New Record Label: Starbucks

Does Apple’s iTunes hold the key to the future of music distribution? Or does Starbucks with its Hear Music burning stations? Jason Tan gave us three considerations:

1. Music from all over the world has become very accessible (via legal means or otherwise) and professional-sounding music has become easier to produce on your own…thanks to Apple actually (ProTools, GarageBand). This means that there is too much music out there. What the world will need are record labels that represent specific sound sensibilities to sort out the music clutter. As sad as it may be to some, Starbucks has come to represent a certain sound while Apple has yet to. There are already some great record labels like the alterna-country flavored Lost Highway who are organizing their artist lineup based on sound sensibility. Now all they have to do is setup their own CD burning/song ripping stations like Starbucks does. In this way, record labels will kinda be like fashion labels with their own retail boutiques and philosophies.

2. Record labels hate the blanket 99 cent per song pricing model of iTunes. They believe that they are getting short-changed so that Steve Jobs can sell more iPods. Starbucks, which now exclusively sells rare Bob Dylan songs and songs from its own signed artists, does not have to deal with this. Starbucks not only has more control over pricing, but with distribution as well. Pretty soon, smart record labels (i.e. the small ones) will realize this. Musicians will start seeing this too and will also build record labels based on the Starbucks model. Music will be price-segmented into premium designer music and deeply-discounted commodity pop music (Wal-Mart music store?).

3. Unlike the iTunes Music Store, Starbucks offers digital music that people are willing to pay for without sacrificing the face-to-face social factor. People have been getting together based on music taste for decades. This will just make it all the more easier. See you when Lost Highway Records decides to open its first country barbeque music house that serves Ryan Adams songs free with Lucinda Williams fries.

Contributed By Jason Tan