Byline: By danny hakim section: Section B; Column 0; Metropolitan Desk; Pg. 1 Length

URL: http://www.nytimes.com
SUBJECT: CAMPAIGNS & ELECTIONS (89%); US PRESIDENTIAL CANDIDATES 2008 (89%); POLITICS (78%); POP & ROCK (78%); MUSIC (78%); HEALTH CARE POLICY (78%); POLITICAL DEBATES (78%); PRIMARY ELECTIONS (78%); CELEBRITIES (78%); FILM (77%); TELEVISION INDUSTRY (75%); INTERVIEWS (75%); HEALTH CARE REFORM (70%); BROADCASTING INDUSTRY (69%); FUTURES (64%); PUBLIC PRIVATE PARTNERSHIPS (50%); HEALTH MAINTENANCE ORGANIZATIONS (50%); WALKING & JOGGING (76%); SINGERS & MUSICIANS (78%); INTERNET SOCIAL NETWORKING (61%)
PERSON: BARACK OBAMA (95%); HILLARY RODHAM CLINTON (52%)
GEOGRAPHIC: GHANA (75%)
LOAD-DATE: March 17, 2008
LANGUAGE: ENGLISH
PUBLICATION-TYPE: Newspaper

Copyright 2008 The New York Times Company

968 of 1231 DOCUMENTS

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March 17, 2008 Monday

Late Edition - Final

Does This Latte Have a Funny Mainstream Taste to You?
BYLINE: By JEFF LEEDS
SECTION: Section C; Column 0; Business/Financial Desk; Pg. 1
LENGTH: 1417 words
In 2005, Starbucks looked like it was going to do for undiscovered music what it had done for the nonfat latte. The company decided to stock ''Careless Love,'' a CD of sophisticated pop-jazz songs by Madeleine Peyroux, who had attracted only a modest following in this country, plying her craft in small bars. Ms. Peyroux soon found herself at No. 81 on the Billboard chart, and has become a mainstay of jazz.

Starbucks was betting that its eclectic taste played to the upscale atmosphere of its coffee shops, where it enticed customers to pay $4 for their daily caffeine fix. And record companies saw Starbucks at the vanguard of a new class of unconventional sales outlets that could keep the CD alive in an age of digital downloads.

But the ardor for Starbucks has gone the way of yesterday morning's grounds. Critics in the music industry say the company squandered its cachet by mismanaging the effort to broaden its music mix. The choices that reflect its early taste for the offbeat -- like an album from Lizz Wright, a torchy pop singer -- are now squeezed in with offerings not unlike those at Wal-Mart, including the latest releases from Alicia Keys and James Blunt. The shift has not been lost on some customers.

The music offering ''is more popular now,'' said Hazel Delgado, 33, a social worker and Starbucks regular from San Bernardino, Calif., who attended a recent concert presented in front of one of its coffee shops by another act on the company's label, the singer Sia. ''I want to come in and be surprised,'' she said. ''If they do get more mainstream, why bother?''

Along the way, Starbucks has alienated business partners who contend that it has demanded too big a cut of music revenue. The company's shift in direction has also prompted upheaval within -- including the departures of half a dozen senior executives from its entertainment unit.

Starbucks, of Seattle, said its music sales are healthy: it reports selling 4.4 million CDs in North America last year, up some 22 percent from the year before. Still, it opened hundreds of shops in the same period, increasing stores in the United States by 18 percent.

Despite adopting a broader musical approach, Starbucks on average sells only two CDs a store each day at company-owned shops, according to people briefed on its business. Starbucks disputed that figure but declined to provide a different one.

Its sliding reputation in the music business represents a setback in its efforts to build cultural credibility, which have also included promotion of a handful of films like ''Akeelah and the Bee,'' books like Mitch Albom's ''For One More Day'' and an in-house magazine called Joe.

For music fans, Starbucks initially conveyed ''a promise that 'we're going to be bringing you something special, unique,' '' said David Sonenberg, a talent manager who has guided the careers of acts including the Fugees and John Legend, who had a CD carried by Starbucks.

''I don't have the sense that there is any longer a culture and purpose to their musical endeavors,'' said Mr. Sonenberg, who has had a dispute with the company over its handling of a new band, Low Stars. ''It's lost its sense of purpose.''

The coffee chain began its musical offerings with a 1994 album by the saxophonist Kenny G, an early investor who now records on the company's own label, Hear Music. But it cultivated a more discerning musical reputation with releases like a collection from the Blue Note jazz label.

In the late 1990s, as Starbucks grew exponentially, its chairman, Howard D. Schultz, decided to buy Hear Music, then a small chain of music stores based in the San Francisco Bay area and run by Don MacKinnon, a music entrepreneur who had started by creating a mail-order catalog. Soon, Starbucks customers were finding Hear Music's custom-made compilations of jazz artists and little-known singer-songwriters on the sales counters.

But in 2004, after Mr. MacKinnon's team struck a deal to help produce and distribute what would become the Ray Charles album ''Genius Loves Company,'' Mr. Schultz decided to hire someone with a more general business resume to oversee the company's expansive entertainment projects, and picked Ken Lombard, formerly president of a company overseeing retail development projects for Magic Johnson, to be its entertainment chief.

Mr. Lombard said his charge was to expand and diversify Starbucks's music selection, which he said was never intended to exclude mainstream hits.

''We're trying to make music selections that fit a customer demographic that's broad and, with that, we've tried to provide great music,'' he said.

In a business where CD sales are in free fall, many executives remain thankful for exposure in Starbucks's 6,800 company-owned shops, including Tom Corson, executive vice president at the RCA Music Group, which released the current album by Ms. Keys. It has sold more than 120,000 copies at Starbucks.

''There's a disenfranchised consumer right now,'' he said. ''I think that's where businesses like Starbucks play a really vital role. They're good for getting to people who don't really know where to find CDs anymore, especially the right ones.''

Others suggest that Starbucks has expanded and altered its mix of music too quickly under Mr. Lombard. Before he took charge, the stores offered 5 to 20 CDs over the course of a year, according to the company. Now, Starbucks displays as many as 20 CDs at a time, adding six to eight new ones each month or so.

''They've lost that 'event' thing,'' a senior executive at one of the industry's biggest labels said, requesting anonymity because the label continues to market music there. ''It would be like Oprah's Book Club having 15 books a week.''

Starbucks says it still has the power to move record sales, including for its own label, which released Paul McCartney's ''Memory Almost Full'' last year. Though it shifts titles regularly, its sales of a CD over, say, six weeks typically accounts for 5 to 10 percent of the album's overall sales, according to music executives who do business with the company.

Mr. Lombard said that since taking a broader approach in the shops, ''we have done nothing but continue to add value to the credibility that we've been able to build around the Starbucks voice.'' Behind the scenes, however, his changes in the Starbucks music strategy touched off an internal clash that led to an exodus of executives from the division, including Mr. MacKinnon early in 2006.

Mr. MacKinnon declined to comment for this article, but others briefed on the conflict say that morale in the unit has been shaken by a belief that Mr. Lombard was focused on increasing sales volume without a particular creative vision. Some of the departures came after those executives expressed frustration with Mr. Lombard's management style, which they viewed as brusque, these people said.

Mr. Lombard, for his part, played down suggestions of continuing dissent, and added, ''At no point in time was there anyone who was pressured to leave.''

Outside the company, Mr. Lombard has not been shy about throwing Starbucks' weight around. For a time, the company offered music labels on favorable terms -- it did not, for example, return unsold CDs as most music shops do -- and in exchange the labels offered their CDs at discounted prices.

But last year, Starbucks began pushing for another discount on its purchase of new releases, lowering its price to $8 from $8.25, even while seeking the right to return up to 20 percent of its orders, according to people briefed on the company's negotiations. Those terms can equate to $2 or $3 a CD less than the price paid by other retailers, these people said.

And for emerging talent, it has raised the price of entry. When Starbucks merely stocks an album by an emerging artist on an outside label, it routinely seeks up to 50 percent of the total profit, including sales at retailers.

''What they were asking was not commensurate with what they were giving,'' said Gary Borman, the longtime talent manager behind acts like Faith Hill and Keith Urban, who has discussed deals with the chain. ''We just walked away,'' Mr. Borman said.

Such talk from artists' managers suggests that others who once viewed Starbucks as a pivotal player in music might not lag too far behind. ''To this day, I see it as a great way of reaching a certain customer,'' Mr. Borman said, ''but not the panacea that a lot of people considered it to be.''

URL: http://www.nytimes.com
SUBJECT: MUSIC (90%); JAZZ & BLUES (90%); MUSIC INDUSTRY (90%); COFFEE & TEA STORES (90%); MOVIES & SOUND RECORDING SECTOR PERFORMANCE (89%); ENTERTAINMENT & ARTS (89%); RECORD REVENUES (89%); POP & ROCK (78%); MOVIES & SOUND RECORDING TRADE (78%); RECORD PRODUCTION & DISTRIBUTION (77%); MUSIC REVIEWS (78%); SINGERS & MUSICIANS (89%)
COMPANY: STARBUCKS CORP (93%)
TICKER: STB (LSE) (93%); SBUX (NASDAQ) (93%)
INDUSTRY: NAICS722213 SNACK & NONALCOHOLIC BEVERAGE BARS (93%); SIC5812 EATING PLACES (93%)
PERSON: MITCH ALBOM (50%); ALICIA KEYS (55%)
GEOGRAPHIC: SEATTLE, WA, USA (92%) WASHINGTON, USA (92%); CALIFORNIA, USA (74%) UNITED STATES (92%); NORTH AMERICA (79%); SPAIN (73%)
LOAD-DATE: March 17, 2008
LANGUAGE: ENGLISH
GRAPHIC: PHOTOS: A Starbucks shop in Seattle displayed coffee beans and a Paul McCartney CD. Some insiders saw a stress purely on marketing.(PHOTOGRAPH BY ANDREI PUNGOVSCHI/ASSOCIATED PRESS)(pg. C1)

Executives who have left include a backer of Ray Charles.

Starbucks helped lift CD sales of Madeleine Peyroux, performing here at a jazz festival in Spain.(PHOTOGRAPH BY RAFA RIVAS/AGENCE FRANCE-PRESSE -- GETTY IMAGES)(pg. C5)
PUBLICATION-TYPE: Newspaper

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The New York Times
March 17, 2008 Monday

Correction Appended

Late Edition - Final
Open-Source Troubles In Wiki World
BYLINE: By NOAM COHEN
SECTION: Section C; Column 0; Business/Financial Desk; Pg. 1
LENGTH: 1737 words
Since he helped create Wikipedia in 2001, Jimmy Wales has been called many things: benevolent dictator, constitutional monarch, digital evangelist and spiritual leader of the tens of thousands of volunteers who have made the online encyclopedia one of the top 10 most visited Web sites.

Sue Gardner, the new executive director of the Wikimedia Foundation, which runs the various Wikipedia projects, said that when she first met Mr. Wales, ''he made a joke that he saw himself as the queen of England, waving to the crowd.''

Unfortunately for him, the news media love a good royalty scandal and, in the last few weeks, he has been getting the royal treatment.

Last month, Mr. Wales was accused of intervening to protect the Wikipedia page of a TV news commentator with whom he had a romantic relationship. The accusations were fueled by text messages, said to be between Mr. Wales and the commentator, Rachel Marsden, that were published on a gossip Web site.

He added to the online fuss on March 1 by addressing the issue on his own page, and announcing that the relationship was over. (Ms. Marsden put up a T-shirt and sweater he had left in her apartment on eBay. A bid of $500 for the T-shirt came up short.)

And there have been persistent questions, chiefly raised by a former employee, that Mr. Wales has abused his expense account, including filing for a $1,300 dinner for four at a Florida steakhouse that was ultimately denied and lacking receipts for $30,000 in expenses.

In some ways, these allegations -- trivial and personal as they might seem -- illustrate the growing pains Wikipedia is now experiencing. The populist impetus for Wikipedia -- building an open-source encyclopedia -- has been spectacularly fulfilled with more than 2.2 million separate articles in English, 52 million unique visitors in December in the United States, according to comScore Media Metrix and brand recognition that puts it in the upper echelon with Google, Yahoo and Microsoft.

Until recently, however, Wikipedia was run more like a storefront community center than a digital-age powerhouse. What was a nine-person operation -- a top 10 Web site had a paid staff of less than 10 -- has just recently grown to a 15-person operation. Last year's $2.2 million budget grew to $4.6 million this year.

''A surprising number of people don't even know it is a nonprofit,'' Ms. Gardner said. ''They say, 'How do they make their money, anyway?' They assumed there were ads or some other way.'' In fact, the project relies on fund-raisers, and its latest one, Ms. Gardner said, received donations from 45,000 individuals, with a $30 average contribution.

Mr. Wales and the board of the Wikimedia Foundation have tried to professionalize the project, moving its offices from St. Petersburg, Fla., to San Francisco, to be near the talent, entrepreneurial spirit and wealth of Silicon Valley. The board of seven trustees, made up of appointed and elected members including Mr. Wales, has brought in new administrators, beginning with Ms. Gardner, a former journalist who had run the Canadian Broadcasting Company's Web site.

But members of the Wikipedia community -- scattered around the globe, writing in more than 200 languages -- remain consistent in their belief in a decentralized power structure and noncommercial principles. And they aren't sure what to make of the move to the big city, with its reputation as the home of irresistible temptations.

The persistent arguments about whether to accept any kind advertising, no matter how indirect, to increase revenue -- something Mr. Wales and Ms. Gardner among others say they oppose -- have recently flared up again.

And there have been questions raised about the foundation's close relationship with Roger McNamee of Elevation Partners, a venture capital firm in Silicon Valley, and who has helped arrange two sizable donations to Wikipedia.

Some members further wonder if Mr. Wales, who has created a company, Wikia, to make money from wikis and to implement a volunteer-created search engine, will reduce his role within Wikipedia.

But Mr. Wales said he was adamant.

''Dialing down is not an option for me,'' he said. ''Not to be too dramatic about it, but, 'to create and distribute a free encyclopedia of the highest possible quality to every single person on the planet in their own language,' that's who I am. That's what I am doing. That's my life goal.''

Henry Mintz- berg, a professor of management at McGill University who studies organizations, said a visionary leader is crucial at the beginning. But, he said, ''what these people do is, they are determined and focused,'' he said, keeping the vision pure, ''not mixing it up.''

It is natural that over time a visionary leader's role is diminished and that is good thing, he said, quoting Bertolt Brecht, ''unhappy is the land that has no heroes -- no, unhappy is the land that needs heroes.'' Despite some of the attacks on Mr. Wales, he is still largely a hero within the Wikipedia community -- walking through the annual conventions with assistants in tow, greeting the most enthusiastic Wikipedia contributors from across the globe, receiving invitations to the World Economic Forum in Davos, attending George Soros's birthday party.

Ms. Gardner said there will always be a need for what Mr. Wales provides.

''People want to reach out to someone, and they know his name -- it could be a famous person, a celebrity, or not -- if they have a problem with their entry they will contact him.''

It was in this capacity that Ms. Marsden, a columnist and a former commentator on Fox News, said she had reached out to Mr. Wales, after her article page was being vandalized. She wrote via e-mail that ''Jimmy volunteered to make changes to my Wikipedia page after we became involved personally and romantically. Before that, he really couldn't have cared less.''

Mr. Wales wrote on his user page that he would not interfere before meeting Ms. Marsden, and summed up, ''My involvement in cases like this is completely routine, and I am proud of it.'' However, the incident did pry open his personal life to Silicon Valley gossip sites (he said that he had been separated from his wife when he met Ms. Marsden) and has created the embarrassing spectacle of having his old laundry put up for auction on eBay.

At the same time, a former foundation employee, Danny Wool, has created a blog where he has been detailing what he says were Mr. Wales's abuses of expense reimbursements, twisting Mr. Wales down-home nickname ''Jimbo'' to ''Jimbeau.''

While the allegations involve a time before Ms. Gardner arrived, she said: ''I have done my own conversations with people, and I am satisfied that Jimmy hasn't used the Wikimedia Foundation money to subsidize his own personal expenses. I believe he has consistently put the foundation's interests ahead of his own.''

Beyond the personal questions, many Wikipedia members have expressed reservations about the project's relationship with Elevation Partners.

Mr. Wales said in an interview that Elevation Partners had expressed interest initially in business opportunities with Wikipedia, but ''it took one meeting for them to realize it was off the table.'' He added: ''Certainly there can be no investment in Wikipedia. Wikipedia is a nonprofit and always will be.'' He said he also has had inquiries from other venture-capital firms, who likewise were told to look elsewhere.

But the initial meeting with Elevation, Mr. Wales said, led to a relationship with one of its partners, RogerMcNamee, who stresses that he is acting as a volunteer entirely separately from his business. Mr. Wales describes him as ''a bit of a mentor in doing fund-raising.''

Ms. Gardner said that Mr. McNamee in the past had lined up a $500,000 donation, and arranged another $500,000 donation that came through last week.

Mr. McNamee would not confirm this, but did say, ''I am a Wikipedia volunteer -- I help with strategy, fund-raising and business development -- it has nothing to do with Elevation Partners. And no on should be confused about that.''

Florence Nibart-Devouard, the chairwoman of the Wikimedia board, who has never met Mr. McNamee, did not sound enthusiastic.

''It's not a huge concern right now, but I am not comfortable with the concept,'' she said, of venture capitalists consistently making donations to the foundation. ''I would much prefer a varied diverse base of donors, some could be large, some could be long-term friends, who help in finding new friends. I hope the foundation won't rely on these relationships.''

She said that she had proposed a resolution, passed recently, to require that any donation larger than 2 percent of revenues be approved by the board. And she said she would ''make some noise'' if a venture capitalist were to try to become a board member.

While Ms. Nibart-Devouard worries about the provenance of donations, Mr. Wales and Ms. Gardner say they must worry also about sustainability. ''A big piece of my day is thinking about money,'' she said.

Mr. Wales said that ''existing on donations keeps us on a shoestring budget'' adding that he was not opposed to leveraging Wikipedia's brand, consistent with its free-culture values, of course.

''There are some kinds of ways of using our brand name -- a trivia game, a branded home-edition trivia game, that kind of thing seems to fit,'' he said. Perhaps a Wikipedia documentary TV show. He said that Elevation Partners ''are flexible -- they could be involved in that kind of stuff.''

''We do not want to touch the core,'' he added. ''The core of Wikipedia is something people really believe in. That is too valuable for the world to screw it up.''

As long as he is involved with Wikipedia, however, Mr. Wales will continue to be a guiding light for its many contributors -- as well as a lighting rod for its critics.

''Recently, I was in Thailand and I was giving a speech there and spoke about opposition to censorship of the Internet in Thailand, how this was bad for their economy, and this made the newspapers,'' he said. ''That's really important, that I have the ability to do this.''

But he conceded that along with ''my being some kind of celebrity -- not a real celebrity,'' comes scrutiny that ''isn't a welcome part of the job.''

He added: ''People who have achieved a public voice find it a mixed bag.''

URL: http://www.nytimes.com
SUBJECT: INTERNET SOCIAL NETWORKING (89%); RELIGION (78%); INTERNET AUCTIONS (78%); EXECUTIVE MOVES (77%); VOLUNTEERS (77%); FUNDRAISING (77%); CHARITABLE GIVING (67%); RESTAURANTS (64%); NON FICTION LITERATURE (58%); BRANDING (50%); BRITISH MONARCHS (78%); TEXT MESSAGING (53%)
COMPANY: MICROSOFT CORP (52%); GOOGLE INC (52%); WIKIMEDIA FOUNDATION INC (58%)
TICKER: MSFT (NASDAQ) (52%); GOOG (NASDAQ) (52%); GGEA (LSE) (52%)
INDUSTRY: NAICS511210 SOFTWARE PUBLISHERS (52%); SIC7372 PREPACKAGED SOFTWARE (52%); NAICS518112 WEB SEARCH PORTALS (52%); SIC8999 SERVICES, NEC (52%); SIC7375 INFORMATION RETRIEVAL SERVICES (52%); NAICS519130 INTERNET PUBLISHING & BROADCASTING & WEB SEARCH PORTALS (52%)
PERSON: JIMMY WALES (94%)
GEOGRAPHIC: ENGLAND (79%); UNITED KINGDOM (79%); UNITED STATES (78%)
LOAD-DATE: March 17, 2008
LANGUAGE: ENGLISH
CORRECTION-DATE: April 1, 2008

CORRECTION: An article on March 17 about internal disagreements and accusations of favoritism at Wikipedia misstated the name of the Canadian network that once employed Sue Gardner, executive director at the Wikimedia Foundation, which runs the various Wikipedia projects. It is the Canadian Broadcasting Corporation, not the Canadian Broadcasting Company.
GRAPHIC: PHOTOS: Rachel Marsden, a New York columnist and former Fox News commentator who dated Jimmy Wales, tried to auction a T-shirt, among other items, that he left in her apartment.

Roger McNamee of the venture capital firm Elevation Partners arranged two big donations toWikipedia.(PHOTOGRAPH BY FRED R. CONRAD/THE NEW YORK TIMES)(pg. C3) DRAWING: Jimmy Wales, one of the creators of the volunteer Internet encyclopedia, has drawn concerns over his ties to a venture capitalist. (pg. C1)

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March 17, 2008 Monday

Late Edition - Final

Southwest Festival Wraps Up Its 2,000-Course Feast