Starbucks retreating from music business

Starbucks Corporation (NASDAQ: SBUX) was reported last week to be "pulling back" from the company's one year old record label, Hear Music. The label, which released high profile and chart successes from Paul McCartney and Joni Mitchell, will be turned over to independent label Concord Music Group. Concord will also assume management and promotion for those artists that signed with Hear Music, including McCartney and Mitchell, as well as James Taylor and newcomer Hilary McRae.

In the meantime, Ken Lombard has left the music label and coffee giant "to pursue other business interests" according to MSN. Chris Bruzzo, who had been the chief technology officer, has been promoted to the leadership role in the Entertainment division at Starbucks. According to Billboard, Lombard's exit and the reorganization of Hear Music "are part of a strategic overhaul to examine all aspects of its business that are not directly related to its core."

Over a year ago, when the announcement was first made that Starbucks would be starting a music label and had successfully signed one of The Beatles as its first artist, it made headline news. Given the success that McCartney has seen with his only album for Starbucks and the way the marketing for the album was handled, the news that the label is essentially moving back into the industry is shocking. Even though Concord is an independent label, the exciting thing about Starbucks' music label was that it was so different.

It may not have been any cheaper to buy the album from a Starbucks store, but it was the method with which it had approached selling music that was special. It was inventive and really showcased the full extent of each product. Fortunately, it is doubtful that Starbucks will stop stocking CDs or even Hear Music albums. Perhaps it was just too late for a physical album label to be set up successfully due to the success and promotion that digital music has started to enjoy within the same time period.