Amazon Assumes CDNow Chores
By Alan Wolf -- TWICE, 1/9/2003
SEATTLE, WASH.— Amazon.com has expanded its roster of online alliances by assuming all operational duties for CDNOW, the Bertelsmann-owned music and movie e-tailer.
The site, which maintains its cdnow.com URL, was absorbed into Amazon's platform last month as part of a multiyear agreement. Under terms of the deal, Bertelsmann will continue to control CDNOW through its BeMusic retail unit, while Amazon will provide inventory, fulfillment, site content and customer service.
Amazon's Web site, including its music, video and DVD cyberstores, will continue to operate independently, the companies said.
The arrangement represents the latest move by Bertelsmann to outsource, sell or shutter its e-commerce interests, which have variously included BarnesandNoble.com and the now-defunct Napster. The most recent casualty was myplay, a music-downloading site that was closed last month.
The German media conglomerate had considered CDNOW another step toward becoming "the world's leading e-content, community and commerce company" when it purchased the e-tailer for $117 million in 2000. Founded in 1994, CDNOW was a pure-play pioneer of online music and video retailing. It became a dominant player in that niche before other contenders, including Amazon, crowded the field.
The deal follows a similar arrangement with Virgin Entertainment Group that went into effect last June. Amazon became the seller of record for the company's site, virginmega.com, which offers music, books, video, software and other entertainment products.
Virgin's site has since assumed Amazon's characteristic design and graphics, as has cdnow.com.
Amazon also maintains co-branded partnerships with Circuit City, Office Depot, Target and Toys "R" Us, among other retailers. Besides generating income through commissions or fees, the joint e-commerce efforts have served to extend Amazon's product assortment and to allow for in-store pick-ups.
