Starbucks Announces Free Wi-Fi, Proprietary Content Network

http://www.wired.com/epicenter/2010/06/starbucks-announces-free-wi-fi-proprietary-content-network

Starbucks Announces Free Wi-Fi, Proprietary Content Network
Eliot Van Buskirk June 14, 2010

NEW YORK — Starbucks’ coffee drinks have become synonymous with the high costs consumers are cutting back on these days, but at least the Wi-Fi connections in its stores will no longer require a credit card.

Free Wi-Fi is in my mind just the price of admission.Starting July 1, Starbucks will let anyone connect to its WiFi network for free. This fall, the company will add a content network called Starbucks Digital Network, in partnership with Yahoo and other sites, which will include local content you won’t be able to read anywhere else. Both offerings will be free.

“Free Wi-Fi is in my mind just the price of admission — we want to create … new sources of content that you can only get at Starbucks,” chairman and president and CEO Howard Schulz told the Wired Business Conference. “This is a thing that doesn’t exist in any other consumer marketplace in America.”

Starbucks hopes to make money from these initiatives indirectly, by “enhanc[ing] the experience” and making the content “so compelling that it drives incremental traffic,” said Schulz as he announced the new initiative at Wired’s Disruptive by Design conference on Monday.

McDonalds has free Wi-Fi too, of course, as does just about every other coffee place in the country other than Starbucks. Schulz admitted that both of those stratas have been competing with Starbucks on coffee as well as internet service, with McDonalds stealing bargain-oriented customers and boutique independent coffee shops in urban areas grabbing some of its loyal epicures.

However, none of Starbucks’ direct competitors have their own localized content networks on the level of what Schulz described. In some communities, Starbucks functions as a sort of community center — a “third place” between home and the office, in Schulz’s words — and this infusion of local news and information, along with a free way to get it, could enhance that effect.

Each customer must log in to Wi-Fi and the Starbucks Digital Network with a unique identifier, so Starbucks won’t only know where you are, but who you are, potentially allowing for targeted messaging to offset cost further. Focus groups have been quite receptive to the free Wi-Fi and local content customers will get in return, says the CEO.

So, where will all of this content come from? Especially, when Starbucks wants it to be updated multiple times a day, so people always see something new.

In addition to the inked partnership with Yahoo, Starbucks is talking to AOL’s Patch.com content-creation division about having it create customized content for the network. In addition, the network will include free online access to the Wall Street Journal, with a percentage of subscription revenue generated when coffee drinkers decide they want to access those articles elsewhere, too.