CDnow Tops Chart, Expands into Europe

The numbers are up for CDnow. The world's largest online music retailer reported April 30 that its first-quarter sales increased 288% over the same period in 1997. The company took in $10 million in revenue through the period ending March 31, an increase of 26.4% over the previous quarter, in which revenue totaled $7.9 million.

CDnow has registered 432,000 customers since it went online in 1994. 135,000 of those have been added since January 1 of this year. Costs, however, seem to track revenue: the company reported operating expenses of $10.7 million in the same period, and $7.6 million for the last quarter of 1997. A net loss of $9.2 million was posted last year, according to a company press release.

Despite the lack of profitability, CDnow has plunged ahead with strategic alliances intended to solidify its position in the online music market. Three-year agreements were recently signed with Tripod and Lycos, Inc., in which CDnow will be the exclusive music retailer. The link with Lycos' European branch, Lycos Bertelsmann, will give CDnow a solid foothold in the 11 countries of the European Union. MSI of Miami will create a fulfillment center in the Netherlands for European customers.

In addition, a sweetheart deal has been signed with Rolling Stone Network, whose content will be integrated into CDnow, where customers will be able to read 30 years of Rolling Stone music coverage. In turn, visitors to the Rolling Stone Network will have access to all 250,000 items in CDnow's inventory. The recent developments reflect CDnow's "sole focus on creating the best possible music-shopping experience for our customers," according to CEO Jason Olim.