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Starbucks Digital Network: what are the reasons Starbucks is moving into the content business?
Starbucks offers free wifi and will now provide premium content for free to patrons via their Digital Network. Content partners include the Wall Street Journal, New York Times, Apple, and Nickelodeon. What the business drivers behind this decision? Will it work?
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3 Answers
In my opinion, Starbucks has made an excellent move to subsidize wi fi offered free to customers. Traditional media uses the model of advertiser support for presentation of content. WSJ is behind a pay wall and as such becomes a value add if it comes free with the premium coffee price. Nickelodeon attracts customers with what a friend of mine calls "Starbucks children." Content helps to sell almost all products and creates a brand safe environment for advertisers. Starbucks attracts high income customers and WSJ appeals to the same. You could develop a long list of business drivers behind the decision. Welcome to the future where content can be found everywhere because of the devices consumers have in their hands and on the table next to their Starbucks latte and scone.
Starbucks is moving into the content business because everyone is moving into the content business. That doesn't make them a follower. They're continuing to lead the way and showing how big brands all have to be media companies as well to continue to engage their customer's and earn their attention. It could also be because they're rethinking the whole "selling coffee" thing.
Scott,
I wouldn't necessarily consider this a move by Starbucks into the content business. Starbucks has a very valuable brand and perhaps a more valuable following of loyal customers - something which they lost sight of over the past couple of years. Given current economic conditions I would suggest that this is precisely the time to invest in strengthening their customer community. This looks like an interesting and viable way to add to the comfort of customers and further differentiate the Starbucks experience from that of its competitors. Likely some decent revenue upside for Starbucks both in terms of increased spend per customer and fees from content providers for access to the customer base.
Cheers,
William
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