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So, Is This Extortion - or What?

Magazine article Editor & Publisher

So, Is This Extortion - or What?

Article excerpt

Regional dailies balk at Starbucks' demand for free advertising space in return for exclusive distribution

Coffee and newspapers -- they seem like a perfect match. Some papers, however, find their relationship with the Starbucks Corp. growing bitter: They face being booted from Starbucks coffeehouses unless they meet new demands, including one for advertising space and another that several newspaper executives contend would have them pull their products out of competing single-copy-sales outlets.

Starbucks, with more than 3,000 stores in North America, wants each regional newspaper involved to swap ad space for the privilege of being the exclusive local paper sold in its region. The effort is a variation of Starbucks' year-old pact with The New York Times, which made the Times the only national newspaper sold in Starbucks. Individual stores in the chain are now permitted to sell local newspapers of their choosing, but the company eventually wants each store in a given market to offer the same newspaper selection. The goal is to make its customers' experience consistent, said Mark Sacks, Starbucks' publications product manager. Starbucks has found that, for most customers, a choice of three papers suffices, he said. It is asking about 30 major dailies to propose ads-for- exclusivity barters.

For dailies in competitive newspaper markets, the chance to be exclusive to a retailer can be irresistible. Boston Starbucks have sold The Boston Globe for years, while the Boston Herald has to sell papers outside. "We'd love to get together with Starbucks," said John Hoarty, vice president of circulation for the Herald. "Anytime you're the only local newspaper that's available, you've got an edge."

In some noncompetitive daily markets, however, papers wonder what's in the Starbucks proposal for them and balk at the idea of forking over ad space to keep the in-store position they already have.

In Houston, where there are relatively few Starbucks locations, the Houston Chronicle doesn't sell enough copies at Starbucks to justify the newspaper real estate the coffee company seems to expect, said Chronicle Circulation Director Rocky Mills.

The Dallas Morning News also sees little benefit in Starbucks' proposal. Kelly Roberts, consumer sales manager for the Morning News, said it doesn't barter for ads and can't see pulling out of Starbucks' competitors, as he says the company demanded. …

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