In an email message to QSR, Starbucks responded to a lawsuit filed in early October by singer Carly Simon in which she accused the coffee company of hurting sales of her latest album, “This Kind of Love,” when it relinquished its music label, Hear Music, shortly before the album’s release.
Starbucks says it, “more than fulfilled its obligation to Ms. Simon.”
Simon is seeking $5 million–$10 million from Starbucks for “concealment of material facts,” “tortious interference with contract,” and “unlawful, unfair, and fraudulent business practices.”
According to the lawsuit, Simon’s “desire to record a new album generated great interest among many prominent record labels,” and Starbucks promised to distribute the work in more than 7,000 of its locations. When Starbucks withdrew from Hear Music, responsibility fell solely to its former partner, the Concord Music Group.
“Not only were agreed upon marketing and promotional efforts carried out,” Starbucks says, “this album … was carried at Starbucks for an additional promotional period in two key markets.”
But Simon’s camp maintains that the singer only learned of the Starbucks withdrawal five days before her album’s April 2008 release and that the Concord Music Group “simply lacked the ability to effectively promote her album.”
“To the extent that Starbucks was required to do anything, it was done,” the company says. “Unfortunately, sales continued to lag as the title received tepid response from consumers. Other retailers had similar results with the album.”
The lawsuit will likely have a small impact on Starbucks’ image, according to restaurant analyst Clark Wolf, whose clients have included Hard Rock Café Hotel and The Russian Tea Room.
“A lot of the identity [of a company] is connected to trust, and a lawsuit of any sort is really not a good thing,” he says. “I don’t think it’s the end of the world, but people should pay attention to it.”
He views the lawsuit is a sign that Starbucks has strayed too far from its central brand.
It was that reason that caused the company to relinquish its music label last year. In a statement to the press, CEO Howard Schultz said the restructuring was meant to return the company to its core business. “We have had numerous successes in music and books including eight GRAMMY Awards and three No.1 books on the New York Times bestseller list. However, now is the appropriate time to restructure our Entertainment business to better align our efforts with our overall business strategies,” Schultz said.
Starbucks still works with the William Morris Agency for book projects as well as Apple and AT&T for ways to enhance its wi-fi network and other in-store technologies.