Starbucks forms Hear Music record label

By Nichola Groom

LOS ANGELES (Reuters) - Starbucks Corp. said on Monday it has formed its own record label, Hear Music, to develop records for sale both in its coffee shops and through traditional music retailers.

Starbucks' influence as a music retail outlet has grown in recent years. It posted its biggest success with the Ray Charles album "Genius Loves Company," a co-production with Concord Records that won eight Grammy awards. Concord is also partnering with Starbucks on the new record label.

The coffee chain has parlayed sales of music compilation CDs into a business that has included deals for exclusive content with well-known musicians such as Alanis Morissette and Bob Dylan and with little-known musicians. Those sales have helped increase revenue at Starbucks stores.

Starbucks Entertainment is the small but profitable unit of the coffee-shop chain that oversees the sale of music and books in its stores.

In an interview, Starbucks Entertainment President Ken Lombard said exclusive content would not be a major focus as the company works to sell CDs through traditional music channels in addition to its own stores.

"It's not an important part of our strategy going forward," Lombard said.

Albums will be released at Starbucks stores and at traditional retailers on the same day, giving the coffee shop chain no advantage, Concord Music Group President Glen Barros said.

FROM RETAIL CHAIN TO RECORD LABEL