February 16, 2005
Genius Loves Company
By Rick VanderKnyff - MSN

Starbucks not only cleverly blends and sells coffee-house music, it's making it, too. Ray Charles' eight-Grammy winner is the company label's first-ever original album.

A shot of Ray with that cup of joe?

The success of Starbucks owes a lot to its skill in creating a certain cultural buzz that goes well beyond caffeine. On Sunday, that buzz reached all the way to the Grammy awards.

"Genius Loves Company," the Ray Charles album that took eight awards, was released by the coffee company's Hear Music label (acquired in 1999), in conjunction with Concord Records. Of more than 2.1 million copies sold domestically so far, 24% were sold at Starbucks locations.Start investing with $100. Explore our new ETF center.

Music has always been part of what the company calls the "Starbucks Experience," with a mix of classic pop and jazz as carefully blended as its coffees: Billie Holiday to Frank Sinatra, Otis Redding to Elvis Presley.

Hear Music, in charge of programming the music for Starbucks outlets, started releasing compilations a few years back, but "Genius Loves Company" is its first foray into original music, and its first partnership with Concord.

A different -- and upscale -- audience

The CD certainly got a triple shot of attention from its duets with such high-profile singers as Norah Jones and Elton John, from the release of the acclaimed biopic "Ray," and from Charles' death early last year.

Still, the Starbucks exposure was a major reason that Charles was able to score his first top-10 hit since 1964 -- and his first platinum release ever. What Starbucks brought to the table: a connection to hard-to-reach adult buyers and the cachet of the coffee chain's name.

The album's success "has a great deal to do with the awareness created by Starbucks," said Glenn Barros, president of Concord Records. "There are 33 million people who walk through their stores every week."

It was not just a case of slapping the Starbucks label on the CD, Barros said. While Concord took the lead production role, he explained, the two labels had been talking about joining on an original music project for years, and Hear Music was involved in the Charles project from its inception.

As soon as the record was released, Barros added, he started getting calls from people who saw it in the coffee stores. "That's when I realized the power of Starbucks," he said.

"Starbucks was able to get behind this record with a ton of marketing, both marketing dollars and cross-promotion," said Clark Benson, CEO and founder of a consulting group called the Almighty Institute of Music Retail. Benson suspects that many people who ended up buying the Charles record elsewhere, either at another store or online, initially heard it at Starbucks.

It helps to have a great album, Benson said, but creative retailing is what made it a big hit. "There aren't that many radio stations that say, 'Oh, we're going to play the new Ray Charles record,'" Benson said. At the same time, he added, "The average American consumer doesn't set his foot in as many music stores as he used to."

He guesses that without the cross-promotion with Starbucks (and the publicity boost from the movie), the album might have sold in the neighborhood of 200,000 to 300,000 copies.

More from the Starbucks label

Starbucks obviously sees the success with Charles as a model. This month, it announced another original music venture -- like the previous effort, one that pairs a music luminary who has lost some sales luster in collaborations with a wide-ranging roster of stars. This time it's Herbie Hancock, in a fall 2005 release slated to feature the jazz veteran performing with Sting, Carlos Santana, Annie Lennox, John Mayer and Damien Rice.

According to a release from the company, Hancock has high hopes for his collaboration with the coffee chain: "Because of their commitment to helping people discover great music, and the enormous awareness they create for the music they love, Starbucks emerged as the ideal collaborator."

So, will Hear Music become a powerhouse in the music biz? The label is likely to be methodical in choosing its projects and is not likely to put its name on any release that you wouldn't hear in a Starbucks store.

Still, the chain is experimenting at some locations in Seattle and Austin, Texas, with its Hear Music "media bars," which allow patrons to download songs and burn their own mixed CDs while sipping Frapuccinos. There's also a full-fledged Hear Music "music cafe" in Santa Monica, Calif., and another announced for Miami.

And, finally, there is a 24-hour Hear Music channel offered through XM Satellite Radio. So now, you can get your Starbucks coffee and music to go.

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