Starbucks, Apple Strike Up The iTunes

Starbucks says its customers will now be able to wirelessly browse, preview and download music from the iTunes Wi-Fi Music Store at Starbucks, using iPods, iPhones or any computer with iTunes software.

The service is expected to launch at more than 600 Starbucks company-operated locations in New York and Seattle on Oct. 2, rolling out in San Francisco, Los Angeles, Chicago and additional markets later in 2008.

Among the features is a "now playing" service, which automatically displays the name of the song playing in the store. And while prices and selection on the Tunes Wi-Fi Music Store are the same as on the regular iTunes Store, there will no longer be a connection fee--standard practice at Starbucks.

"With this partnership, we're bringing Apple's leadership in digital music together with not only our retail footprint, but the unique Starbucks experience, to offer customers a world-class digital music experience," the retailer says in its announcement.

The move deepens Starbucks' commitment to music sales as a way to enhance the customer experience. Its Hear Music, a partnership with Concord Music Group, already includes compilations from Paul McCartney, Joni Mitchell, and James Taylor.



Separately, presenting at the Goldman Sachs Investor Conference, Starbucks executives say that rough economic times may even cause people to cut back on coffee, if only at the margins of its customer base. While it still expects comparable store sales to gain 4% in the U.S. this year, and 5% overall, "we do think some customers may reduce the frequency of their visits" due to growing economic constraints.

And music isn't its only growth path. Starbucks confirms that the company is continuing its smoothie experiment, which dovetails with core customer concerns about health and wellness as well as offering "an extension of handcrafted beverages, made in front of the consumer."

The company also says it will continue to expand its drive-through locations, possibly adding some highway sites, as well.

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