CDNOW http:www.cdnow.com

1
CDNOW http//www.cdnow.com/

• Founded in 1994 by Olim brothers
• Business model
• Direct sale of CDs, VHS, DVDs, Minidiscs,
  T-Shirts etc.
• Standard product, along with Imports
• Run popular affiliate marketing programs
• E-nhanced services
• User Feedback (Buyers guides)
• Sample before you buy
• Veritys K2 search technology
• Build user community

2
Financial History

• Shoe-string budget, operated from parents
  basement
• In 1997 CDnow earned almost 3 times as much as
  its nearest rival, and owned one third of the
  online music business
• From first month revenues of 387 in August of
  1994, the company grew to sales of 16.4m in
  1997, and industry analysts predicted 1998
  revenues of 60m
• PC Data reports that CDNow had 1.026 million
  buyers in February 2000, as opposed to 984,000
  for Amazon.com
• Share prices sink in 1999 (dropped to 3.41, a
  record low)
• Failed merger with direct marketer Columbia House
  leads to significant cost-cutting measures
• June 2000, London office closes but soon after
  Bertelsmann buys company for 141 million

3
Overview

• Over half of its sales from repeat orders
• The music-retailing industry is relatively small,
  much
• competition
• Example of a pure-play e-commerce company that
  was unable to keep its house in order.
• Conor Sheehy
• 99600471