Spotify and Starbucks: why have they teamed up?

Starbucks has scrapped CD sales in favour of a deal with Spotify

An agreement between the two companies will link Starbucks’s 10 million loyal customers with Spotify’s 60 million users (Pascal Le Segretain/Getty Images)

The jokers were out in force when Starbucks first announced it would stop selling CDs earlier this year.

Three months after dumping CDs, Starbucks has inked deal with Spotify. An agreement between the two companies will link Starbucks’s 10 million loyal customers with Spotify’s 60 million users, allowing Starbucks members access to ‘Starbucks music’ on Spotify and earn points, known as stars, to use as currency.

Starbucks employees will also get Spotify premium memberships – first in the US, but later also in the UK and Canada – that allows them to effectively DJ during their shift.

Spotify relies on getting users hooked in the hope of convincing them to upgrade to a premium, paid-for service. Only 15 million Spotify subscribers currently pay – so access to Starbucks’ customer base could significantly boost numbers.

One thing it doesn’t rely on is artist exclusives – reasoning that in the sharing age, the very idea of an exclusive is laughable. So instead it’s offering another kind of deal: cheap coffee.

Deals like this one also give Spotify an edge in a streaming marketplace that is about to get even more crowded. Apple, which already has access to the credit card details of 500 million people through iTunes, is widely expected to launch its own streaming service this summer after it bought Dr Dre’s Beats last year.

It’s also a sign that streaming is becoming the mainstream way for listeners to consume music. The numbers have told that story for some time. Last year, for the first time, the music industry derived as much revenue from digital as it did from physical formats such as vinyl and CDs.

The big question now is whether Spotify can stay ahead as Apple, Tidal and Google start to tempt subscribers with rival deals.