Commentary

Starbucks Digital Network: Why?

Statbucks- 

Coming to you from my local Starbucks after browsing the Starbucks Digital Network (SDN), which launched Wednesday with much fanfare and loads of media coverage. The offering is much what you'd expect from Starbucks, a "premium blend" of content from partners including The New York Times, The Wall Street Journal and Apple (iTunes) presented in a slick package spanning areas like news, entertainment, business, health and local.

A feature in the entertainment section called New Word City launches with an excerpt from marketing guru Seth Godin's new book "Graceful," which may describe how Starbucks would like users to think of its complimentary, curated media selection. But my initial reaction to the Starbucks digital hub is "why?"

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Isn't free WiFi enough of an incentive to bring in customers who might otherwise not come to Starbucks? The swelling laptop and netbook population in stores since the company switched to free Web acccess in July attests to that.

Starbucks said it had 30 million users logging in from stores with free WiFi last month -- a not-insignificant captive audience. But with SDN largely ad-free, Starbucks look to e-commerce to make money, taking a cut of content sold via the network, like iTunes downloads or newspaper subscriptions.

But it's hard to imagine that will add much to Starbuck's topline, especially if it's counting on digital newspaper sign-ups to drive revenue. And depending on how device-crowded a store is, or how many people are sucking up bandwidth with apps like video chatting, Starbucks won't be the the ideal place for downloading content.

Why should I open that New York Times Reader 2.0 if I can just jump on NYTimes.com? It's not as if Starbucks is limiting WiFi users to material within SDN only. That's not say the network isn't a nice option, especially for things like free promotional iTunes downloads or free access to the Journal. But whether it will drive more people into Starbucks, beyond the lure of free WiFi, or add meaningful revenue, seems unlikely.

1 comment about "Starbucks Digital Network: Why?".
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  1. Joe Bencharsky from iNet Entertainment, October 21, 2010 at 3:34 p.m.

    I have not had the conversation yet with Starbucks, but hope to soon, about the strategy. There are partnering and monetizing opportunities in creating a coffee-culture portal sans advertisements. There are several models I can see working for them.
    The question is, are they trying to be a mini AOL/Yahoo or are their goals more progressive?

    I can see a massive potential but it depends on their underlying strategy and motivations.

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