Starbucks has set up 45 stores with a Hear Music service but only a few stores in places like Santa Monica and Miami are dedicated to the model. BW isn’t clear on whether the dedicated stores are not making money but they say:

[The poor perfomance in Austin] could be sign that Starbucks is misreading its customers. The city is full of tech-savvy music downloaders who carry iPods, not portable CD players. Digital music these days means MP3 file mixing and sharing, and that’s not in the business model yet, says digital music analyst Josh Bernoff of Forrester Research Inc. “Starbucks is not going to be a significant contributor to the music economy.”

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