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The prime concerns for digital music streaming companies right now are monetization and getting a foothold in the music industry. But at a more product and service level, companies like Pandora and Spotify are still having trouble figuring out what to do with their discovery tools. The companies’ radio features – where an algorithm chooses songs based on a user’s supposed musical tastes – are helpful, but the companies haven’t yet figured out how to leverage and expand their discovery services to put them in better business positions, while still organically serving listeners. Perhaps Starbucks can teach them something about how to get there.

I’ll preface my following argument by saying I’m not ashamed to say I enjoy the song “Last Christmas” by Wham!

This week, I’ve been working from a Starbucks next to my parents’ house while writing things for the coming holiday week. Sitting there with my laptop open, I heard the opening melody to “Last Christmas” being played on an accordion, followed by the lyrics sung in glossy three-part harmony. I looked up at the “now playing” monitor above my head to find out it was a cover sung by the Puppini Sisters, in a Django Reinhardt-esque, slow gypsy jazz saunter. It was the most serendipitous form of music discovery I’d experienced in awhile. At the bottom right corner of the screen, it displayed what artist was coming up next, but not what song. 

That little sequence worked so well because of the environment and mood I was in, which Starbucks calculates meticulously. I obviously didn’t come to the coffee shop specifically to discover a new band. But they’ve created an atmosphere that is conducive to that discovery. A customer who stays and sits at a coffee shop – and doesn’t just rush off with their drink – is someone who is trying to get work done, or sitting reading a book, or meeting someone else for an appointment or meeting or date, and is open to that quintessential experience of being in a coffee shop. You know what I’m talking about: that almost stereotypical idea of a coffee house: goatees, snaps instead of claps. That experience is tied intimately to music.

Starbucks, of course, is a large, corporate coffee seller, but that does not mean it isn’t necessarily in the music discovery business. The company might argue it’s in the experience business, otherwise why would it go through such great lengths to get people to stay? In either word or action, the company at least claims to care about music discovery. From the Starbucks website: “We take pride in creating unique compilations you can’t find anywhere else. Because helping people discover their next favorite artist or recording is one of our favorite things to do.”

Of course, you’ve got to be at least remotely into that “coffee house” music genre to be open to any kind of music discovery that might occur there – and not buried in earphones, doing your own musical thing. But if you are into the coffee shop vibe, it’s like stepping into a scrupulously planned Pandora radio station. In fact, Spotify radio has coffee shop playlists.

If Pandora or Spotify could turn their music discovery features into intimate experiences, they’d engage with their users in a uniquely powerful way. Looking at the “now playing” screen, I was searching for any kind of outside branding, something that said “powered by” and then the familiar Spotify or Pandora logo. Those companies not only have the chance to control what goes through your headphones, but the environment in which you hear it. Starbucks is proud of its music compilation efforts, but perhaps Pandora could throw some money at the coffee company to hijack the operation.

A local coffee shop I used to go to (which closed down just last month) used to play Pandora stations over the sound system, depending on the barista on duty. Pandora could do this in some official capacity with the big corporate chains. The company could also make its way into gyms and airlines.

Of course, Pandora or Spotify would need to convince these companies of the value proposition, if they are going to pay for something they are already getting for free. But Pandora could create compilations tailored specifically to those stores. Or the partnership could be a part of some larger advertising tie in deal. Being in these places is a way a) to reach users who aren’t coming to them traditionally, loading the Pandora app and hitting play, and b) allow the company to focus its discovery tools around a specific experience.

Now, that’s easier said than done, but it could lead to more of a concrete presence in the real world. (And people go crazy when they see their favorite Web brands out in the real world.) Being in these settings could put the discovery tools the companies do have to good use. All I know is, sitting there writing at Starbucks, I was very anxious to hear what came next.

[Photo courtesy: elvissa]