Starbucks and Apple

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Danielle Green

IST5010 S01

Revenue Model

Starbucks has agreed to a partnership with Apple to collaborate on selling music as part of the "coffeehouse experience". In October 2006, Apple added a Starbucks Entertainment area to the iTunes Store, selling music similar to that played in Starbucks stores. In September 2007 Apple announced that customers would be able to browse the iTunes Store at Starbucks via Wi-Fi in the US (with no requirement to login to the Wi-Fi network), targeted at iPhone, iPod touch, iPad, and MacBook users. The iTunes Store will automatically detect recent songs playing in a Starbucks and offer users the opportunity to download the tracks. Some stores feature LCD screens with the artist name, song, and album information of the current song playing. (Neumayr) This feature has been rolled out in Seattle, New York City, and the San Francisco Bay Area, and was offered in limited markets during 2007–2008. During the fall of 2007, Starbucks also began to sell digital downloads of certain albums through iTunes. Starbucks gave away 37 different songs for free download through iTunes as part of the "Song of the Day" promotion in 2007, and a "Pick of the Week" card is now available at Starbucks for a free song download. Since 2011 Starbucks also gives away a "Pick of the Week" card for app downloads from the App Store. A Starbucks app is available in the iPhone App Store. Here is a look at the revenue model for the iTunes store from amazon. [pic]

Figure 1

These numbers are similar to what Starbucks is receiving revenue with. There is a charge of .99 cents per download. If you purchase a CD, the charge is roughly about 10 dollars. Bringing in partners could even facilitate product sales, since these companies have different identities and, thus, to customers, it may not feel like Starbucks is pushing anything at all. Thus, this could be a win-win for both Starbucks and the content providers, which benefit from finding...
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