Spotify replaces CDs at Starbucks, company rumoured to launch “Spotify Now”

Spotify has bagged another very big deal this week as the company has become the official replacement of CDs at Starbucks. 

Starting this fall, all 7,000+ Starbucks stores in the USA will be playing music from Spotify in-store and the company’s employees - over 150,000 - will receive free subscriptions to the service in order to create the playlists that will then be played in store: Spotify’s CEO Daniel Ek stated that the company is making the barista the DJ. Customers may also be able to contribute to the playlists at a later stage, although details on how that would actually work have not been unveiled. 

In addition - and to a certain extent most importantly for Spotify - Starbucks will be promoting the streaming service in-store. Spotify Premium subscribers may even get a discount on their coffee - this is the first time that the coffee chain has opened up its loyalty program to another company - although there are no details on that as of yet.  

The two companies also mentioned the creation of a new ‘music ecosystem’ coming later on although no details were given on that. 

Could this be linked to the rumoured launch of “Spotify Now” later this week? According to report the new service would provide users with personalised playlists based on the time of the day and on their mood, with an additional fitness component which could see tracks being picked based on their BPM to better adjust to your pace. As of yet it is unclear as to whether the new functionality will be part of the current Spotify app or if it will be a separate element. 

Back to the Starbucks deal, first of all this will be a great boon to employees who are currently going mad listening to the same light pop or smooth jazz CDs on replay over and over again. At the same time it will be interesting to see what the company’s “policy” will be around what can be playlisted, it is unlikely customers will want to listen to hardcore metal at 7AM but that's a story that has practically already written itself unless some guidelines are put in place.

From a business perspective, it is interesting to note that Spotify here is being used in a commercial context. The Spotify T&Cs currently specify that “As specified in our Terms & Conditions, Spotify Free and Premium accounts are for personal, non-commercial use only.” Shops therefore are not supposed to play Spotify in public (even though they do it all the time) as the Premium service is not based on a commercial license. 

To get around this problem a company called Soundtrack Your Brand has created a separate Spotify for Business service, which is for now only available in Sweden, and provides shops with the required commercial license to play Spotify in store.

If through the Starbucks rollout Spotify has put the finishing touches to a viable commercial license to sell the service to shops, in the near future we may see a broader rollout of Spotify to large clothing chains, restaurants, malls and even (if the price is right) small independent stores. This is potentially huge market for the service and if accompanied with similar deal to promote subscriptions in-store could provide Spotify with continued momentum in spite of the threat posed by Apple’s upcoming service.

 

(Andrea Leonelli)