Starbucks

1. Starbucks A Proposal for International Growth of Starbucks Entertainment

2. Agenda Macro-Level Analysis Growth Strategy Country Analysis Financial Analysis Q & A

3. Starbucks Strengths Macro Analysis Growth Strategy Country Analysis Financial Analysis

4. Starbucks Challenges Macro Analysis Growth Strategy Country Analysis Financial Analysis

5. Starbucks Entertainment How can Starbucks Entertainment add to the Starbucks Experience and to the bottom line? Macro Analysis Growth Strategy Country Analysis Financial Analysis

6. Keys to International Growth Macro Analysis Growth Strategy Country Analysis Financial Analysis

7. Pay For Play Program Expose Pay Fee Purchase Music Macro Analysis Growth Strategy Country Analysis Financial Analysis

8. Quality Management Macro Analysis Growth Strategy Country Analysis Financial Analysis

9. Streamlined Customer Interface Macro Analysis Growth Strategy Country Analysis Financial Analysis

10. Stakeholder Benefits Macro Analysis Growth Strategy Country Analysis Financial Analysis

11. United States Canada United Kingdom Japan China South Korea Germany Thailand Taiwan Mexico Australia Philippines China - HK, Macau, S.A.R. Malaysia Singapore Turkey Greece Spain Indonesia Saudi Arabia United Arab Emirates Jordan New Zealand France Switzerland Puerto Rico Chile Peru Ireland Lebanon Austria Egypt Qatar Cyprus Bahamas Brazil Bahrain Oman Netherlands Denmark Romania Russia Czech Republic Kuwait Starbucks Stores - Global Macro Analysis Growth Strategy Country Analysis Financial Analysis

12. United States Canada United Kingdom Japan China South Korea Germany Thailand Taiwan Mexico Australia Philippines China - HK, Macau, S.A.R. Malaysia Singapore Turkey Greece Spain Indonesia Saudi Arabia United Arab Emirates Jordan New Zealand France Switzerland Puerto Rico Chile Peru Ireland Lebanon Austria Egypt Qatar Cyprus Bahamas Brazil Bahrain Oman Netherlands Denmark Romania Russia Czech Republic Kuwait Top 10 Digital Markets Macro Analysis Growth Strategy Country Analysis Financial Analysis

13. Final Choice United States Japan China Canada United Kingdom South Korea Germany Thailand Taiwan Mexico Australia Philippines China - HK, Macau, S.A.R. Malaysia Singapore Turkey Greece Spain Indonesia Saudi Arabia United Arab Emirates Jordan New Zealand France Switzerland Puerto Rico Chile Peru Ireland Lebanon Austria Egypt Qatar Cyprus Bahamas Brazil Bahrain Oman Netherlands Denmark Romania Russia Czech Republic Kuwait Macro Analysis Growth Strategy Country Analysis Financial Analysis

14. Implementation Plan Macro Analysis Growth Strategy Country Analysis Financial Analysis

15. Pricing Information Macro Analysis Growth Strategy Country Analysis Financial Analysis

16. Pricing Strategy Macro Analysis Growth Strategy Country Analysis Financial Analysis

17. Revenue Growth Macro Analysis Growth Strategy Country Analysis Financial Analysis

18. Additional Net Income Macro Analysis Growth Strategy Country Analysis Financial Analysis

19. Conclusion Macro Analysis Growth Strategy Country Analysis Financial Analysis • Our Plan • Capitalizes on Starbucks’ marketing strength • Generates new revenue while keeping focus on coffee • Enhances the customer’s experience

20. Questions

22. Potential Label Profit Analysis

23. Canada

24. Key Canadian Music Centers Toronto Distributors Vancouver Distributors • RED Distribution • Koch Entertainment • Zing Distribution • Trend Music Group • Outside Music • Scratch Distribution • Festival Distribution • Pacific Music Canada is the sixth largest market for recorded music in the world

25. United Kingdom

26. Why Digital? • By 2012, Digital Music will account for 40% of worldwide music sales* • Physical CD sales dropped by 15% in 2007, according to Nielsen Media** * IFPI 2007 ** http://www.afterdawn.com/news/archive/10282.cfm

27. Music Industry Trends

30. A Question of Balance

31. UK Digital Sales *2007 Data for first 43 weeks of year

32. International Sales Growth

33. Starbucks ITunes Label

34. Long Tail

35. Starbucks Countries with iTunes • Australia • Austria • Canada • Denmark • France • Germany • Greece • Ireland • Japan • Netherlands • New Zealand • Spain • Switzerland • United Kingdom

36. Digital Music: UK and Canada 732 million international sales >90% UK sales are now Digital Top 40 accounts for 10% of sales in 2007 – strong “long tail” sales Canada ne of largest growing segments outside of U.S. For SBUX Vancouver stores are “established and well known”

37. Risk Analysis

38. Digital Music Perfect time to capitalize on innovation Aggressively expand experimentation People exposed to more music then ever (both good and bad for us because, we can give them music they want to hear, but they are exposed to free stuff) $3.05 billion in 2007, up 48% from 2006. Revenue for worldwide full track mobile downloads will reach approximately $4.2 billion by 2012. 37.7% growth from 2007-2012

39. “Third Place” "They're creating another way to recommend music to people and target a specific music buyer, bridging the gap between the digital and the physical," says Jimmy Iovine, chairman of Universal Music Group's Interscope, Geffen, and A&M labels. • Create Synergy between music and store • Return to non-watered down coffee and music “The key is to provide cultural leadership through media to promote conversation and community within Starbucks locations. That would be a quantum leap in terms of engagement and experience at Starbucks.” "Starbucks isn't just adding music to their stores. They're adding culture to the stores. They're enhancing the customer experience."