Don’t Be Surprised if Starbucks and Spotify Fall Out of Tune

Spotify Chief Content Officer Ken Parks News Conference

Starbucks (SBUX) turned heads earlier this month, striking a deal with streaming-music darling Spotify. The partnership will allow Spotify’s premium subscribers to earn reward points that can be redeemed at the leading premium coffee chain.

It’s a pairing that makes sense in theory. Spotify has more than 60 million active subscribers worldwide, with more than 15 million of them on board as paying members. If Spotify is paying for the right to issue Stars — the points issued in the My Starbucks Rewards program — as a tool for attraction and retention, it could be a win-win move.

However, then we get to an interesting wrinkle in this partnership. Spotify users will be able to suggest songs from Spotify to include in the music playlist of their preferred Starbucks store. That seems pretty inspiring, until you begin to wonder if walking into a store will result in the awkward aural transition of going from Skrillex to Kanye West to Florida Georgia Line between sips of your Caramel Brulee Frappuccino.

Sure, that will never happen. Starbucks is trying to cultivate a specific premium user experience, and sonically speaking, that involves a steady flow of smooth indie tunes. However, if your favorite store ignores your Spotify suggestions — and that’s what will probably happen, as the Top 50 playlist on Spotify is far removed from the hipster sets that currently play at Starbucks — it will lead to disillusioned customers who were duped into thinking that they actually had control of the jukebox.

Once again, Starbucks will get it wrong when it comes to music.

The Long Divide Between Java and Jams

Starbucks has always wanted to be a tastemaker in the world of music. Walking into a store opens up access to its Pick of the Week, which is available as a free iTunes download. Starbucks used to hand out promo codes for the iTunes downloads until it improved its in-store Wi-Fi.

Starbucks has even put out its own musical releases. Did you know that it was Starbucks that released Paul McCartney’s “Memory Almost Full” CD in 2007? It was the initial release on the Hear Music label that the coffee giant launched that year — and if the “Hear Music” moniker sounds familiar, it’s because it was also the name of the coffee-centric music store that Starbucks tried to roll out a few years earlier.

Hear Music was a chain of five CD stores that Starbucks acquired in 1999. It went on to open three more flagship stores, incorporating the signature premium brews of Starbucks into a dynamic music environment with listening stations and music sales. It never truly took off. CD sales were peaking. However, this has never stopped Starbucks from trying to score the soundtrack of its customers.

Sometimes it works. Starbucks earned props for unearthing early recordings of Ray Charles and Bob Dylan, and countless music icons got an early boost from iTunes promo codes at its stores. However, there are also lines that shouldn’t be crossed. Giving Spotify listeners the ability to earn reward points that can be exchanged for steaming beverages at Starbucks makes sense, but pretending that it’s going to let customers play DJ for individual stores is never going to fly.

Get Ready for ‘Buy’ Buttons on Google Searches

Google Stock Split Settlement

Google (GOOG) is apparently gearing up to populate product searches made on mobile devices with “buy” buttons. The Wall Street Journal reported this month that the new graphical buttons would be available to advertisers, helping them stand out even more on Google’s popular search engine.

This would be a controversial move if consumers weren’t already inundated with “buy” buttons on leading e-commerce sites including (AMZN) and eBay (EBAY). Google going this route, particularly on smartphones and tablets, where advertisers have been reluctant to pay as much as they do to reach Google users on PCs, makes a lot of sense.

Consumers will just have to be smart enough to realize that the new buttons are a monetization tool for Google, and limiting its use to existing sponsors will mean that there might still be cheaper ways to buy these particular products.

You’ve Come a Long Way, ‘Buy’ Button

Google isn’t the first non-e-tailer to go this route. Twitter (TWTR) began testing similar buttons last year, giving advertisers more bang for their marketing buck.

Introducing the feature to consumers on mobile devices makes sense. It’s an area where Google usage is growing at a faster clip than traditional access through desktops and laptops, but the rates that the global search engine leader is commanding are lower than on PCs. The disparity between what advertisers are willing to pay for PC users versus mobile users is explained by the fear that folks on smaller screens aren’t as likely to complete transactions as they are on larger computers. A big reason that cost-per-click at Google and other search engines has been declining is that advertisers are paying less for leads generated through smartphones and tablets.

We saw the number of leads generated by Google climb 13 percent over the past year during the first quarter, but the aggregate cost per click declined 7 percent as most of Google’s growth came from access on smaller wireless devices.

The “buy” button can help. It’s probably not a coincidence that eBay, Amazon, and most e-commerce sites incorporate action buttons. It also could only help if Google’s product pages with the new buttons lead to checkout platforms with existing payment information already entered. It would make it that much more conducive to finalizing a transaction.

Push the Button

The “buy” button could be just the beginning, of course. If the e-commerce wrinkle is successful, why wouldn’t Google turn to an “get more info” button that would automatically send relevant information by email to the user? There could also be a “save” button to square things away for future consideration.

Growth is slowing at Google. Analysts see earnings per share and revenue climbing in the pre-teens this year. The monetization challenge has been eating at margins, and Google has missed Wall Street’s quarterly profit targets for more than a year.

As long as consumers don’t react negatively to the “buy” button — and they shouldn’t since it will appear in search engine results that are already clearly labeled as sponsored entries — Google could be on to something here.

Ford Recalls Nearly 423,000 Cars for Power Steering Problem

Ford Investigation

Under pressure from U.S. safety regulators, Ford is recalling nearly 423,000 cars and SUVs in North America because the power-assisted steering can fail while they’re being driven.

The recall covers certain Ford Flex and Taurus vehicles, as well as the Lincoln MKS and MKT from the 2011 through 2013 model years. Also covered are the Ford Fusion and Lincoln MKZ from 2011 through 2012 and some 2011 Mercury Milans.

Ford says an intermittent electrical connection can cause the power steering to stop. That sends the steering into manual mode, making the vehicles harder to control. The company says it knows of four crashes due to the problem but no injuries.

Dealers will either update power steering control software or replace the steering gear depending on the problem with individual vehicles. A new steering gear eliminates the electrical issue.

In October, the National Highway Traffic Safety Administration began investigating complaints of power-steering failures on three Ford Motor Co. (F) midsize car models. The probe covered 938,000 Ford Fusion and Lincoln MKZ cars from the 2010 through 2012 model years, as well as the 2010 and 2011 Mercury Milan.

According to a class-action lawsuit filed in June about the matter, the problem could affect more Ford models, including the compact Focus.

NHTSA said at the time that it received 508 complaints alleging that the cars lost power-assisted steering, causing increased steering effort.

Ford said it was unsure if the agency would close its investigation because of the recall. A message was left Wednesday for a NHTSA spokeswoman.

The company also is recalling 19,500 2015 Mustangs with 2.3-Liter engines due to high underbody temperatures that could degrade the fuel tank and fuel vapor lines, increasing the risk of a fire. No fires have been reported. The heat also can damage the parking brake cable. Dealers will replace a heat shield and add insulation.

This Couple is Set to Retire at 40

Couple walking at beach smiling

Retiring at 40 seems like an impossible dream. Just making it to the golden years by 65 is challenging enough. Yet, there are a growing number of early retirees who have managed to call it quits in their 30s and 40s.

So it is with Chris, who goes by the name of “Elephant Eater” on his blog, The motto of the blog is “Working toward financial independence and early retirement — one bite at a time.” That motto should give you a solid idea of what it is he writes about.

I had an opportunity to interview Chris on the topic of his journey to early retirement at age 40. He provided fascinating insight into the nuts and bolts of extreme early retirement. While Chris is 38 and his wife is 37, they are just a couple of years away from making retirement at 40 a reality. Still, when it comes to money, they are light years ahead of their peers.

How are they doing it — especially with a two-year-old daughter?

Live Beneath Your Means

According to Chris, the “secret” to their success has been not just living beneath their means, but well beneath. Since graduating from college in 2001, they have lived off of one paycheck and banking the other.

The one paycheck strategy started when Chris’s wife graduated from college. They lived off of her salary of $36,000 while Chris finished his last year in graduate school. When Chris began working and earning a similar paycheck, they continued living on his wife’s income. They dedicated his paycheck to paying off her car loan and student loan.

There’s no magic here. Chris and his wife lived off of her income while dedicating his paycheck to improving their finances. This strategy enabled them to devote an entire income to paying off debt and saving money. They’ve continued to operate in that mode since 2001, which explains why they are nearing retirement.

Ignore the Consumption Trends Around You

For Chris and his wife, living on one paycheck and banking the other became a lifestyle. But it wasn’t one that was without the typical distractions. While they were paying off debt and saving money, many of their friends were busy improving their standard of living. Most bought new cars, and some traded up to larger houses. It was a trend that Chris and his wife resisted.

They bought a small house in 2003. Rather than trading up to a new and larger home, they paid off the mortgage in seven years. They still live in the same home today.

They followed the same pattern with their cars. Instead of buying new, they bought older, used cars — for cash — then drove them until the car died. Until three years ago, Chris drove an older Chevy Malibu for eight or nine years while his wife drove the same car she had in college. We’re talking about driving cars that were well over 10 years old. That’s not something that many couples do these days.

But it’s that willingness to live well beneath their means that has enabled Chris and his wife to live on a single paycheck. And while some might call it a sacrifice, it’s led to several benefits. For one, there’s the rapidly growing savings account, which is fed monthly by the extra income they earn. Meanwhile, they’ve also been able to take some exotic trips. For example, they have traveled to Africa, Australia, Ecuador and all over the United States.

Save As If Your Life Depends On It — And One Day it Will

“Saving as if your life depends on it” is the cornerstone of the early retirement concept Chris and his wife embraced early in their marriage. While most couples save 10, 15 or as much as 20 percent of their income, Chris and his wife have been saving 50 percent. When you can save that much money, the whole idea of early retirement becomes much more likely.

Since Chris and his wife earn approximately the same income and save one paycheck, their average savings rate sits around 50 percent. That isn’t a static number. Some years they’ve managed to save “only” 40 percent, while in others it’s been at 60 or even 70 percent. With a combined income now in the $170,000 to $180,000 range, that’s a lot of savings.

Saving 50 percent has two related benefits. First, and most obvious, is that it has enabled Chris and his wife to save mountains of cash. Second, and just as important, it keeps their spending requirements in check. Since they live off of 50 percent of their gross pay, they don’t require as much capital to retire. To see this dynamic in action, check out this Financial Freedom Calculator.

Adopt a Zero-Tolerance Attitude Toward Debt

Part of what has enabled Chris and his wife to save such a large percentage of their income is their complete aversion to debt. As noted earlier, they paid off their mortgage in seven years and eschewed car payments in favor of older, paid-off models. Since debt is often a savings-killer, Chris and his wife committed to avoiding it like the plague early on, with a few exceptions. For example, they took on debt to buy their home, but paid it off quickly.

After some time, Chris and his wife found that a debt-free lifestyle also came with its own set of benefits. With no debt and plenty of cash on hand, they felt far less pressure to get the things that debt typically buys. They found themselves content to lead a modest life, to control their cash flow, and to travel. They found that their frugality and high savings rate could buy freedom, and they relished in the purchase.

Recognize that Mistakes Aren’t the End of the Line

Interestingly, Chris concedes that he and his wife have made some mistakes along the way. For example, in the early 2000’s, they were busy paying off their mortgage. While that has been a huge boon for them, the “return” they earned for prepayment was only equal to the interest rate on their mortgage. According to Chris, they could have done much better by investing in stocks and in real estate.

But that wasn’t their only “mistake.” Three years ago, when his wife became pregnant, they gave into peer pressure and purchased two brand-new automobiles. The prospect of having a child made them believe that they had to default to more common aspirations.

Meanwhile, they’ve also had issues on the investment front. They’ve hired and fired some investment managers, some of whom did a poor job of managing their money. Though adept at living beneath their means, avoiding debt, and saving, they weren’t skilled investors.

The saving grace is that Chris and his wife are doing the big things right. They are living beneath their means, they are staying out of debt, and they are saving 50 percent of their income. Those are each financial fundamentals. When you get those right, you can afford to make a few mistakes without having your plans completely crushed.

Early retirement is possible, but you have to master the basics of good money management. While many people focus their energy on finding the right investments, lowering investment fees, and getting the best rates on mortgages and credit cards, none of those efforts match the benefits of saving 50 percent of your income.

If you get the basics right, retiring early can become much less of a dream and much more of a reality. And as Chris’ story goes to show, you don’t have to do everything perfect either.