Industry News | December 19, 2005

Starbucks to Open Next Evolution of Hear Music(TM) Coffeehouses

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Starbucks Hear Music announced today that the next evolution of the Hear Music(TM) Coffeehouse will open on Monday, December 19, 2005, on the Riverwalk in San Antonio. An additional location will open in South Beach in early 2006.

The San Antonio and Miami Hear Music Coffeehouses will carry an extensive physical inventory of CDs and will include a music selection that has been hand-picked by the Starbucks Hear Music content team to appeal to local and regional tastes in each market.

The new coffeehouses will also feature the next generation of the Hear Music media bars, a service that provides customers with an easy, fun, self-service way to discover and customize music on CDs. The new Hear Music(TM) media bars offer more than one million songs digitally—nearly a five-fold increase over the selection offered on the previous version. Customers can use these enhanced media bars, 35 in the San Antonio Coffeehouse and 33 in the Miami Coffeehouse, as both listening stations to sample music and as burning stations to create custom CDs or burn an album in minutes. The media bars will also allow customers to listen to any physical CD in the store by simply scanning the bar code. The price to burn a custom CD at the Miami and San Antonio locations will be the same as it is in the Santa Monica location: $8.99 for the first 7 songs, and $.99 for each additional song.

The new Hear Music(TM) media bars boast technology with increased capacity and an unparalleled overall user experience. Externally, the tablet and stylus interface were replaced with a touch screen format, and internally, changes were made to the navigation system. New functionality has been added, as well as a feature that allows users to store a song list on a Starbucks card that can be burned during another coffeehouse visit. The media bars' quicker response time enables speedier interaction and a world-class user experience.

The new Hear Music(TM) Coffeehouses also feature innovative in-store merchandising and were created with a quality, personalized music experience in mind. The layouts of the new coffeehouses allow for more CD facings—covers on display—and emphasize Starbucks Hear Music's role as a curator to help customers discover quality music they might not otherwise be exposed to. Combined, the physical and digital music offerings at the Hear Music(TM) Coffeehouses provide an unprecedented breadth and depth in selection of music.

These additions to the Starbucks retail portfolio further extend the concept of the initial Hear Music Coffeehouse, which opened in Santa Monica, California, in March 2004. The new stores represent the full integration of a classic coffeehouse experience with an extensive digital and physical music inventory.

"Starbucks has changed the rules of engagement for the music industry," said Howard Schultz, Starbucks chairman in a recent release. "By fully integrating the Starbucks Experience with the discovery of music, the new Hear Music Coffeehouses offer a music retail environment unlike any other and represent a significant milestone for the Company." "The new Hear Music Coffeehouses truly transform the way consumers discover and acquire music, both physically, through our CD inventory, and digitally, through our media bars," added Ken Lombard, president of Starbucks Entertainment. "We're building upon the success of the Santa Monica Coffeehouse, by incorporating customer feedback to extend the experience even further by adding enhanced ambiance, more space and new technology."

Starbucks Hear Music has been recognized as a significant force in the music industry over the past year. Highlights include co-releasing the triple platinum, GRAMMY(R) Award-winning Ray Charles Genius Loves Company album in collaboration with Concord Records; achieving the Company's first simultaneous global CD release, Herbie Hancock Possibilities, which has been nominated for two 2005 GRAMMY Awards, marking the second year in a row in which an album Starbucks Hear Music co-released has received multiple GRAMMY(R) nominations; and successfully securing high-profile exclusives from established artists such as Bob Dylan. Starbucks Hear Music also launched its inaugural Hear Music Debut CD series featuring Antigone Rising, with resulting sales that clearly validate the Company's ability to successfully discover and introduce emerging artists. These successes, supported by Starbucks Hear Music's marketing alliances with XM Satellite Radio (Hear Music Channel 75), T-Mobile and United Airlines have all contributed to enhancing the Starbucks Experience for the Company's valued customers.

"A coffeehouse ambiance plus established and emerging music technologies equal an innovative way for the music industry to connect with consumers," said Susan Kevorkian, Program Manager, IDC Consumer Markets: Audio. "It gives music lovers—who may not otherwise be reached through traditional channels–the opportunity to discover and buy new music over a cup of coffee."

Starbucks assessed many different variables when selecting the next markets for Hear Music(TM) Coffeehouses, including location, foot traffic, the music culture of the city, population of tourists and residents, and visibility for these unique stores. Based on these criteria, the Company found San Antonio's Riverwalk, and Miami's Lincoln Road to be ideal locations. Both the San Antonio and Miami locations have been tailor-made for each market, not only through the architectural design, but also with music selected with regional preferences in mind.

Starbucks sought out prominent architects Charles Gwathmey and Kang H. Chang of Gwathmey Siegel & Associates. Their imaginative approach takes the original concept of the Santa Monica Hear Music Coffeehouse to a new level.