow line" not to be crossed at the risk of succumbing, like Gucci in the 60s. The sirens of classic business development – big is beautiful - should be combated. There is a limit to the number of shops, there is a limit to product diversification.
The consistency of the brand and its development has a price: stay focused on the organization of rarity.