Anyone Can Sell a Product

Yesterday’s New York Times article, “Does This Latte Have a Funny Mainstream Taste to You?”, on Starbucks’ approach to selling music, was an interesting look at contemporary music business models, if a little misguided in its angle. The article, by Jeff Leeds, seems to claim that Starbucks has lost sight of its initial, more curatorial sensibility—daring to sell Alicia Keys and Paul McCartney instead of (then-unkown) Madeline Peyroux. As We Eat What We Like notes, who ever thought of Starbucks’ selection as “not mainstream”? Even when unfamiliar acts got prime counter space—anyone remember Antigone Rising?—I never really thought of Starbucks as going to bat for the little guy. Whatever its reputation is for being selective, I’ve never equated Starbucks with Oprah (or Pitchfork) in terms of rubber stamping quality approval.

So let’s put that argument aside, shall we? Because more interesting than what was being said in the NYT article was who was saying it.

For music fans, Starbucks initially conveyed “a promise that ‘we’re going to be bringing you something special, unique,’”

—let me just pause this quote for a second. Note Leeds’ attributing the feeling about Starbucks to “music fans”—

said David Sonenberg, a talent manager who has guided the careers of acts including the Fugees and John Legend, who had a CD carried by Starbucks.

“I don’t have the sense that there is any longer a culture and purpose to their musical endeavors,” said Mr. Sonenberg, who has had a dispute with the company over its handling of a new band, Low Stars. “It’s lost its sense of purpose.”

A second, anonymous “senior executive at one of the industry’s biggest labels” is also quoted, saying “They’ve lost that ‘event’ thing…. It would be like Oprah’s Book Club having 15 books a week.” Clearly this is not the case, as both Paul McCartney and Joni Mitchell released albums to great fanfare via Starbucks and Hear Music, each less than a year ago. In fact McCartney’s album release was nothing but an event.

It’s frankly curious, if not downright hilarious, to hear industry execs lament that a coffeehouse chain has lost its “sense of purpose” when it comes to selling music. The complaint, among other things, is that Starbucks now sells too many CDs at once—“as many as 20 CDs at a time.” Oh my! How will I navigate these crowded shelves? How will I trust the barrista to steer me to the right album—Radiohead or Sia?—tailored impeccably to my individual sensibilities?

What we’re experiencing here is sour grapes. McCartney, Mitchell, and even Kenny G are all on Hear Music, Starbucks’ label. In other words, for all the success the coffeehouse is having selling compact discs—tangible music product—very little of that money is going into “the music industry”; at least not to record labels or the media conglomerates that own them. The people in this article are watching a lot of money change hands—money they used to lay claim to.

This is the same industry that has become enslaved to big-box grocery stores selling their product as loss leaders in order to sell frozen peas and shower curtains, all while music retailers—Tower, Musicland, Virgin, never mind mom & pops—have shuttered their doors. According to a Rolling Stone article published last year, nearly 3,000 record stores have closed in the U.S. since 2003.

I’ve talked about this before (part I, part II). The major labels got in bed with Wal-Mart, one of the most ruthless business models to have ever existed, and Wal-Mart subsequently beguiled the music industry into an untenable situation. Major labels are beholden to big-box retailers’ massive purchasing power, to the point that when they don’t want the labels to offer competitors incentives, the labels buckle. (For instance, see this post I did last year, which recounted the way big-box retailers pressured labels to scuttle plans for a resolution with Napster.)

Right after linking to the Starbucks story yesterday, Idolator followed it up with a seemingly unrelated story about Wal-Mart (and Target, another big-box grocery store) exerting its influence against Pepsi, who was advertising Amazon’s new mp3 service on their packaging.

In an apparent response to retailers’ concerns, Amazon’s name has been banished from the front of Pepsi bottles carrying the promotion—rendering it invisible in supermarket aisles to passing shoppers.

This is the power we’re dealing with here. Wal-Mart (and Target and Costco et al.) simply has, in sum, too much real estate dedicated to selling Product X—Pepsi, Alicia Keys, whatever—for the makers of that product to say no to them. When it comes to the music industry, that means not giving other retailers properly competitive discounts or other incentives. And so Tower, Virgin, and all the other thousands of record stores, go kaput.

This brings us back to Starbucks, and all those sour grapes in the NYT article. There was a time when CDs were sold in CD stores. Given that, it made sense for artists to sign deals with CD manufacturers and distributors—record labels—in order to get their product into the proper store. Makes sense. I certainly wouldn’t sign a deal with an airline or a farmer to sell my music! But the record labels asphyxiated the record stores, choosing to land their products in grocery outlets instead. So there’s a new dynamic. Musicians, being the simpletons they are, have connected the dots—all two of them. “If my music is sold in a grocery store, I should make a deal with a grocer. If my music is sold in coffeehouse, I should make a deal with the coffeehouse. If my music is being downloaded outside of any bricks-and-mortar establishment, accessed directly by my fans, I should make a deal with my fans.” Thus Paul McCartney signs to Starbucks, the Eagles make an exclusive deal with Wal-Mart, and Trent Reznor makes a million bucks in a week by going straight to his fans.

It is that fucking simple. Music industry stops supporting music retailers; music industry destroys its own niche; music industry renders itself obsolete. If music is nothing more than a product, well fuck dude, anyone can sell a product. It’s business 101—it doesn’t matter what the product is, call it a widget. Now what was that about losing one’s sense of purpose?

Comments

[lukas]

Why is this even an issue? What company would want to give shelf space to an artist whose music wouldn't please their customers? Just like their coffee, mints and brownies, Starbucks' music selection is picked to specifically fall into their brand. The only reason they don't blast Hannah Montanna is because little kids think coffee is "icky."

[scott pgwp]

lukas, I agree with you - I don't think there's anything wrong with Starbucks appealing to their customer demographic. I take more pleasure in noting how this story really illustrates the line drawn in the sand between old-era record labels and new-school models.

I suppose I could have done similar longwinded posts on the Raconteurs today, NIN last week, Madonna last month, or Gnarles Barkley tomorrow. The story ends the same either way - record labels made themselves obsolete.

Meanwhile - I hear Big & Rich just signed to Appleby's!

[michelle]

brilliantly put!