One More Cup of CD for the Road

Starbucks boldly markets its mild music blend

It's a cool night in mid May at the Supper Club in midtown, and the place is crawling with industry reps—of both the music and coffee varieties. "I'd like to give a shout-out to Starbucks and all the baristas and partners here!" Kristen Henderson, a guitarist for Antigone Rising, yells into her mic. About a dozen people in the audience reflexively holler and throw their hands up in the air. "You make a mean soy latte. Thanks for supporting our band!" Not exactly on par with Paul Stanley's homage to "Cold Gin," but the New York-area hottie female rock quintet is getting from Starbucks what Kiss never got from Bombay Sapphire. The week before, the coffee behemoth had begun selling Antigone's acoustic major-label debut, From the Ground Up, which it co-released on its own Hear Music label and sold exclusively out of its 4,400 U.S. stores. In its first week the record SoundScanned 10,656, more than well-known artists such as Mars Volta, Mario, and Queens of the Stone Age. Pretty impressive for a "baby band," but for Starbucks's next release, that figure would barely amount to a hill of Sumatran coffee beans.

On June 13, 10 years to the day Alanis Morissette's Jagged Little Pillcame out—the second biggest album ever by a female artist—the java corporation will begin peddling a new acoustic version of the 16-times platinum CD. Hear Music is banking on Jagged being its bestseller since Ray Charles's spectacularly successful Genius Loves Company. The coffee establishment even worked out an exclusive if controversial deal with Morissette's label, Maverick Records, to carry it for six weeks before it's available in other stores.

"Your Alanis plan is not very cool," the president of the Coalition of Independent Music Stores, Don VanCleave, wrote in a vitriolic open letter to Starbucks. "Securing yourself a six week window of exclusivity on the Alanis before everyone else gets it is only gonna make you a moving target." Music retailers across the country, facing a declining market, are furious with Maverick and are threatening to pull its titles and/or remove them from advertisements. With sales down 7 percent in the first quarter from last year, according to Nielsen SoundScan, it's no wonder record shops sound a little desperate.

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The anti-Starbucks: Dancing to the beat of the Mudtruck at the Howl Festival in 2004
photo: photo: Nora Szilagyi
"It's really hard to run a successful business selling records these days," says Josh Madell, co-owner of Manhattan's Other Music, a store that 10 years ago had the cojones to open up across the street from Tower Records, which was still the city's dominant music retailer (before it filed for Chapter 11). "There's definitely a lot of financial problems in the music industry right now, but the bottom line is that the markup on music for retail is much smaller than any other type of retail. The markup for clothing is 100 to 200 percent or more. For CDs you're lucky if you can get a 30 percent markup." Most successful music retailers, Madell explains, make their money on selling peripherals. Best Buy, for instance, sells new releases as loss leaders to get people to buy electronics.

Not so for the coffee leviathan, which now shifts units (3 million Ray Charles fans can't be wrong), tops music charts (Brother Ray hit No. 1, Tina Turner No. 2), wins anachronistic Grammys (eight for Genius Loves Company), and has its own label plus 33 million weekly customers with disposable income to burn. The chain store is filling iPods and CD carousels of the time- challenged and overcaffeinated at full retail price, which is why the majors are lining up to get their CDs in the cardboard containers next to the cash registers.

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Alanis Morissette
photo: Chapman Baehler

Starbucks's entertainment division significantly ratcheted up its game in the third quarter of 2004. That's when Hear Music released Genius, launched an XM satellite radio station (to complement corporate partnerships with United Airlines, T-Mobile, Hewlett-Packard, and The New York Times), and began rolling out its digital-downloading Hear Music media bars. Since then, the corporation has opened its first Hear Music coffeehouse—essentially a full-fledged music retail store with a Starbucks—and announced a deal to produce Herbie Hancock following in Ray Charles's footsteps, complete with an obligatory roll call of milquetoast collaborators: John Mayer, Sting, and Carlos Santana. In spring, the store began carrying some of the major labels' biggest sellers, including Beck and the Dave Matthews Band. In July comes a live album from Carole King. And then, according to industry scuttlebutt, the caffeine monger plans a live album by venti-rock icon Bob Dylan, culled from his 1962 performances at the Gaslight Café.


"Basically it sounds like they're doing to the small record stores what they once did to the small cafés," says Anette Baldauf, professor of sociology specializing in globalization and culture who teaches at the New School for Social Research. "They have very aggressive business strategies. . . . They've made it really difficult here in New York for the small coffee shops to survive. Naomi Klein calls it 'cluster politics'—they take over entire neighborhoods, like what they did at Cooper Union, where they have three or four locations so any alternative or small coffee shop wouldn't have a chance to make it." Witness Starbucks's 341-store carpet-bombing of our fair metropolis, from Bay Ridge to Riverdale.

"For us," says Ken Lombard, president of Starbucks Entertainment, "it's always been about great music." He sounds like a press release when he speaks, especially when asked about selling more underground music: "We are expanding the genres and recognizing that our customers, who have given us permission to go beyond coffee, love music in a wide variety of genres. We don't exclude Top 40, but it's our objective to go beyond that." Translation: Don't expect to hear Mastodon, John Zorn, or Luther Campbell anytime soon. The coffee shop still won't play or sell music that might cause you to jostle your java or to look up from your laptop. For chrissakes, even Bruce Springsteen's new Devils & Dust was reportedly deemed too risqué due to an anal-sex allusion—apparently the mermaid doesn't like her customers to use the back door. (Starbucks claims it didn't stock the album due to shelf space.)

The brewmasters' straight-up-the-middle music taste is coupled with sheer marketing muscle. Madeleine Peyroux, a relatively obscure torch singer on the independent Rounder Records, put out her first album in 1996. Her latest, Careless Love, was released last September, but in mid March Starbucks started prominently displaying it. Suddenly sales more than tripled in one week, from 4,849 albums to 16,636, pushing the album to No. 81 on the Billboard Top 200. "People are so busy these days," says an elated Sheri Sands, vice president of sales and marketing at Rounder Records. "To have music in a store you visit every day is just that much more convenient."

Starbucks's Hear Music label's first release was a 1995 jazz compilation with Blue Note Records. The company subsequently expanded its music roasts to include everything from opera to Afro-pop, classical to children's music, and of course rock, blues, and soul—but still nothing too abrasive or hard. Its Artist's Choice CDs, which feature legendary artists like the Rolling Stones, Elvis Costello, and Johnny Cash, most often feel like an exercise in licensing clearances for the canonical. More useful are the Hear Music Playlist compilations, featuring slightly off-the-beaten-path performers like Magnetic Fields, Calexico, and Sondre Lerche—choices suggesting corporate headquarters may be more musically savvy than your average label exec.

"I think the biggest challenge for labels is breaking bands," says Antigone's Kristen Henderson, whose band will release its major-label studio debut in August. "The situation with Starbucks is perfect for us because it's going to get us into 4,400 stores, front and center, and expose our band, our music, our name to a whole group of people who have never known us." The acoustic Starbucks release doesn't do the band's accomplished hard-rock chops—which at times recall the Allman Brothers or the Black Crowes—justice. Still, the twentysomething guitarist feels no shame in having her band associated with the coffee store. "There's always negative spin, people get like, hate the Man, the corporation—but we're signed to a major label. We were an indie touring band, but we consider our band a small business. We want to grow our business. . . . It doesn't really freak us out."

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Madeleine Peyroux
photo: Andrew MacNaughtan
Nor does it freak out the most loyal Starbucks customers, who visit 216 times a year. How many other yuppie-oriented businesses can make a similar claim? "We're a nation of people that likes to get takeout in the best form," says legendary music producer Phil Ramone, who co-produced and won two Grammys for Genius Loves Company. "I don't think 20 years ago people would have said, 'I'm going to buy my music in that store.' But the store is inviting. . . . There's no indignity. It's a cool place to go. Almost everybody I'm in touch with goes to Starbucks." Except perhaps those who want to know more about whatever music they're purchasing for $15.99.

On several occasions I ask baristas what the CD sitting two feet from their noses sounds like. Each time the question is met with blank stares and a colleague consultation, inevitably resulting in a mutually agreed-upon two-word genre description like "sorta jazz" (Michael Bublé), "kinda r&b" (John Legend), "rock 'n' roll" (Beck), "like folk" (Antigone Rising). "We will continue to work very hard with our baristas to be able to help them build awareness around which titles are part of the offerings," says Ken Lombard. "That's a big part of our music strategy right now, but with over 9,200 stores worldwide, you can imagine it takes a lot of work." Don't expect "partners," who are basically higher-paid fast-food employees, to ever appropriately describe what Sondre Lerche sounds like.

In late April barista Daniel Gross, an employee at the 36th and Madison store, organized a benefit to support the first Starbucks workers union. Last January, following allegations of Starbucks's aggressive union-busting tactics, the National Labor Relations Board filed a complaint against the company. The benefit's headliner was David Rovics, a folk singer described by no less an authority than WBAI's Amy Goodman as a musical version of her progressive politics show, Democracy Now! Rovics receives the evening's loudest applause for a song entitled "Minimum Wage Strike": "There was no one flipping burgers/All the grills were cold/Onion rings were in their bags/Fries were growing mold/There were no baristas at Starbucks/Asking, 'How many shots would you like?'/When all the minimum-wage workers went on strike." After the show I ask Rovics, a thirtysomething Woody Guthrie acolyte with nine independent releases, if he wouldn't mind selling his music out of the megalith coffee retailer. "I really don't think Starbucks would be interested in selling my records," he answers. "I'm not going to refuse to sell my records to any store. If Starbucks wanted to promote pro-union, anti-war music that is directly in contradiction with the basic principles of the people who run the company . . . it just seems extremely unlikely."

Most New Yorkers I speak with assuage their blue-state guilt for imbibing the corporation's delicious black crack, secure in the knowledge that workers there make two to three dollars above minimum wage and may be eligible for health insurance benefits, stock options, and 401(k) plans. Many customers are also convinced the store concentrates on fair-trade coffee. But how sure should they be?

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Antigone Rising
photo: James Minchin

"Starbucks is the perfect example of a contemporary corporation," Professor Baldauf explains. "They are very aware of educated consumers and their concerns. They use a certain language and are incredibly successful in presenting themselves as being consumer and worker friendly; at the very same time, they are the fastest growing corporation." Union organizer Daniel Gross claims all baristas are part-time and none make a living wage. And fair-trade coffee, it turns out, makes up less than 5 percent of the stores' sales (which totaled $5.3 billion in 2004, according to their financial statements, up 30 percent over 2003). Every day, three new Starbucks open up somewhere in the world. So where does that leave us? What coffee store big or small can ever compete?

It's 9:30 a.m. on a recent Wednesday at Astor Place. As usual, eight or so bleary-eyed commuters stand aside the bright orange Mudtruck awaiting their daily caffeine fix. Abstract hip-hop beats blare from the speakers hung off the side of the converted Con Ed truck. "We play everything—RJD2, Prince, the Small Faces, anything," explains Shoshana Ami, the energetic and gregarious worker inside the motor vehicle. "Also Rare Earth, Aphex Twin, Prefuse 73, and sometimes death metal," her co-worker Kyle Lawrence calls out. It would have been only too easy for any of the cued-up workaday weary to hit one of four Starbucks that lie within a two-block radius of here. "Sometimes," Ami says. "I even make mix tapes for the customers."

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