CDnow Teams Up with Sony, Time Warner
Some skeptical observers have noted the possibility that Amazon could diversify to the point of losing its focus. "They are going off in many, many directions," said Time Warner's CEO, Gerald Levin. Under the consolidation plan, Columbia House, the mail-order discount music club co-owned by Sony and Time Warner, will be merged with five-year-old CDnow.
The three-way deal is the latest in a series of moves into the Internet by major companies. Columbia House signed a marketing deal in February with America Online, the world's largest Internet Service Provider. Music-industry giant BMG recently teamed up with Universal Music to sell discs online at their GetMusic site.
CDnow will gain enormous financial and marketing resources in return for sacrificing its independence. The new retailing enterprise, which has not yet been given a name, will be owned 26% by CDnow's current shareholders, 37% by Sony, and 37% by Time Warner. The deal is expected to be finalized by the end of the year.