Dailies Bitter on Starbucks

Media Week

By Lucia Moses

October 01, 2001

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.

Starbucks, with more than 3,000 stores in North America, wants each regional newspaper to swap ad space for the privilege of being the exclusive local paper sold at its outlets in the area. The effort is a variation of Starbucks' year-old pact with The New York Times, which made the Times the only national newspaper sold at Starbucks. The company eventually wants each store to offer the same newspaper selection. The goal is to make its customers' experience consistent, said Mark Sacks, Starbucks' publications product manager. The company is asking about 30 major dailies to propose ads-for-exclusivity barter deals.

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 had to sell papers outside. "Anytime you're the only local newspaper that's available, you've got an edge," said John Hoarty, vp of circulation for the Herald.

In some noncompetitive markets, however, papers 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.

And not all competitive dailies are hot on exclusivity. Mark Hornung, the Chicago Sun-Times' vice president of circulation, said Starbucks risks alienating customers and hurting newspaper competition if it chooses to sell only the Sun-Times or the Chicago Tribune, both now sold in local Starbucks.

In Seattle, where Starbucks originated, the joint-operating agreement between The Seattle Times and Seattle Post-Intelligencer further muddies the proposal. Both papers are now sold in local Starbucks and won't compete for exclusivity, said Mei-Mei Chan, vice president of circulation at the Times, which handles business operations for both papers. "We're not going to play that game," she said. "If worse comes to worse, we'll put racks out on the sidewalks, and their customers will be less served."