The Cyberbrains

Research and contemplation in new media

The Starbucks model

Jeremy LittauMy wife and I had an interesting conversation today about the “Starbucks way” of doing things. I know there are Starbucks haters out there who accuse it of going into towns and driving local business into bankruptcy, but they are a different kind of company. They don’t go in and slash prices like Wal-Mart, making it impossible for companies to compete. In most places I have lived, Starbucks coffee actually costs more than most others in the community.

How can you charge more and succeed? By offering a superior product, and by that I am not just talking about the coffee.

With Starbucks I know I can go into any of their franchise stores in the U.S. and know what to expect. But I also know that with my local Starbucks it can feel like a non-franchise business as well, from getting to know my name and favorite drink to the bulletin board postings of local events. I like the socially conscious attitude they take and don’t mind paying more for coffee when I know people were not exploited overseas to produce it.

The kicker when it comes to news media parallels is this: People are willing to pay $2 per day five days per week for Starbucks coffee (about $40 per month) but not willing to pay $12 per month to subscribe to a newspaper. Let that sink in for a second.

Sure people have a lot of media choices out there, but they have a lot of coffee choices too. And coffee has been around a heck of a lot longer than newspapers.

MyMissourian recently posted a series of blog pieces from a local band named Ironweed, which recently did a tour of China. The posts were excellent and they later said it was a great experience to be able to write down what they were doing and learning. But what struck me was a response that Clyde Bentley heard from someone at the Missourian, our local newspaper that publishes MyMo, and it was something to the effect that we should be charging Ironweed for all the free publicity.

And therein lies the Starbucks vs. media difference. Starbucks puts up a bulletin board and allows for free postings, believing that it is important to be in the community as well as do business within it. In media, we charge people for the privilege of letting US be in the community.

And on top of it, in many cases we offer an inferior product. More wire copy, less news hole. Less enterprise and investigative reporting, more flash and trash. Maybe we have convinced ourselves that consumers don’t recognize the difference between an AP story from the state capitol and one filed by a local employee who’s been covering state politics for 20 years, but the readers are more savvy than we like to believe.

The Starbucks model shows us that people are willing to pay for quality of both product and experience. Media companies don’t need to be Wal-Mart in order to thrive.

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September 3, 2007 - Posted by | Jeremy Littau

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