Carly Simon Sues Starbucks For Not Promoting Her Album Enough

from the hello-old-way-of-thinking... dept

Starbucks got plenty of attention a few years back for trying to start its own music label. We had hoped that maybe the company would try to do something unique and different with it, but, instead, it basically just tried to set up a conventional music label that was going to rely on selling CDs via Starbucks. Doing things the conventional way at a time when an industry is in upheaval makes little sense, and it didn't take long for Starbucks to dump the label. However, one of the last CDs it put out was by well known singer Carly Simon -- and Simon is now suing Starbucks for $5 to $10 million, using famed power lawyer David Boies.

While it does seem pretty clear that Starbucks didn't do all that much to promote the album after deciding to get out of the music label business, it's hard to feel particularly sympathetic to Simon. The same thing could have happened with any record label -- and given how many are struggling these days, it certainly could have happened. Furthermore, nothing in the article above suggests that Simon did anything to help promote the album herself or work on any aspect of the business model. It sounds like she just sat back and expected Starbucks to do everything and just start sending her checks. On top of that, the deal still included a huge advance (while she says not all of it was paid, the official advance was $575,000 -- hardly a small sum). And, again, her complaints of losing some money in the stock market, and owing money on one house in fancy Martha's Vineyard while being unable to sell her apartment in Greenwich Village (not exactly the low rent district) doesn't make her the most sympathetic of characters.

On top of all this she still sold 124,000 copies of the album.

Considering that only about 100 albums last year were able to sell more than 250,000 CDs, it seems like Simon should be thankful she was able to sell as many as she did -- especially given the fact that she seems to think Starbucks had the total responsibility for selling the album. This whole lawsuit seems to be a very old school recording industry artist mindset -- where the artist isn't expected to get involved at all, but just expects to sit back and get handed millions of dollars. Sorry, the market doesn't work that way any more, even if Starbucks is involved.

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T-Mobile Sues Starbucks For Over Eager Switch To Free WiFi

from the that-wasn't-what-we-bargained-for... dept

Back in February, Starbucks surprised an awful lot of people by signing up to use AT&T's WiFi offering, ending the exclusive deal it had for many, many years with T-Mobile (and Mobilestar before T-Mobile purchased that company). Part of the AT&T deal was that it would offer some amount of free WiFi -- something T-Mobile/Starbucks never did. There was some early confusion about the deal concerning whether T-Mobile would continue offering service and how the two services would overlap. It turns out that it wasn't just confusing to us reading about it -- it was confusing to T-Mobile as well.

T-Mobile has now sued Starbucks over the transition, saying that the company has gone well beyond what the two companies had agreed to. The original plan was that T-Mobile would gradually transition the network to AT&T, and the companies would work together to make sure things worked well for customers of each company. However, just recently, Starbucks pushed forward with the plan to offer some number of "free" WiFi hours to AT&T customers -- much to the annoyance of T-Mobile, who says most of the WiFi equipment in use is still T-Mobile's, and the company isn't getting paid at all for the free hours (an interesting question could be whether or not AT&T is getting paid for that usage).

Basically, the infrastructure transition has barely begun, and Starbucks is already acting as though it's complete, shifting over to the business model provided by AT&T, without having that work within the parameters of T-Mobile's model. While the legal result will almost certainly come down to contractual terms, the real issue may be that this suggests the promised "smooth transition" from T-Mobile to AT&T may not be very smooth at all. T-Mobile is going to have less and less incentive to make sure that the network really works all that well, especially if it feels that it's being cheated out of money for the use of its network.

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And On Second Thought, Maybe Starbucks Shouldn't Be In The Music Business

from the core-competencies dept

We've chronicled Starbucks' successes and failures as it tiptoed into the music industry over the past few years. The ubiquitous coffee shop was trying to position itself as a "lifestyle" brand. After successes in selling the albums it regularly played in stores, the company went so far as to set up its own record label. While we noted that this was an interesting play, it seemed like it would really only work if the the company didn't try to become a normal record label. Unfortunately, it seems like that's exactly what it did. It focused on selling albums, rather than the wider musical experience, and pretty much relied on the Starbucks connection to boost sales. That just wasn't going to cut it -- so it should come as little surprise that the suddenly struggling company is handing over the record label to someone else to deal with. Starbucks will continue to look for music to sell in its stores -- it just won't be producing albums anymore. This makes plenty of sense since Starbucks never really seemed to have much of a plan to do anything really innovative in the music business, and right now it probably has a lot more important things to concentrate on.

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Starbucks Adds AT&T WiFi; Now You've Got A Choice

from the would-you-like-the-tall-or-the-vente-wifi? dept

For many years, Starbucks has provided a huge footprint for fee-based WiFi from T-Mobile (originally Mobilestar). While many, many others had determined that it made more sense to offer free WiFi in coffee shops and other places to attract users, Starbucks stuck by the relatively expensive T-Mobile WiFi offering. The deal was apparently somewhat (though not fantastically) profitable for both companies, which is why they never seemed to budge from it, even as the idea of fee-based WiFi lost a lot of its luster. However, it looks like things are finally shaking up a bit. Starbucks has now announced that it's also adding AT&T's hotspot offering to its stores, which is a pretty big deal, since AT&T offers access to its WiFi hotspots for free to most DSL customers. Prior to this, most of AT&T's hotspots were found in McDonalds -- so adding Starbucks is a big win.

It's interesting to note, however, that Starbucks hasn't dumped T-Mobile, it's just added AT&T. It's not clear if this means that Starbucks will be installing separate WiFi equipment for both services, but given the recent deal between Apple and Starbucks to let iPhone users access iTunes via WiFi for free, you had to figure that the company was going to be changing some of its WiFi backend equipment. Also given AT&T's iPhone connection, it shouldn't be a huge surprise that AT&T was a part of the new Starbucks offering. The other interesting bit is that for non-subscribers, the AT&T WiFi will be noticeably cheaper in one-off use than T-Mobile's -- meaning even if T-Mobile hasn't been "dumped" it may have just lost many one-time users. If anything, this may continue to push Starbucks to move closer and closer to finally giving up the paid solution and offering WiFi for free -- just as many Starbucks managers have been begging the company to do for years.

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Big Energy Company Makes Small Effort To Go Green

from the better-than-nothing? dept

As big energy companies jump into the green tech gold rush, some of them have faced criticism that their efforts amount to little more than a cosmetic makeover. Chevron's recent release of an online game in which players are asked to tackle the energy demands of a virtual city does little to soothe such critics. Chevron was beaten to the punch by Starbucks, of all companies, who launched a similarly themed online game back in April. Both companies state their aim to increase awareness of energy issues and encourage participation in the search for solutions. Judging by their investment of creativity into these games, however -- Starbucks' "Planet Green Game" is both more fun and more informative than "Energyville" -- the energy company has been soundly beaten on their own turf by the coffee company (even then, Starbucks' game won't be mistaken as much fun or brilliantly informative any time soon). Chevron appears to have realized that video games can be a useful tool to reach the upcoming generation of their customers and investors; it so happens that it is also this game-playing generation that will face the environmental, security, and economic problems related to energy demand. Unfortunately, Chevron's half-baked game is unlikely to generate any real dialogue, and, for critics, it certainly fails to demonstrate a serious commitment by the company to solving these problems.

Daniel DiPasquo is an expert at the Insight Community. To get insight and analysis from Daniel DiPasquo and other experts on challenges your company faces, click here.

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Apple Announces New iPods, Cue Fanboy Frenzy, Navel-Gazing

from the ihype dept

Apple refreshed its iPod line today, announcing the long-expected touchscreen iPod among other things. The event was pretty wide-ranging, with a lot to chew on. The biggest early news was the announcement that iPhone owners will be able to create ringtones from songs they've purchased from the iTunes Music Store... for an additional 99 cents on top of the cost of the downloaded track. Perhaps this is an attempt by Apple to throw a bone to disgruntled record companies, but it's likely to call attention to legions of mobile handsets other than the iPhone that will let user set MP3s and other types of audio files as ringtones for free. Apple also sliced the price of the 8GB iPhone by $200, to $399 -- indicating that demand has slowed as demand among diehard Mac fans and other early adopters has been filled. The price cut is probably also a reaction to the iPod Touch, which appears to be an iPhone without any phone, and a similar 8GB model of it has been priced at $299. This may prove to be an attractive alternative to the iPhone for many users, since it has a fairly similar feature set, outside cellular connectivity, including WiFi web browsing -- but comes at a lower upfront cost, plus without the need for a long-term contract with AT&T.

Perhaps the most curious announcement, though, was news of an Apple partnership with Starbucks. iPhone and iPod Touch users will eventually see an extra icon on their screen when they're within range of a WiFi-enabled Starbucks. The application it leads to will allow them to see what songs are playing in the store, and buy them from the iTMS, and they can also access the iTMS without having to pay usage fees for the hotspot. On the face of it, it's a pretty underwhelming offering, just like all of Starbucks' previous attempts at digital music downloads, and the fact that Steve Jobs claimed Apple had been working on it for two years is hardly reassuring. Despite Jobs' contention that the service is "very cool", it's hard to see it selling more iPods, or making much money on its own.

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Why Paul McCartney Would Have Been Better Off Giving Away His Latest Music For Free

from the promote-the-other-things dept

Earlier this year, we noted that Starbucks was going to start its own record label to sell CDs, with Paul McCartney as the first artist to release an album on it. This came after the relative success of promoting a few albums exclusively in Starbucks when they launched (on other labels). However, as Bob Lefsetz points out, McCartney's album looks like it's a money loser for Starbucks -- though McCartney likely made money from Starbucks who probably paid him a nice sum to put the album out on the new label. However, as Lefsetz points out, he could make a lot more in concert revenue much faster. Lefsetz goes on to point out what we've been pointing out for years: McCartney would have been better off giving away the music for free everywhere, and actually getting people to hear it. In fact, Lefsetz suggests that he might have put more effort into making better music if he knew that there was a much bigger likelihood that people would hear it and care about it. Where I disagree with Lefsetz is his belief that it makes sense to offer the music for free for now, while you still get a promotional bump just for announcing that you'll be giving away music for free, that it won't make sense in the future when lots of artists are doing it. Instead, it seems likely that more and more new models will arise, where the music acts as the promotion, and bands make their money elsewhere. The more popular and widespread the music is, the more opportunities there will be to make that money elsewhere. Once bands start seeing success using that model, more and more will pile on, and people will wonder why anyone pays just for the music if they're not given anything else of value with it.

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