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Friday, May 26, 2006 - Page updated at 12:00 AM

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Song over for most Starbucks music-CD burners

Seattle Times business reporter

If you were waiting for a CD-burning machine to come to a Starbucks near you, let the anticipation end: It's not coming.

After two years of testing the machines at 15 stores in Seattle and 30 stores in Austin, Texas, the coffee retailer has pulled them out of all but five locations in each city and will not install them in future coffee stores. The machines will remain at Starbucks' three large-scale music stores, called Hear Music Coffeehouses, in Santa Monica, Calif., San Antonio, Texas, and Miami, and go into future music stores.

People who download their music from the Internet will not be surprised that Starbucks is limiting the footprint for its CD-burning machines, which are becoming quickly outdated.

Still, at least one retail and technology expert thought the machines gave Starbucks cachet with customers and was surprised it would yank them out of so many stores without unveiling a new plan.

"Starbucks got a lot of hype value" from the machines, said Aram Sinnreich, managing partner of Radar Research, a media and technology consulting firm in Los Angeles.

"My guess is that they're not abandoning the whole concept, but just retrenching and planning to launch Phase Two, whatever that might be," Sinnreich said.

Earlier this year Ken Lombard, president of Starbucks Entertainment, told Bloomberg News that the company is working on a way to let customers fill up their own digital music devices at Starbucks stores. The CDs cost $8.99 for seven songs, then 99 cents for each additional track.

Starbucks officials insist that the elimination of CD-burning machines at 35 stores represents "an evolution."

"They will continue to be part of our overall music strategy," said spokeswoman Sanja Gould.

Whatever Starbucks' plan, no one can accuse it of stagnation as it continues to find new entertainment to promote and sell in its stores.

This spring, the company debuted the new singer-songwriter Sonya Kitchell with the CD "Words Came Back to Me" and is promoting the movie "Akeelah and the Bee" in stores nationwide.

On Wednesday, it announced plans to market "The Velveteen Rabbit" and "The Night Before Christmas" audiobooks under an agreement with Random House.

"It would be a shame if they stopped experimenting," said Neil Stern, a retail consultant at the Chicago-based firm McMillan Doolittle.

Sharon Zackfia, an analyst at William Blair & Co. in Chicago, which makes a market in Starbucks stock, said the company is good about pulling the plug on experiments that do not perform well.

"It's never done with great risk to the entire enterprise, and a lot of it succeeds," Zackfia said.

Starbucks officials bristled at the idea that the CD-burning machine business failed to gain acceptance. "Honestly, there's a lot of factors that go into deciding what goes in and out of our stores, and customer usage patterns is one of those factors, and in this particular instance, the burn-and-print media bars [the CD-burning machines] are going to be mostly aligned with our Hear Music Coffeehouse locations," said spokeswoman Christy Salcido.

"We plan to announce other ways that we want to provide music to our customers," she added, but would not elaborate.

Starbucks shares climbed 23 cents Thursday to $35.44 and are up 18 percent this year.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Starbucks to open

first stores in Brazil

Starbucks agreed to open its first stores in Brazil, setting up a joint venture with Cafes Sereia do Brasil Participacoes, a Brazilian holding company led by local retailers, to form Starbucks Brasil Comercio de Cafes.

Locations will be opened throughout Brazil, with the first shop scheduled for São Paulo within a year, the Seattle-based company said in a statement Thursday.

Bloomberg News

Copyright © 2006 The Seattle Times Company

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