• by Nina Lentini  @Nina_Lentini, March 14, 2007

While it serves up free coffee for two hours tomorrow, Starbucks is taking its brand further into the entertainment field with the creation of a new music record label, Hear Music, in a deal with Concord Music Group and based on its Hear Music brand. Unconfirmed reports had Paul McCartney on the verge of signing on with Hear Music.

The news is seen as a strong possibility, given McCartney's fit with Starbucks demographic. The former Beatle is also a free agent.

The coffee giant is going beyond branding music by artists such as Ray Charles and Sergio Mendes, each of whom won Grammy Awards in collaboration with Starbucks Entertainment and Concord. Now, it will create its own music, although the company says the deal isn't intended to monopolize the result. It will sell records through its own stores as well as through other retailers.

Starbucks' moves in recent years--to books, a movie, hybrid Hear Music coffeehouses and a branded page at Apple's iTunes store--have industry observers questioning its brand strategy. Indeed, its own chairman, Howard Schultz, has lamented the "watering down of the Starbucks experience, and what some might call the commoditization of our brand."

The company says the agreement gives Hear Music a "greater hand in developing music that fits within the profile of the 'Starbucks Experience'."

A statement by Ken Lombard, president of Starbucks Entertainment, that Hear Music "will seek out unique and compelling artists from a broad range of genres to help them reach the widest audience possible" sounded to some like an "American Idol" for musicians could be in the works. The company had no comment.

With more than 13,000 locations in 39 countries and more than 44 million customer visits per week, Starbucks offers a unique set of assets.

Oh, about that free cup of coffee? For the second year in a row, the company is offering complimentary, tall cups of brewed coffee in stores across the U.S. and Canada tomorrow from 10 a.m. to noon as part of its Starbucks Coffee Break.