News Regarding the Center
At Starbucks, Songs Of Instant Gratification
(View original article)
New York Times
October 01, 2007
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Credit card companies in particular are experimenting with ways to turn the phone into a conduit for card purchases and to offer incentives, like coupons, for mobile purchases. Visa, for instance, is developing technology that will allow people to wave their cellphones in front of a reader to pay for items under $25 without a signature. (Swiping the card through a reader, an innovation several years old, is apparently too much of an impediment.)
The idea is no waiting, cashier or other buying barrier -- aside from the charges that show up on a credit card or cellphone bill. And there,
along with challenges revolving around security and business models, lies a chief rub.
The mobile-payment technology can create a desensitizing and seductive purchase experience, said James Katz, director of the Center for Mobile Communications Studies at Rutgers University.
''The more people think about a purchase decision, the more likely uncertainty creeps in,'' he said. ''One frame of mind is you're helping create in consumers' mind a source of pleasure, and enabling them to fulfill that pleasure,'' Mr. Katz said of the mobile impulse temptation. Another is that ''they're preying on our materialistic souls.''
For now, the new Starbucks service's preying capabilities will be limited. The concept is being introduced in around 600 cafes in New York
and Seattle only, though Starbucks, based in Seattle, and Apple, of Cupertino, Calif., plan to offer the service in other major cities late
this year and in 2008.
Impulsive music lovers will have to sign onto the cafe's Wi-Fi network to discover what song is playing over the Starbucks speakers. With a few
taps, users can download the song onto their iPhones (which double as an iPod), or the new Apple iPod Touch with its wireless connection. The
99-cent charge will appear on their phone bills.
Other coffee drinkers who have iTunes software loaded on their notebook computers can do somewhat similar things. When they open their laptops
while sitting in a participating store, a Starbucks icon will pop up, giving them a chance to click and buy.
Starbucks said it was the first retail outlet to offer such capability. It is certainly not on the cutting edge of the downloadable music
experience. For more than a year, Verizon Wireless has offered technology that lets consumers buy songs over the air. Other carriers, including Sprint and AT&T, allow over-the-air downloads.
Roger Entner, a communications industry consultant with IAG Research, which advises mobile carriers, said Sprint and Verizon were each offering around 60 million songs a month for downloading.
Verizon and others also allow users to buy video, pictures, wallpaper, ring tones and games -- none of that revelatory anymore. Verizon also
experimented with music fans' buying concert tickets over the phone, then turning that phone into a bar code for concert entry.
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For example, he said, the mobile-carrier profits for downloadable songs were about 3 cents a song, which he deemed ''razor thin.''
Visa, which takes a piece of the action of credit purchases and would love to see buying opportunities blossom, introduced a new microcard
last week. It works like a credit card, but it is small enough to fit onto a key chain. At merchants equipped with wireless payment systems, consumers wave the card to pay; purchases under $25 do not require a signature.
Visa is also rolling out a ''mobile payment platform.'' That's marketing-speak for software that not only lets consumers pay by waving
their phones, but also lets merchants beam coupons to their customers on the go. For instance, Visa has experimented at its headquarters in
Foster City, Calif., with sending employees coupons for discounts in the company cafeteria.
The plan got a strong reception by consumers, said Pam Zuercher, Visa's vice president for innovation.
''Think about this as an extension of direct mail, but you have a much lower chance of leaving your coupon at home,'' she said, adding that the
technology ''provides the ability to influence experiences within a retail location.''
Ms. Zuercher said Visa planned a test of its mobile payment system with its partner, Wells Fargo. It is already testing the system in South
Korea and Taiwan. (Some of the mobile payment systems are more advanced overseas, where wireless networks are faster, allowing more complex
services. But, Mr. Entner said, the United States may wind up in the forefront because credit payments are so tied up with consumer culture).
The prospect of coupons by phone, or location-based advertising, might give shivers to people already distressed by seeing every nook and
cranny of public space crammed with commercial messages.
They are getting trade-offs. Services including the Internet and e-mail, like television before it, are subsidized by advertising and those who
respond to it.
''One of the great steps forward for denizens of the online world was the development of one-click buying,'' Mr. Katz from Rutgers said.
Before that technology, ''there was a vast amount of evidence that a small percentage of people who started the checkout process actually completed it.''
In the mobile world, the barriers fall further. No checkout aisle, cashier or money changing hands. Just an impulse -- click and a buy.
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