Spotify is racing ahead of the pack. And not just the pack of music streaming companies – though, there’s that, too. Through its freshly minted agreement with Starbucks, Spotfiy is also leading the pack of digital co-branders.

Yesterday, Starbucks announced an innovative partnership with Spotify that enhances both firms and seems like a win for artists. Starbucks  employees will receive a Spotify Premium subscription. They can use it to help generate Spotify playlists culled from 20 years of Starbucks’ music picks. These will also be accessible via the Starbucks Mobile App. Under a reciprocal loyalty point arrangement, Spotify users will be able to receive “Stars as Currency” for My Starbucks Reward (MSR) Points.

Starbucks has provided a premiere coffeeshop-music experience for more than two decades. Spotify raises Starbucks’ technological game on the heels of Starbucks’ February announcement that it will stop selling CD’s. If all goes well, beyond mutual financial rewards, Starbucks will also afford Spotify much-needed props with musicians angry about its free programs. It’s a marriage made in double-shot, platinum-hit heaven.

The arrangement marks the first time Starbucks has made its loyalty program accessible to a third party. Spotify will offer Starbucks playlists to all Spotify users. Starbucks MSR members and Spotify users would earn “Stars as Currency” for subscribing (or upgrading) to Spotify premium, which would help Spotify grow its fee business.

“Spotify has powered more than 25 billion hours of listening around the world so far,” said Daniel Ek, CEO of Spotify, “and we’re looking forward to creating unique in-store music experiences while also making more than 20 years of popular Starbucks music available to both Starbucks customers and Spotify’s 60 Million global music fans.”

Starbucks’ 7,000 U.S. company-owned stores and 10 million MSR loyalty program members will join with Spotify’s 60 million users to form, what the two firms call, a “First-of-Its-Kind Music Ecosystem.”

This is the unique kind of deal that delivers smiles on both sides. Additionally, it also offers musicians an upside over the free and ‘freemium’ advertiser-based Spotify programs, plus a wider distribution platform for their music.

Starbucks has excelled at converting coffee-drinkers to broader consumers and artists have been grateful for Starbucks’ support for their work. In keeping with its pro-musician legacy, Starbucks stores will promote Spotify Premium, the paid part of Spotify.

“Throughout its history, Starbucks has worked closely with the music industry, offering a variety of artists a platform for their work,” said Howard Schultz, chairman and CEO of Starbucks. “By connecting Spotify’s world-class streaming platform into our world-class store and digital ecosystem, we are reinventing the way our millions of global customers discover music.”

The musical core of Starbucks’ coffeehouse culture goes back more than 40 years. But it wasn’t until 1994 that its entertainment team began picking and showcasing original CDs (250 of them eventually) traversing genres and geographies. The program highlighted established stars such as the late John Lennon, Aretha Franklin and Bonnie Raitt. Starbucks also engaged stars like Bob Dylan, Yo-Yo Ma the Rolling Stones and Ray Charles to select their favorite songs for the Artist Choice series.

Starbucks has championed rising artists such as John Legend, Madeleine Peyroux and Fleet Foxes, too. Even mega-platinum-star Taylor Swift, the most ardent Spotfiy critic (joined by Ne-Yo, Jay-Z and others later) has fond memories of the thrill she got when her Speak Now album hit Starbucks.

The “musical-ecosystem” initiatives will begin rollout this fall, starting with Starbucks’ company-owned stores in the US before branching out to Canada and the United Kingdom.

This union says as much about coffee and music as it does about the future of co-branding digital entertainment. These types of synergies could foster a slew of similar combinations. First music, then maybe movies – how about a Netflix-Starbucks partnership? If we’re talking full-service entertainment experience, why not? Starbucks already sells a mean truffle popcorn.

Other interesting digital co-branding partnerships could arise. Last November, under the slogan “Your Ride. Your Music” Spotify hooked up with Uber so riders could pipe their favorite tracks through the car’s speakers. (American Express had already taken the slogan “Don’t leave home without it.”)

Speaking of the pre-eminent “membership card,” American Express is spearheading co-branding and loyalty program collaborations in the credit card space. Consider a future Spotify-AmEx match. Imagine. You can drink your double soy latte cappuccino while listening to Starbucks playlists via Spotify in your Uber, all while earning American Express membership points. It could happen sooner than you think. [Forbes]