May 1, 2006

A Small Step at Starbucks From Mocha to Movies
By SHARON WAXMAN

LOS ANGELES, April 30 — With barely one movie under its belt, Starbucks is moving aggressively toward expanding its involvement in the entertainment business, seeking movies and books to promote in the hope of duplicating the success it has had with music.
The retail coffee giant — which used its stores to promote "Akeelah and the Bee," a Lionsgate movie that opened this weekend — is to announce Monday that it has signed an agreement with the William Morris Agency to find more movie and book projects to market. The aim is to have one book in Starbucks stores this year, and at least two or three movies to promote and sell on DVD next year, with more projects in years to come.
In the meantime, the company's small entertainment staff will move from Seattle, where Starbucks is based, to Santa Monica, Calif., this year to be closer to the heart of the entertainment industry.
"Akeelah and the Bee" is an inspirational tale about an African-American girl in Los Angeles who competes in a spelling bee. Starbucks is promoting the movie in places like the sleeves of its coffee cups, and the "Akeelah" soundtrack is on sale at the stores. The DVD of the movie will be on sale at Starbucks this fall.
Howard D. Schultz, the company's chairman, said that in the wake of promoting "Akeelah," it had been deluged with material from film distributors who hope to be Starbucks' next movie partner. It became clear, he said, that the company needed more expertise in handling that work. "We're not prepared in terms of our core business" to respond to such approaches "in a way that is timely," Mr. Schultz said from Seattle, explaining the plan to work with William Morris.
He said it was not Starbucks' goal to become an entertainment-business investor. "We have no intention of financing movies, or being traditional investors in movie projects," he said, although the company's promotion of "Akeelah" gave it an undisclosed equity stake in that film.
Instead, Mr. Schultz said, it will selectively link the Starbucks brand with certain kinds of movies and books in the belief that Starbucks customers trust the company, in essence, to choose their entertainment for them.
"We're looking for quality, and substance," he said. "We want to see our name associated with the kind of music, literature and movies that people will say, 'I'm glad Starbucks brought this to the marketplace.' " He gave "Crash" as an example of the kind of movie that Starbucks might promote. The film, which was about racial tension and also was from Lionsgate, was a sleeper hit at the box office and went on to win an Oscar for best picture this year.
The company has already done this successfully with music, becoming a tastemaker in an industry still struggling with piracy and depressed sales. Starbucks sold 3.5 million CD's in the 2005 fiscal year, promoting artists like Coldplay and Bob Dylan and introducing the group Antigone Rising and the singer-songwriter Sonya Kitchell. (The company does not break out revenue figures for its CD's.)
Starbucks had its biggest success with a Ray Charles album in 2004, "Genius Loves Company," which sold 775,000 copies and went on to win eight Grammys.
Hollywood can only hope for this kind of success at a time when new technology is encroaching on traditional film distribution models. While this year's box-office total has so far pulled ahead of last year's disastrous statistics, industry experts are still puzzling over how to adapt to changing consumer habits in a world of Internet, cellphone and iPod entertainment.
In this environment, Starbucks provides a potentially important new point of sale, and could have the kind of impact on movies — narrow, but profound — that Oprah Winfrey has had on publishing with her book club.
In the case of "Akeelah and the Bee," the box-office revenue from opening weekend did not indicate that the Starbucks promotion, which also included whimsical vocabulary plastered across store windows, had immediately led to a hit.
The movie took in $6.25 million over the weekend at 2,195 theaters, an average of just $2,847 a screen, according to Exhibitor Relations, which tracks box-office sales. It was No. 8 among movies for the weekend, behind offerings like the Robin Williams comedy "RV"; the teenage drama "Stick It"; and the harrowing Sept. 11 drama "United 93."
"This was an interesting experiment," said Paul Dergarabedian, the president of Exhibitor Relations. "The Starbucks tie-in didn't hurt, but with the movie opening at No. 8, I don't know if it really helped."
He noted that signs at Starbucks stores might have been too subtle in some cases for customers to associate them with the movie. And other industry analysts suggested that the boost from Starbucks could give the movie longer legs at the box office than most releases.
Asked last week if he thought the movie would do well, Mr. Schultz responded: "I don't know what 'well' is. We won't use the box office as our only criteria for success here."
Starbucks had been looking for a partner in movie promotion for about a year before one of its executives came across "Akeelah and the Bee," Mr. Schultz said. It was not until the movie was mostly complete, though, that a deal was struck to give Starbucks an equity stake — including an on-screen credit as one of its "presenters" — in exchange for the promotion.
Lionsgate executives could not be reached for comment over the weekend.
Nicole Miller, a research analyst with ThinkEquity Partners in New York, said of Starbucks: "This is the third evolution they're in — it's the entertainment evolution, finding a way to grow Starbucks outside the four walls of the store. The reason it works is they're a trusted brand. They have six million people a day in their stores, and those people trust Starbucks and what Starbucks is selling to them. That's very powerful."
Mr. Schultz said he was also considering self-publishing books for Starbucks stores. "I want to bring books to the marketplace that perhaps can't be found," he said, citing "The Kite Runner," a novel about an Afghan boy that won a huge readership through word of mouth, as an example of the sort of content he would seek. "There's no reason to believe we can't be a self-publisher."
The depth of Starbucks' future involvement in entertainment ventures will depend at least in part on the company's experiences in dealing with Hollywood, said Jim Wiatt, the chief executive of William Morris.
"Depending on how the process goes," he said, "and how they enjoy this process, and how much impact they want to make, they may want to end up functioning as a real distributor."
Mr. Schultz emphasized that not only was Starbucks aiming to extend the reach of its brand, but it was also trying to achieve something more ephemeral: enhancing the experience of being in Starbucks stores.
"It's more than just coffee, it's human connection," he said. "In terms of content, the linkage is tied to that aspiration. We want to add texture to the brand, and value to the experience."