By Julie Jargon
Starbucks Corp. is teaming up with Spotify to allow subscribers
of the music-streaming service to get reward points they can redeem
at the coffee giant, in the first of what Starbucks Chief Executive
Howard Schultz said will be similar tie-ups with other
companies.
As part of the deal, Spotify is paying Starbucks for the right
to issue Starbucks "stars" reward points to its subscribers,
Starbucks said, without disclosing the amount. Spotify will use the
stars as an incentive to attract new subscribers. Customers will
also be able to link their Spotify and Starbucks accounts and
suggest songs to include in the music playlists of the Starbucks
stores they go to, the companies said.
The deal is part of Mr. Schultz's efforts to use digital
initiatives to fuel growth at Starbucks. In January, he named a
longtime technology-industry executive, Kevin Johnson, to be his
second in command as president and chief operating officer.
Its stars points are central to that, with the potential to be
not only a customer loyalty tool but a source of revenue from other
companies willing to pay to use them to attract or retain their own
customers.
"Our long-term plan has been to create an external ecosystem
with like-minded brands that will buy Starbucks stars from us and
use them as a catalyst in their own business," Mr. Schultz said in
an interview, explaining that it will also drive more traffic into
Starbucks stores as people come in to redeem the stars for free
coffee.
Starbucks already has 10 million customers signed up for its
loyalty program, and it hopes to gain more by pairing up with
Spotify's base of 60 million customers, it said.
In addition to attracting customers into stores, where Starbucks
hopes they might buy a pastry to go with the coffee they get by
using stars, the Spotify partnership is intended to create a
localized music experience.
Starbucks long has put music at the center of its coffee shop
experience, by selling CDs and giving away free music downloads of
songs piped into the stores.
Starting in the fall, the company's 150,000 U.S. baristas will
receive a Spotify Premium subscription that will allow them to
create music playlists for their stores. Using the Starbucks mobile
app, customers will be able to indicate whether or not they like a
certain song. The customer input will be calculated using a
software algorithm and the baristas will act as DJs, updating the
playlist according to customer preference.
Spotify CEO Daniel Ek said customers also will be able to access
the coffee shops' playlists while they're away from the stores,
turning each Starbucks its own music station.
Write to Julie Jargon at julie.jargon@wsj.com
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