GigaOM Pro

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Let’s face it. Many of us go to Barnes & Noble not for the high-priced books but for the comfortable environment created by overstuffed chairs and coffee (Starbuck coffee, to be exact). But lately there’s reason to worry that the cozy brick-and-mortar retailer might not be around forever, and the question then becomes, in the age of e-books, will there be a savvy retailer to fill the void if brick-and-mortar bookstores go the way of the dodo?

Possibly, and with this week’s launch of the Starbucks Digital Network (powered by Yahoo), we may have an idea of who could fill that void.

The Starbucks Digital Network (SDN) is a nationwide content network that features a variety of free content, along with upsell to paid content, for those connected to Starbucks’ in-store Wi-Fi hotspots. The network includes a variety of complimentary accesses to magazines, newspapers, music and video and, yes, e-books.

The early goods are a bit scarce, but Starbucks is striking deals with Simon & Schuster, Penguin, Harper Collins and New Word City to provide free access to select books through the SkyShelf platform in-browser; the company could, then, be setting itself up as a significant purchase-channel for e-books down the road, once its library expands.

There is no doubt many users accessing e-books at Starbucks will do so through their existing e-book relationships with the likes of Kindle, iBooks and, of course, Barnes & Noble’s e-book storefront. But it’s still early in the e-book game, and there’s reason to believe that SDN could become a significant channel for e-book purchases.

Below are three ways in which Starbucks and its SDN network could become the B&N of the digital era:

• Emphasize the social aspect of reading and book buying. While many see reading as a solo endeavor, I would argue book buying and, to some extent, reading are social exercises for many. One only has to look at the huge popularity of book clubs to see this. If Starbucks can somehow create localized rankings and recommendations for e-books, the coffee powerhouse may create what could be the first localized e-book storefront and social network with a significant physical presence.
• Integrate with larger e-book storefronts. I think most of us will likely centralize our e-book purchases with one or two major e-book storefronts. Starbucks could count on many more transactions if it created a curated e-book channel that allowed an SDN user to complete their purchases through already-established e-book buying relationships.
• Offer rewards and reinforcements. Starbucks has some of the most loyal customers of all physical storefronts and does a good job rewarding them with gift cards and other programs. If the company could extend its reward programs towards e-book purchases (and other content purchases, for that matter), it could create a significant purchase incentive for those buying through SDN.

While there’s no doubt Starbucks’ past efforts as a content channel has received mixed results, I think SDN combined with a huge nationwide footprint of Wi-Fi hotspots could position the company as a serious player for digital content transactions. Whether or not Starbucks can leverage the competitive advantages at their disposal, however, is yet to be seen.

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