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Thursday, September 6, 2007 - Page updated at 12:00 AM

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Sip Starbucks, access iTunes

Seattle Times business reporter

If you like what you hear over Starbucks' sound system, get ready to download it.

Beginning Oct. 2, the Seattle-based coffee shop chain will launch a program that allows customers to access Apple's iTunes Wi-Fi Music Store with no connection fee or hot-spot login.

A feature called "Now Playing" will show customers what's playing over the sound system and let them buy it from iTunes for the usual price — 99 cents per song.

Music can be downloaded to wireless iPods, iPhones, Macs and PCs with iTunes installed, but not to non-Apple portable digital music players.

The Starbucks-Apple service was announced the same day that Apple unveiled a new version of its popular iPod media player with wireless Internet access: the iPod Touch. The Starbucks icon will light up on the iPod Touch whenever a user nears a Starbucks coffee shop that has wireless access.

Financial terms of the partnership between Starbucks and Apple were not disclosed.

Kiosk test

The wireless music program arrives more than a year after Starbucks ended a long-running test of music-downloading kiosks at dozens of stores in Seattle and Austin, Texas. The kiosks can be used to burn songs onto personalized CDs for about $9 each.

Customers told Starbucks they preferred wireless access, said Ken Lombard, president of Starbucks Entertainment.

"They really wanted the ability to download music to a device," he said. "Now we're there, and we're very excited about it."

So are some customers, even if they don't use iTunes.

"I think it's great," said Becky Hughes, a Starbucks customer on Capitol Hill who keeps meaning to sign up for iTunes and might do it now.

Hughes likes the idea of accessing iTunes free in the store, and she likes the music Starbucks plays, including a tune by Elliott Smith that she heard at her local shop Wednesday. By the time she left, the Grateful Dead were grooving with "China Cat Sunflower."

Lombard said tracks are chosen by a "content team" at Starbucks, but he makes the final decisions. All Starbucks' stores play the same music, he said.

Free iTunes access will debut at 300 company-operated stores in Seattle and 300 in New York. Stores that are not operated by Starbucks, including most grocery and airport locations, will not have the service.

The rollout will move to 350 stores in San Francisco in November, 500 stores in Los Angeles in February and 300 stores in Chicago in March.

By the end of 2009, all U.S. company-owned stores with wireless access — about 5,800 locations — should have the service, Lombard said.

To do anything else on the Internet, customers must pay to log onto Starbucks' usual T-Mobile service.

Starbucks shares fell 28 cents to $27.44 during regular trading Wednesday and dropped another 9 cents to $27.35 in after-hours trading.

Strong brands meet

Analysts for Starbucks and Apple said the collaboration represents the meeting of two spectacularly strong brands but will mean little for short-term sales.

"At the end of the day, Starbucks is still about selling coffee in their stores," said John Owens, a Starbucks analyst for the investment research firm Morningstar. "I doubt this would significantly change Starbucks' traffic patterns."

Apple has bigger things happening, too, such as its new iPod Touch and its continuing strong hold on the portable music player market.

The Starbucks deal will bring "ancillary revenues" for Apple, said Jupiter Research analyst Michael Gartenberg.

The companies first partnered last fall, when Starbucks launched its own area on the iTunes site featuring music chosen by the coffee company.

Starbucks would not disclose details of that deal, either, but said it did not pay Apple to be on the site.

Kaijson Noilmar is a Starbucks customer who spends hours each week working in their coffee shops but hasn't spent much time downloading music to his iPod. He figures he'll use the new service if it's easy.

"If it's point-and-click, that's great," Noilmar said. "I'm busy, though, and that's not one of the things that's been important enough for me to worry about."

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

The Associated Press and Seattle Times business reporter Benjamin J. Romano contributed to this article.

Copyright © 2007 The Seattle Times Company

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