SEATTLE – Starbucks Corp. expanded its push into the entertainment business Monday, launching a record label with the same brand – Hear Music – stamped on the compilation CDs it sells in coffeehouses.
The Seattle-based coffee giant said it was partnering with Concord Music Group to launch the record label. The two companies have an existing deal to release albums under the Hear Music brand.
Starbucks said the new Los Angeles-based label will work with established artists while seeking to develop new artists. The company refused comment on whether any artists already were signed to the label or planned to release records under the new banner.
“This announcement is a natural next step in our entertainment strategy,” Starbucks Entertainment President Ken Lombard said in a statement.
Starbucks has been extending its brand beyond the world of coffee in recent years to embrace music, books and even a movie, “Akeelah and the Bee.” The company also has opened four hybrid Hear Music Coffeehouses, where customers can purchase music from thousands of titles and burn them to CDs.
But the company’s overall strategy has been hotly debated in recent weeks, following a leaked memo from Chairman Howard Schultz that lamented a loss of authenticity as the world’s largest specialty coffee retailer expanded to some 13,000 stores worldwide.
In the e-mail to top Starbucks executives, Schultz said various changes over the years have led to “the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.”
Some may now question whether launching a record label is the right move for Starbucks, said Dan Geiman, an analyst with McAdams Wright Ragen.
But music always has been close to what Starbucks sees as the identity of its brand, while remaining a relatively small business, generally about 1 percent of all sales, he said.
“I think it’s going to be kind of viewed as something that’s going to detract from the experience and gets away from their core. But I don’t necessarily think that’s the case,” Geiman said.
The companies said the label will “advocate creative control for artists and encourages musicians to stretch and take risks.”
Lombard will lead management of the new label, working with Concord Music Group president Glen Barros and reporting to a management committee.
Starbucks and Concord’s past ventures include the Ray Charles compilation “Genius Loves Company,” which featured the music legend singing classics with a variety of musical guests. The album has sold more than 5 million copies and won multiple Grammys.
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