Starbucks And Spotify Get Into The Jukebox Business Or Something Like It

SEATTLE -- Starbucks Coffee Co. said it has entered into a letter of intent with Spotify to establish a multiyear relationship that will link its 7,000 company-operated stores in the U.S. -- and 10 million My Starbucks Rewards loyalty members -- with Spotify's more than 60 million global users to offer a "music ecosystem."

This interconnectivity will allow a Starbucks rewards member access to the coffeehouse's music on Spotify, the ability to influence in-store playlists and opportunities for rewards members to earn "Stars as Currency."

However, make no mistake, the music is not free. Consumers wishing to hear a song at their local Starbucks will use points from the customer loyalty program in much the same way they would credit plays on a jukebox. The coffee giant's Spotify announcement, which included much techno jargon, could have a significant impact on location-based music payment and programming.

The initial rollout will allow Starbucks' 150,000 U.S. employees to have a hand in programming in-store playlists through the music streaming giant. These lists will also be accessible on Spotify through Starbucks' mobile app, enabling patrons to stream playlists anywhere on their phones.

"For over 40 years, music has played a vital role in Starbucks' 'Third Place' experience -- inspiring our partners and customers in unexpected ways that have helped to shape the global pop culture," said chairman and chief executive Howard Schultz. "Throughout its history, Starbucks has worked closely with the music industry, offering a variety of artists a platform for their work. By connecting Spotify's world-class streaming platform into our world-class store and digital ecosystem, we are reinventing the way our millions of global customers discover music."

The Starbucks-Spotify plan calls for a phased rollout later in U.S. company-owned locations later this fall, and later in Canada and the United Kingdom. The agreement specifies that Starbucks and Spotify will collaborate on a next-generation music ecosystem. As part of the agreement, Spotify Premium will be promoted in these stores.

"Starbucks has a rich music heritage and customers who are passionate music fans, which makes us incredibly proud to be their music partner," said Spotify chief executive Daniel Ek. "Spotify has powered more than 25 billion hours of listening around the world so far, and we're looking forward to creating unique in-store music experiences."

As many jukebox operators know, the Starbucks-Spotify concept is not entirely new. Many bars and taverns around the country have been letting personnel and some preferred customers plug mobile devices into in-house sound systems to program a location's music. The proposed Starbucks and Spotify partnership formalizes that informal relationship.