A Co-Branding Case Study

Writing a Persuasive Email

Read this co-branding venture between Starbucks and Spotify and write a persuasive business email as a representative of Starbucks, addressing Daniel Ek, the founder of Spotify.

Your email should consist of following points:

1. Receivers address
2. Formal opening
3. Your own introduction with your title.
4. A brief introduction of your company and its products or services.
5. The co-branding business proposal
6. One sentence on the benefits of this proposal for both the companies and for the customers.
7. Invitation for this joint venture.
8. Suggest a call-for-action, for example, ask for a meeting, or phone call etc.
9. A formal closing
10. Final greeting, senders name, title and the contact details (email, phone number etc.)

Starbucks and Spotify

The musical core of Starbucks coffeehouse culture goes back more than 40 years. But it wasnt until 1994 that its entertainment team began picking and showcasing original CDs. On its first day, Starbucks displayed 250 CDs. It selected artists and their music from different genres and countries. Starbucks understood that its American customers need two things every day, a nice cup of coffee and one of their favorite songs. On its more than 7000 stores in the USA, Starbucks allowed its customers to choose their songs and the baristas played them, while people were sipping coffee with cookies.

NEW YORK - OCTOBER 25, 2010: Singer Taylor Swift purchases her new album 'Speak Now' at Starbucks.

The program sold CDs of classical stars such as the late John Lennon, Aretha Franklin and Bonnie Raitt.

Starbucks also engaged stars like Bob Dylan, Yo-Yo Ma, the Rolling Stones and Ray Charles to select their favorite songs for the Artist Choice series.

Around 1998, Starbucks started inviting singers and artists to their stores to sell and promote their music CDs. This move became a big hit.

However, things started changing soon with more and more of music now was increasingly available on internet.

In 2006, Spotify, a Swedish audio streaming and media services provider, founded by Daniel Ek, emerged on online music scene.

Spotify offered digital copyright restricted recorded music and podcasts, including more than 70 million songs, from record labels and media companies. Spotify was the first company to start a freemium service.

Freemium is a business model, especially on the internet, whereby basic services are provided free of charge while more advanced features must be paid for. On Spotify, the basic features were free with advertisements and limited control, while additional features, such as offline listening, new arrivals and commercial-free listening, were offered via paid subscriptions. Users could search for music based on artist, album, or genre, and could create, edit, and share playlists.

Spotify was available on Apple Store to download until 2015. In January 2015, Apple started its own music application. As a result, Spotifys profits dropped. Spotify felt it was fooled by Apple because Apple did not inform them in advance of the launch of its own music app. This resulted into a battle between the two companies in the law court. Finally, Apple had to pay Spotify a big amount of money as damages.

By this time, Starbucks started losing its customers interest in CDs. Starbucks saw a chance in attracting Spotify to its own mobile phone application, My Starbucks. They immediately stopped selling and playing CDs on their stores and removed all the CD racks.

Starbucks found a way to replace the CDs it forbade in March 2015. The company announced it had partnered with music streaming service Spotify to play music chosen by baristas in 7,000 U.S. stores.

The new music partnership began to hit coffee shops in the fall of 2015.

The new partnership was a way for Starbucks to stick to its long-time musical roots. It was also a major expansion of Starbucks successful mobile ecosystem, a technology that was driving huge profit for the coffee retailer.

Members of Starbucks reward program had access to barista-created Spotify playlists through Starbucks mobile app.

Spotify users could also get Starbucks rewards stars (used to buy free drinks) through the music app. Starbucks hinted late 2015 that it was expanding its rewards program to other companies, and that was the first public test of the expansion.

Kevin Johnson, CEO of Starbucks.

"We planned on building one of the most robust digital ecosystems of any retailer in the world. Given the evolution of the music industry and the proliferation of streaming technology, it was natural that we would partner with Spotify in offering our customers a new way to engage with their favorite music, said Starbucks President and CEO Kevin Johnson.

The new partnership also helped Starbucks bring in more loyalty members a lucrative audience that spent three times as much as nonmembers. There were more than 10 million members at the end of the companys last quarter in 2016.

The partnership also included dual advertising for the companies Starbucks promoted Spotify Premium, the paid version, in stores and Spotify had a Starbucks music section in its app. Spotify users were able to receive Stars as Currency for My Starbucks Reward (MSR) Points to buy free coffee.

Daniel Ek, CEO of Spotify

Spotify had already powered more than 25 billion hours of listening around the world before joining hands with Starbucks, said Daniel Ek, CEO of Spotify, in his headquarter in Stockholm, Sweden, and we were looking forward to creating unique in-store music experiences. We also wanted to make more than 20 years of popular Starbucks music available to both Starbucks customers and Spotifys 60 Million global music fans.

According to Ben Sisario of The New York Times, there are seven million artists from all over the world on Spotify. Approximately 13,000 artists earned $50,000 or more in payments in 2020 with the help of Spotify and Starbucks co-branding.