How Starbucks And WiFi Are Like Movie Theaters And Air Conditioning

from the wifi-frappuccino-please dept

Tue, Mar 6th 2007 4:45pm — Carlo Longino

Ever since Starbucks launched its paid WiFi several years ago, plenty of people have questioned the business model for cafes and restaurants charging for internet access. Plenty of other places, both independent retailers and chains, have found free WiFi to be a boon to their businesses, drawing in more customers and getting them to stay longer and buy more stuff. Supposedly some Starbucks managers have even begged the company to let them offer WiFi for free, because they think they're losing customers to other outlets, while an examination of the financial details of the program a couple of years ago didn't make it look like much of a money-spinner for the company or its WiFi provider, T-Mobile. With that in mind, the NYT had an interesting story over the weekend comparing Starbucks to the movie theaters of yesteryear, which saw air-conditioning not as something to drive up prices, but an amenity to offer as a competitive advantage. The story quotes the president of Panera, a chain of sandwich shops and bakeries, who says that the company isn't concerned with making WiFi a profit center, and that it helps fill its locations up during off-peak hours -- a claim it has been making for a while. He then points out, though, that Starbucks are generally pretty busy, so he wonders why they'd make their WiFi free (though perhaps he's using a little bit of the Jedi Mind Trick to ward off competition). Free WiFi would seem to fit with Starbucks' "third space" concept, which is supposed to make its stores a comfortable place between work and home, where people can (and want to) hang out for a while. Free WiFi certainly seems to be helping out plenty of other businesses, but it's hard to argue with Starbucks' success over the years. Still, you'd think that offering free WiFi would help fill the company's stores with more people, particularly during off-peak hours.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

39 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Dave, 6 Mar 2007 @ 4:48pm

Agreed
Agreed. I like Starbucks coffee, however I used to make it over to Panera and sip their coffee and maybe have a cookie so that I can surf the net for free. I have definitely made the conscious decision to go for free WiFi over Frappuccinos.
[ link to this | view in chronology ]
George, 6 Mar 2007 @ 4:48pm

YUP!
Starbucks is just that, in for the "Bucks!" Charging for WI FI is like charging to use the library! Doesn't Starbucks realize how irritating it is. Trying to squeeze every penny out of their customers is going to be their demise!
[ link to this | view in chronology ]
Tony, 6 Mar 2007 @ 4:48pm

Couldn't have said it any better
Free Wi-Fi service and coffee has always been a dream for me, too bad Starbucks can't learn from its' competitors that free Wi-Fi service is the way to go. Bandwidth Buyers Guide
[ link to this | view in chronology ]
Kevin, 6 Mar 2007 @ 4:48pm

Free wi-fi = bad idea
If Starbucks offered free wi-fi then nobody would ever be able to sit down in any Starbucks ever again. T-mobile is definitely faster than the panera that I go to in Santa Monica. t-mobile does not turn off their wi-fi at random times either (rarely adhere to the 1-3 and 6-8 blackout hours). Starbucks is an incredible company and knows how to run a great business, take care of its employees, and come out black quarter after quarter. They will be making some very significant changes in the near future if Howard Schultzs' recent memo means anything. BTW I have been t-mobile wifi subscriber for 5 years now and its been great. tried verzion wireless broadband and its sooo slow.
[ link to this | view in chronology ]
Michael Long, 6 Mar 2007 @ 5:12pm

Traffic
I've talked to many restaraunt owners about putting in WiFi and their concerns seem to fall into two major categories.

The first is that they're afraid people are going to be surfing for porn and that there could be an issue with offending other customers. While that could be a problem, you never see people going in, sitting down, and spreading Playboy's out on the table either.

The second is related to traffic. While WiFi can be be used to draw people in, many owners are concerned that it's going to be the wrong type, and that they'll "camp out", taking up space for little to no return.

As your article states, Starbucks is already pretty busy, and offering free WiFi could simply attract more people who'd nurse a single cup of coffee at a table while surfing the web all day, leaving no room at all for other paying customers.
[ link to this | view in chronology ]
- Anonymous Coward, 8 Mar 2007 @ 7:20pm
  
  Re: Traffic
  This is exactly right. There's a fine line between being comfortable and harboring loiterers.
  [ link to this | view in chronology ]
Susanna, 6 Mar 2007 @ 5:37pm

Starbucks - Don't Give It Away
I hope Starbucks doesn't go to the free WI-FI. I pay good money for my T-Mobile wireless account, and I don't think wi-fi access should be given away for free.
[ link to this | view in chronology ]
- Joe Block, 6 Mar 2007 @ 6:05pm
  
  Re: Starbucks - Don't Give It Away
  Wouldn't you rather not have to pay T-Mobile?
  [ link to this | view in chronology ]
- smith, 6 Mar 2007 @ 8:02pm
  
  Re: Starbucks - Don't Give It Away
  I hope our country never moves to universal health care. I pay tons of money for health insurance for my family and I don't think access to doctors' care should be given to children for free.
  [ link to this | view in chronology ]
  - The Citizen, 8 Apr 2007 @ 2:26pm
    
    Re: Re: Starbucks - Don't Give It Away
    Dear Smith,
    
    You point please? And I hope your aren't being serious here. In the case you are serious, i have nothing to say. In the case you are kidding, I have nothing to say.
    
    ?
    
    The Citizen
    [ link to this | view in chronology ]
boomhauer (profile), 6 Mar 2007 @ 5:46pm

hate to admit...
Ive always wished theyd have it free so I could use it (no way id pay that much for something Id barely use), but i hate to admit I think theyve done the right thing... by charging they keep the "riff-raff" out who might wind up camping for extended hours just to get the net.. and if theyre so cheap that theyre camping somewhere for net access, its not as likely theyll be spending $ on coffee either.

I like the "off peak hours" argument but wouldnt these guys wind up hanging out during peak just as samel? thus making peak overly crowded, a worse situation that having slow off-peaks.

but the main reason i think they have it right - the dang places are always full anyway. I see small coffe shops open and close (despite my frequenting them) all the time, but SB's just keep adding new ones.. ive never seen one close. Read it here first - the next "big tobacco" will be SB- theres no normal explanation for that many people spending that much for that mid-range coffee, that frequently AND for that long (both up and down economies)... there MUST be some nicotine or some other addictive substance in those drinks! ;) ;)
[ link to this | view in chronology ]
- Jeremy, 6 Mar 2007 @ 6:01pm
  
  Re: hate to admit...
  How many people that would be considered "riff-raff" can afford the wireless devices that are needed to access the web? Most people that own laptops and PDA's would not fall into this category. Please correct me if I'm wrong.
  [ link to this | view in chronology ]
  - Boost, 6 Mar 2007 @ 6:58pm
    
    Re: Re: hate to admit...
    Ever been to college, Jeremy? College students have laptops and love a free meal all the same.
    [ link to this | view in chronology ]
Jeremy, 6 Mar 2007 @ 5:57pm

Re: Free = Better
My PDA has wireless access and I love being able to check my e-mail and blog posts from almost anywhere. I avoid eateries that do not have free Wi-Fi. I would sacrifice food quality if I needed to check my mail in a hurry and they offered free Wi-Fi.

If I get lost while driving, most anyplace with free Wi-Fi is likely to get my business while I access Google Maps.

When I travel, I will not stay in a hotel that doesn't have complimentary Wi-Fi. I am a sucker for free Internet.
[ link to this | view in chronology ]
Rich, 6 Mar 2007 @ 5:58pm

Precisely right...
Free wi-fi is why I am much more likely to go to Panera than Starbucks, even though I only use the wi-fi on rare occasions.
[ link to this | view in chronology ]
Iron Chef, 6 Mar 2007 @ 6:33pm

I can pay a little for a consistent experience
Starbucks is going after a different demographic by charging for wifi. The eateries with the free wifi are generally more catering to a sub-prime customerbase.

Have you ever tried these free wifi services? Sometimes they work, but sometimes they don't. There was one place I was trying to logon, and get to my email, and was failing miserably. I called the (non-1-800 helpline) on the table and the support guys said that I had to download a new driver from Dell's website. Only one problem though- I couldn't get to my email to get the URL for the WiFi driver I had to download.

I guess when you go with Starbucks/Hotspot/T-Mobile/Kinkos, or whatever the devil they are calling it these days, it's more of a standards-based approach, and I know it will work with my gear. And for me, who travels extensively, I'm willing to pay a little money for consistency.

I guess if I wasn't travelling so much, I may be willing to be teathered to one or two places.. But thats not the case for me.
[ link to this | view in chronology ]
GoblinJuice, 6 Mar 2007 @ 6:38pm

GOD I HATE POOR PEOPLE!
@Susanna - Yeah! Let the people who can't pay go without! Damn the poor bastards! GOD I HATE POOR PEOPLE!

Sarcasm, folks, sarcasm.
[ link to this | view in chronology ]
Chris, 6 Mar 2007 @ 6:55pm

experiance says make it free
Having worked for ISP's for the last couple years, I haven't seen any managers or businesses really complain about providing free WiFi. Quite generaly the simple nature of human comercialism says that if a lot people are in one location, you should be there as well. So even if you do attract the freeloaders people will think that your business is a happening place, and just might stop in to see why. As far as the porn surfing goes, it should be the least of their concerns, but setting up a simple proxy server (which should be done regardless, can redircet everyone to your companies homepage first, etc...) is an easy way to help avoid such circumstances. Besides if you see people hanging out in front of your shop doing nothing but leeching your WiFi, slap them with a loitering ticket, as you're legaly allowed to do so.
[ link to this | view in chronology ]
Joe, 6 Mar 2007 @ 7:52pm

I think it should be free. Admittedly there will always be the slugs that just surf all day. I always patronize the place that give the wifi for free and don't overstay my welcome. I like the "God I hate poor people", nice atitude babe!
[ link to this | view in chronology ]
Jess, 6 Mar 2007 @ 8:14pm

First of all, Starbucks is always filled with loiters(sp?) anyways. I am from Portland and now the city is putting up free wifi for the city. Maybe corporations should not be so greedy. There are a lot of ways to provide free wifi and still make a profit on the wifi (i.e. homepage ads). 20 bucks a month for internet that I have to drive to and spend about 5 bucks for a coffee while I use it too... no thanks!
[ link to this | view in chronology ]
Dosquatch, 6 Mar 2007 @ 8:16pm

Plenty of places have free wifi
Who cares? Let Starbucks do whatever it wants.
[ link to this | view in chronology ]
Bill, 6 Mar 2007 @ 8:42pm

Free coffee
If Starbucks gave free coffee and charged for wi-fi I would go there a lot more often. If they gave free coffee and free wi-fi I don't think I'd get a table there.
[ link to this | view in chronology ]
JT, 6 Mar 2007 @ 9:32pm

although at many Starbucks....
... there are other businesses nearby with an unsecured network allowing free wifi access. rather ironic and funny, but still very useful. :)
[ link to this | view in chronology ]
Amy Alkon, 6 Mar 2007 @ 10:02pm

I've been to Panera once. It was loud and unwelcoming, and when I tried to go onto my own website, their host company had blocked it as porn. Now, I'm a syndicated columnist in over 100 newspapers, including daily newspapers. I don't have a problem with porn, but I'm not running a porn site. I do have a problem with censorship.

Furthermore, in my eyes, the riffraff are the loud asshats on cell phones. A homeless artist guy I'm friends with does his work out of a Starbucks in Santa Monica. The staff love him and treat him very well, and understand that he just needs a little help to start earning a living from his work. When, one week, he made $500 on his art from a guy in France, one of the baristas let him use his PayPal account to get the cash, which he gave him immediately. A girl barista there let him store his birth certificate and driver's license in the trunk of her VW Bug for safekeeping. I find that Starbucks employees tend to be a cut above, like that. Or maybe I should say three cuts above, in the case of these people. Free Wifi at Panera? Yeah, whatever.
[ link to this | view in chronology ]
Iron Chef, 7 Mar 2007 @ 12:23am

Re: I can pay a little for a consistent experience
I guess you get what you pay for. The HotSpots at StarBucks and Kinkos work well for my needs.

It is a free market society, and in the spirit of what Dosquatch said, the independents are going after a different customer than Starbucks. My needs are different than those who lounge around and are just looking to kill time. WiFi is a productivity tool for me, and consistency is key.

As a business professional, I am willing to pay $5 to get a powerpoint on-the-go which may save my company 10k. That's why I have an expense report.

Don't surf for porn and to everyone else, Man.. I wouldn't consider doing that anyway using any WiFi connection...
[ link to this | view in chronology ]
- The Citizen, 8 Apr 2007 @ 2:33pm
  
  Re: Re: I can pay a little for a consistent experi
  I think people are missing the point. And I don't think starbucks is promoting the idea about coming there to coduct business.
  
  Can Starbucks afford to be selective ?
  
  One is not going to find THUGS at the coffee shop for the free wifi.
  
  If you don't want College Kids.. then don't put one in a college town.
  
  Paying for wifi .. is bad business .. period.
  
  Starbucks will come around.
  
  You "prefer to pay" people.. well I'm sure there will always be the option to pay. Call Verizon ... LOL
  [ link to this | view in chronology ]
|333173|3|_||3, 7 Mar 2007 @ 2:30am

I doubt anyone would surf porn publicly, but downloading movies in the background might be more likely, especially in a free place with no registration.

THe solution to leaches would be to gradually throttle the connection, so if you stay for only 30 mins the connection is perfect, then speed decays at an increasing rate until you are cut off.

I agree about people on 'phones. Seriously, if someone came up to your table, took you outside and talked to you for however long, you would consider it rude, yet answering a 'phone is not. The other thing I hate is when people don't set thier 'phones up properly and shout into them. I think they should come by default set to thier loudest speech volume and quietest ringer volume.
[ link to this | view in chronology ]
Shohat, 7 Mar 2007 @ 3:21am

dont make it free
Free WiFi hurts business. The key of having a good food/coffee place is to have people spend the absolute minimum of time in it, and leave happy with what they got.
Free WiFi in an allready successful place would just increase the number of people that are driving away potential clients due to the lack of free space .
[ link to this | view in chronology ]
Ian Douglas, 7 Mar 2007 @ 4:01am

Fon
If you're unfortunate enough to live above or next to a starbucks you can get free wifi at loads of them by getting Fon to send you a free router through their fonbucks promotion, sharing your broadband with the coffee drinkers, then using the service offered by other foneros for nothing.
[ link to this | view in chronology ]
MikeT, 7 Mar 2007 @ 7:06am

I'd rather pay
The one time I used Panera's wifi, it was terrible compared to the wifi at the B&N with Starbucks next door. I mean, like night and day terrible. I'd much rather pay a few dollars for good access, especially since the places that I have seen where it is free and people actually want to go, have a problem with camping mooches.
[ link to this | view in chronology ]
Andrew D. Todd, 7 Mar 2007 @ 7:13am

Upstairs/Downstairs
In my experience, astute small shopkeepers commonly expand into the basement or the attic. The high-value goods are on the main floor, of course, at street level, but the low-value goods are either upstairs or downstairs. Used bookstores often used this system, back in the days before the internet. The main floor might have been selling new college textbooks, under a de-facto concession from the course instructor. This was back before Amazon, when essentially no one gave discounts over "publisher's list price." However, the attic, generally reached by a fairly narrow staircase, would have used books, at about a tenth of the price. The alternative use of the upstairs was either cheap apartments, or cheap office space for the self-employed, so the rents were much lower than for the main floor. The way the system worked, the idea was to get the instructor, or someone who might be an instructor in two or three years, coming in regularly to buy used books; to make friends with him; and in due course, the instructor would place a textbook order, giving the bookstore a practical monopoly on sales to students. Of course conditions have changed somewhat, but the system can be adapted to other businesses.

Presumably, as applied to a coffee shop, you would have the main floor selling food, and an upstairs for those who want to camp out. If necessary, you could put down a layer of wire screen under the carpet of the upstairs, making a partial Faraday Cage. That way, the upstairs could have its own WiFi access, under different rules than the main floor.
[ link to this | view in chronology ]
a, 7 Mar 2007 @ 7:21am

First off, I have never been inside a Starbucks, I don't drink coffee, so I don't really care.

One thing they could do is offer free WiFi during off peak times when they are usually empty (if there is such a time). That way, they don't have people parking out during their busy times yet will draw in some when they are not busy. Seems pretty simple to me. Why do something to draw in even more people when they are full?
[ link to this | view in chronology ]
Jon, 7 Mar 2007 @ 7:32am

Maybe not free...
I would tend to agree with Starbucks' business model of not offering WiFi for free - they generally need to keep traffic moving, especially during peak hours. There have been times when I would have paid $3-$5 for WiFi access for a short period of time too - I don't have a problem paying for a valuable service, but I do have my limits. I'm not going to spend $10 for a day of internet access, when I'll only use it for 15 minutes, or $20 for a month when I'll use it twice a month at most. What I'd like to see is a discount for current T-mobile customers OR a more reasonable pricing scheme. I don't need a day of access, I need an hour.

I honestly prefer Panera anyway - the internet isn't always great (sometimes a little slow), but it's never been a hindrance; pages do load, I can get my email, even connect remotely to my computers. Plus, I can actually sit down and have a sandwich or a bowl of soup instead of just a coffee and a danish.
[ link to this | view in chronology ]
Ed, 7 Mar 2007 @ 8:54am

What is the problem about??
C'mon,

It's absolutely about money. Starbucks. do not want to give nothing free to no one, thats it.

You can seat at cafe at Paris, drink one coffe and stay there for all day long, reading your newspaper and nobody will ask for you leave the place. C'mon, who do it? A very very small number of people. And, most of the places give you the newspaper, for free, to be read in cafe.

Internet acess must to be free also. As napkins, strollers, sugar, etc. One or two customers will camping on... What's the problem? They will became niot profitable ones?? That is the matter???

This kind of approach where all is profit related shames.

BTW, I do preffer Panera all way instead Starbucks.

Vive la Liberte
[ link to this | view in chronology ]
Lyle, 9 Mar 2007 @ 4:55am

Gone Wifing
I used to be a big Starbucks customer. I live in Seattle. My company (Directors, Ltd.) paid for the wifi ($35 per month) and my Starbucks card ($125 per month). I felt like we were getting screwed on the wifi, so I canceled the account even though I was a regular user -- daily. Now I almost never go to a Starbucks and I haven't refilled my SB card in nine months. When they drop the wifi price to something competitive -- say $10 per month, I'll consider it. Plenty of places offer it for free. The chuckleheads at SB replaced the square tables with smaller round ones at the store near me. I get the message -- I took my business elsewhere. "Bottomline management" often comes with unintended consequences.
[ link to this | view in chronology ]
Don Henson, 8 Apr 2007 @ 12:44pm

pay for wi-fi is B.S.
hanging out at the starbucks? I've seen hundreds, and people are hanging out there. not for long.
[ link to this | view in chronology ]
john, 19 Oct 2007 @ 4:25pm

Why cant Starbucks have free WiFi? I mean they already make a lot of money as it is. If they offered it for free than they would make even more money. http://bandwidthdomain.com

[ link to this | view in chronology ]
Dave, 20 Oct 2007 @ 11:01am

Deaths
Did you know people are DEAD due to wifi? People died in europe in september/october 2007 if you need internet - get it hardwired into your darn stores and hotels, otherwise forget it and expect lawsuits against you http://www.engadget.com/2006/11/24/uk-schools-pull-the-plug-on-wifi-for-alleged-health-reason s/ http://www.redorbit.com/news/technology/946193/health_scare_sparks_rush_to_dump_wifi/index.htm l?source=r_technology
[ link to this | view in chronology ]
newest jordan shoes, 9 Nov 2010 @ 12:20am

newest jordan shoes
I will instantly grab your rss feed to stay abreast of any updates. Solid work and much success in your business enterprize!
[ link to this | view in chronology ]