Starbucks' Music Downloads - Threat To Apple? (SBUX, AAPL)

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Includes: AAPL, SBUX
by: Rich Vanden Boogard

The Business Online has an article entitled "Starbucks to offer music downloads". There are some great quotes in the article. Let's start with:

Starbucks chairman Howard Schultz believes his chain gives Starbucks a huge advantage over Apple as a digital music retailer. Starbucks serves 40m customers a day and plans to open 1,800 more coffeehouses this fiscal year. By contrast, Apple only has a handful of flagship computer stores in key markets.

But, Howard, I need a computer to download music! I can't download songs by plugging my mouse into my $7 latte and connecting it to the internet! Do you honestly believe that people have to travel to these stores to get their music?

Ok, so people do bring computers to Starbucks, and that traffic of 40 million customers is surely impressive. Maybe there's potential? Next quote:

Schultz intends to ramp up the existing wireless internet in Starbucks coffeehouses to provide music downloads.

So let me get this straight. I buy my $7 latte, then I pay Starbucks' hourly internet connection rate, just so that I can download Sir Mix-a-Lot's "Baby got Back"?

This idea that others help me find music that I might be interested in isn't a novel one. BMG Music's website does this automatically for me. Before the internet, they did it via traditional snail mail. I'm not an iTunes member, but I'll bet that it, too, can help me find music I might like. RealMedia's Rhapsody does.

I applaud the attempt at innovating a new revenue stream. But I have to wonder - Howard, have you thought this through?