Starbucks: Giving Away 50 Million Apple iTunes Download

Retail

Published: September 24, 2007 4:53 am

It is not a good sign. Starbucks (SBUX) will give away 50 million downloads as part of its new service with Apple (AAPL). The venture allows iTunes customers to go online for free at Starbucks locations and connect to the download service.

According to Reuters from October 2 to November 7 at more than 10,000 U.S. Starbucks locations, customers can receive "Song of the Day" cards redeemable on Apple’s iTunes store for a complimentary song hand-selected by Starbucks Entertainment.

At the standard iTunes rate of $.99 a song, the deal could cost Starbucks $50 million. And, it is giving away a WiFi connection that it usually charges for through T-Mobile.

Why would Starbucks do this? It may be that foot traffic to its stores is slowing. Same store sales at the coffee chain have been modest this year. SBUX management could be seeing more of the same for the fourth quarter and are willing to invest in the iTunes promotion to help move the numbers up.

Giving away songs. Not a sign of strength.

Douglas A. McIntyre

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