It's hard to fault Starbucks' (NASDAQ:SBUX) strategy. The firm has positioned itself as a provider of a unique offering in the form of premium-priced coffees. The beverages are a luxury that most people are willing to pay for since they can't find the same taste elsewhere. And its numerous cafes mean a coffee fix is never too far away. These two factors -- one-of-a-kind products and convenient locations -- continue to serve the firm well in its core coffee business.
But Starbucks recognizes that its formula can also be applied outside the coffee arena. The Seattle-based company has steadily expanded into other items, including CD sales. In the wake of its sale of 700,000 copies of a Ray Charles album last year, Starbucks' initiatives in the music area have begun to get more serious. For example, the company revealed in April that it signed a new band to its record label, marking a departure from its earlier practice of selling only compilations from established artists.
Today, the company announced what can only be called a major coup for its music business. As part of an agreement with Sony (NYSE:SNE), Starbucks will sell an album entitled Bob Dylan: Live at the Gaslight 1962. The recordings are widely sought by Dylan fans and up until this point have only been available in "bootleg" quality. The new album is professionally produced and will be sold exclusively at Starbucks locations.
There's no need to be concerned that Starbucks will supplant the neighborhood music store, but more deals like the Dylan arrangement may be in the offing. As the company leverages its strengths into music and other areas, Starbucks will only become more and more addictive.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
