The Starbucks Digital Network (SDN) is a new initiative launched by the coffee giant as an effort to differentiate their business and gain a competitive advantage. What the company strives to do is offer something unique to customers as a part of the overall Starbucks experience.
Starbucks Digital Network will come online Fall 2010 and will offer specialized content that individuals can only get at Starbucks. The company plans to partner with several other content distributors and create a winning strategy that is threefold, meaning it will benefit Starbucks, the content providers and customers.
So what kind of content will the SDN stream?
The way it will work is the network will be comprised of a localized five channel network. Content will be categorized by topic through these five channels which will be labeled News, Entertainment, Wellness, Business & Careers and My Neighborhood.
The type of content will vary according to topic. Content providers on board with the new Starbucks' network are big news names such as Wall Street Journal, USA Today, and The New York Times. The entertainment section will offer free Apple iTunes downloads and reportedly other Apple goodies will be an option in the future. Other content streamers are Nickelodeon and health and wellness provider Rodale, Yahoo!, and Zagat ratings for local restaurants. Reportedly more partners will be added soon.
In July Starbucks began offering free Wi-Fi as the first stage of their new strategy. Earlier this summer CEO Howard Schultz talked about longer term strategy and the intention/hope to make Starbucks a "third place" between home and work. Schultz said "this infusion of local news and information, along with a free way to get it, could enhance that effect" (Wired.com).
It will be interesting to see how this business strategy plays out. Starbucks has already managed to very successfully market themselves as a premium product and sales illustrate people are willing to pay more for their coffees. Adding free Internet is a plus, but since many other competitors offer free Wi-Fi, this service isn't differentiated enough to get consumers in that aren't willing to buy Starbucks and are perfectly happy with McDonald's or other local coffee shops.
However by offering specialized content that appeal to local customers is seemingly a great way to further entice other consumers to stop in at Starbucks.
Mashable.com reports "Starbucks does plan to upsell SDN users, and there will be a revenue share between the coffee retailer and its content providers should customers go on to purchase by browsing". So while the motive for offering free services isn't purely altruistic to lure customers in, the plus side to consumers is they can receive content they either couldn't get or have to pay for elsewhere.
Starbucks’s Vice President of Digital Ventures Adam Brotman states this phase is just the beginning. In the future he envisions more "Apple goodies" and exclusive e-book downloads. Other initiatives the company wants to roll out are games and other social activities.
If you're looking to see what SDN is all about, keep an ear out this fall. As of August 2010 no launch date has been released, but allegedly the service is not too far off.
Additional Source: http://mashable.com/2010/08/12/starbucks-digital-net work/