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Starbucks' (SBUX) plan to give away 50 million songs -- not a good sign

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Starbucks' HearMusic interfaceAs part of a promotion to launch its partnership with Apple (NASDAQ: AAPL) to offer free wireless access to download iTunes songs, Starbucks (NASDAQ: SBUX) will give away 50 million songs.

According to Reuters, "from October 2 to November 7 at more than 10,000 U.S. Starbucks locations, customers can receive "Song of the Day" cards redeemable on Apple's iTunes store."

The program may be a good deal for Apple, but it is hard to see why Starbucks would offer the package unless it is trying to drive additional traffic to its stores by paying iTunes for all of the content. If business was robust for the world's largest coffee chain, it is hard to see why it would makes such a large investment.

Apple could be giving away the songs using Starbucks as the marketing medium, but the company hardly needs help driving traffic to iTunes.

The move may well be a signal that Starbucks needs to kick start consumer demand for its core coffee and food products. Competitors like McDonald's (NYSE: MCD) have been taking customers away. Starbucks stock is off more than 20% so far this year.

Giving away iTunes downloads to help bring in customers may not be a good sign.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Last updated: November 24, 2009: 02:41 PM

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