Starbucks brews up new Hear Music record label

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Starbucks announced Monday that it is forming a new record label, Hear Music, with partner Concord Music Group that will sign both new and established artists and distribute recordings through traditional music channels as well as at its 13,000 worldwide Starbucks locations.

Hear Music, the brand name that has been stamped on Starbucks proprietary compilation CDs since 1999, will now become a full-fledged record label that will forge relationships directly with artists, giving the premium coffee chain a greater role in developing music that fits "within the profile of the 'Starbucks Experience.'"

The new label will build upon the success Starbucks and Concord have experienced with previous releases including Ray Charles' "Genius Loves Company," which has sold more than 5.5 million copies worldwide and won eight Grammy Awards including album of the year, and Sergio Mendes' "Timeless," which won a Latin Grammy and has sold close to a million copies worldwide since its release earlier this year.

While other consumer and retail brands have entered the entertainment business to create marketing platforms to promote their products, build brand equity or increase sales, Starbucks said its motive was always to build a profitable business while offering its customers entertainment options that added value to their "coffee experience" and provided a "transformational opportunity" in how music is delivered and discovered.

"We've been profitable since we started the music side of our business and this next step for us is as natural as anything we've ever done in the music business," said Ken Lombard, president of Starbucks Entertainment. "Unlike a lot of other approaches that are out there today, driving traffic is not part of our criteria. Our commitment is to provide not only our customers but the music consumer with great music in a broad array of genres. Our goal is to build a major label and profitability is a very important part of that."

In its fiscal 2006 year ending Sept. 30, Starbucks sold 3.6 million album units in its 13,000 locations. Since entering the music business, Starbucks has partnered with other record labels on CD releases, helping to market and sell the albums in its 13,000 locations worldwide.

"Hear Music will provide a powerful new way for great music to be marketed and distributed," said Glen Barros, president of Concord Music Group. "At such a critical time in the music business, we are excited to be deepening our partnership with Starbucks in an effort to help artists connect with audiences through all music channels."

The new label will be based in Los Angeles with Lombard serving as chief manager of the venture. He will work closely with Barros on day-to-day activities. Concord will serve as a creative partner and will work collaboratively with Starbucks on promotion, distribution and marketing for Hear Music outside of Starbucks.

Lombard said that Starbucks will not be making a similar move in the film business and will stick to the type of marketing and promotional partnerships it launched with Lionsgate and "Akeelah and the Bee" last year.

Starbucks said the new label will advocate creative control for artists and encourage musicians to take risks which it believes will result in "compelling music choices" for consumers.

The company declined to comment on media reports that Paul McCartney's next CD would be the label's first release.
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