Starbucks (NADSAQ: SBUX) will begin to offer new Yahoo! (NASDAQ: YHOO) online services as part of its free in-store WiFi plan. It already gives away some content on the network including WSJ.com, which is paid content for most people who do not go to the coffee shop.
The service, created in conjunction with the portal company, will have “a collection of hand-picked premium news, entertainment and lifestyle content along with local insights and events.” That content, in turn, will be part of the new “Starbucks Digital Network,” which will include “hand-picked premium content which spans six channels: News, Entertainment, Wellness, Business & Careers, My Neighborhood and Starbucks. Newly signed content providers include Bookish Reading Club, Foursquare, GOOD, LinkedIn, New Word City and The Weather Channel.” The service will also have some free music and online versions of The New York Times and USA today.
It is difficult to see what the utility of the service is beyond free content from paid services like WSJ.com. The balance of the content is free online anyway. Most web-surfers tend to go to their favorite sites and those that they have bookmarked. That makes a Starbucks pre-packaged service useless. It is hard to understand why Starbucks does not already understand this.
The part of the Starbucks online program that is very attractive is free WiFi. Cable and telecom companies have begun to build WiFi “hot spots” around major cities, but these are usually only available to people who subscribe to their other services like in-home broadband. That means that truly free WiFi is generally limited to food retailers like McDonald’s (NYSE: MCD) and Starbucks.
Starbucks was able to turn itself around as the recession deepened. It curtailed its expansion and cut stores and 12,000 workers. Those actions made the company more profitable. Starbucks has felt the need to build more and more products and services into its stores now that the economy has recovered. The coffee chain may believe that these will help offset its higher coffee prices. There is almost no way to prove that is true.
What is certain is that Starbucks stores have become crowded with new services and products that run the range from coffee cups to very expensive pre-packed sandwiches. As a result, its customers who just want an expensive cup of coffee are bombarded with more “stuff” than most of them want or need.
Douglas A. McIntyre
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