Looks like the wonderful, mellow world of java is about to meet the futuristic space technology of satellite radio distribution.
I know, satellite radio is rather banal by now, but hey, I have yet to listen to it (for that matter, I have yet to buy one of those pricey cappuccino things either). Starbucks (NASDAQ:SBUX) and XM Satellite Radio (NASDAQ:XMSR) have joined forces in an exclusive deal to cross-promote each other's brands. Starbucks' coffeehouses feature a service called Hear Music (a wholly owned subsidiary of the company), which provides the tunes in the background (it also markets CDs). This concept will be turned into a channel for the XM platform dubbed "Starbucks Hear Music" to commence sometime in the fall; next year, the channel will be piped into 4,000 of the caffeine-dispensing locales.
This is a great opportunity for both companies to grab one another's mindshare. Music and beverages go hand in hand, as both PepsiCo (NYSE:PEP) and Apple Computer (NASDAQ:AAPL) have discovered. Heck, music is going together with a lot of businesses these days, something Alyce Lomax mentioned in a Take on eBay (NASDAQ:EBAY) and that company's latest ambitions.
The sector of satellite radio has captured the attention of a lot of investors (and traders as well). Projects such as these should continue to propel the subscriber base for this product, and while I think Starbucks certainly stands to gain from such an association, I am more curious as to the eventual return on this venture as it regards XM Satellite Radio, especially from the angle of its effect of differentiation against competitor Sirius Satellite Radio (NASDAQ:SIRI), which, as Seth Jayson found, unfortunately stumbled with its latest earnings release.
No matter. Premium radio is here to stay. So is expensive coffee, for that matter. People will always be willing to pay for what they perceive to be an overall value. And if you want to know whether Starbucks is currently a decent value, check out this earnings coverage.
Check out our duel on XM and Sirius:
- Dueling Fools: Serious Sirius, by Don Crotty
- Dueling Fools: XM Dishes It Out, by Seth Jayson
Fool contributor Steven Mallas owns none of the companies mentioned.
