CD Now
   HOME

TheInfoList



OR:

CDnow, Inc. was a dot-com company that operated an
online shopping Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of th ...
website selling
compact disc The compact disc (CD) is a Digital media, digital optical disc data storage format co-developed by Philips and Sony to store and play digital audio recordings. It employs the Compact Disc Digital Audio (CD-DA) standard and was capable of hol ...
s and music-related products. In April 1998, during the
dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...
, the company was valued at over $1billion (~$ in ). In July 2000, it was acquired by
Bertelsmann Music Group Bertelsmann Music Group (BMG) was a division of a German media company Bertelsmann before its completion of sale of the majority of its assets to Sony Corporation of America on 1 October 2008. Although it was established in 1987, the music c ...
for $117million (~$ in ); shortly thereafter
Amazon Amazon most often refers to: * Amazon River, in South America * Amazon rainforest, a rainforest covering most of the Amazon basin * Amazon (company), an American multinational technology company * Amazons, a tribe of female warriors in Greek myth ...
was contracted to operate the website. At its peak, it employed over 750 people and had offices in
Fort Washington, Pennsylvania Fort Washington is a census-designated place and suburb of Philadelphia in Montgomery County, Pennsylvania, United States. The CDP, as of 2020, is entirely in Upper Dublin Township. The population was 5,446 at the 2010 census. History Prior ...
,
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
,
London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...
, and
Los Angeles Los Angeles, often referred to by its initials L.A., is the List of municipalities in California, most populous city in the U.S. state of California, and the commercial, Financial District, Los Angeles, financial, and Culture of Los Angeles, ...
.


Establishment and growth

CDnow was founded in February 1994 by twin brothers
Jason Olim Jason Olim is the former CEO and co-founder of CDNow, Inc., one of the first e-commerce companies (founded in February, 1994). He has earned Entrepreneur of the Year awards from the Small Business Association, Arthur Andersen, the Greater Philadelph ...
and Matthew Olim in their parents' basement in
Ambler, Pennsylvania Ambler is a borough (Pennsylvania), borough in Montgomery County, Pennsylvania, United States. It is located approximately 16 miles (26 km) north of Center City, Philadelphia, Center City Philadelphia. History Lenape The historical territ ...
. Initially launched as a
Telnet Telnet (sometimes stylized TELNET) is a client-server application protocol that provides access to virtual terminals of remote systems on local area networks or the Internet. It is a protocol for bidirectional 8-bit communications. Its main ...
service in August 1994, CDNow became a retail website in September 1994 using Valley Records Distributors as a drop-ship fulfillment center. With three employees, the company moved near the Penllyn train station in
Lower Gwynedd Township, Montgomery County, Pennsylvania Lower Gwynedd Township ( ) is a Township (Pennsylvania), township and equestrian community in Montgomery County, Pennsylvania, United States. Known for its large lot sizes and horse riding trails, Lower Gwynedd is the most sought-after address ...
and a couple years later it moved to the Strawbridge & Clothier building in
Jenkintown, Pennsylvania Jenkintown is a borough in Montgomery County, Pennsylvania, United States. It is approximately north of Center City Philadelphia. History The community was named for William Jenkins, a Welsh pioneer settler. The borough was settled in abou ...
. In December 1994, CDNow claimed to be the first company that allowed people to buy albums online.Beach, Patrick (December 22, 1994).
Tunes on Infobahn
. ''The Des Moines Register Datebook'' (Des Moines, Iowa). p. 10D.
At the time, it said it had over 140,000 different albums available for purchase on its web site. In 1995, an article in the ''
Los Angeles Times The ''Los Angeles Times'' is an American Newspaper#Daily, daily newspaper that began publishing in Los Angeles, California, in 1881. Based in the Greater Los Angeles city of El Segundo, California, El Segundo since 2018, it is the List of new ...
'' said that CDNow had brought the web "one step closer to the day when artists will market directly to consumers, cutting out distributors such as record labels." In 1997, the company had revenues of $18million and in February 1998, with 100 employees, the company became a
public company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...
via an
initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investm ...
. CDNow then embarked on a large
Internet advertising Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising that uses the Internet to promote products and services to audiences and platform users. ...
campaign, and was an innovator in preference-based retail recommendations,
online video Internet video (also known as online video) is digital video that is distributed over the internet. Internet video exists in several formats, the most notable being MPEG-4i AVC, AVCHD, FLV, and MP4. There are several online video hosting se ...
, the use of editorial content as a means to promote interest internet
affiliate marketing Affiliate marketing is a marketing arrangement in which Affiliate (commerce), affiliates receive a wiktionary:commission, commission for each visit, signup or sale they generate for a merchant. This arrangement allows businesses to Outsourcing, ...
programs, and
email marketing Email marketing is the act of sending a commercial message, typically to a group of people, using email. In its broadest sense, every email sent to a potential or current customer could be considered email marketing. It involves using email to s ...
. On March 17, 1999, CDNow acquired its largest competitor, another Philadelphia area company, N2K, whose online properties included
Music Boulevard Music Boulevard, or musicblvd.com, was a retail music information and sales website founded in 1995 by Telebase Systems. In 1997 the Music Boulevard website, operated by N2K, became among the first websites to offer piracy-protected music single ...
and Jazz Central Station. In July 1999, the company announced a deal to merge with
Columbia House Columbia House was an umbrella brand for Columbia Records' mail-order music clubs, the primary iteration of which was the Columbia Record Club, established in 1955. The Columbia House brand was introduced in the early 1970s by Columbia Records ...
, establishing a new public company jointly held by CDNow's shareholders,
Time Warner Warner Media, LLC ( doing business as WarnerMedia) was an American multinational mass media and entertainment conglomerate owned by AT&T. It was headquartered at the 30 Hudson Yards complex in New York City. It was established as Time Warne ...
and
Sony is a Japanese multinational conglomerate (company), conglomerate headquartered at Sony City in Minato, Tokyo, Japan. The Sony Group encompasses various businesses, including Sony Corporation (electronics), Sony Semiconductor Solutions (i ...
.


Decline

CDNow was among the first of the Internet companies to show signs of struggle with the dot-com business model. On March 20, 2000, as the
dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...
burst, ''
Barron's ''Barron's'' (stylized in all caps) is an American weekly magazine and newspaper published by Dow Jones & Company, a division of News Corp, since 1921. Founded as ''Barron's National Financial Weekly'' in 1921 by Clarence W. Barron (1855–19 ...
'' published a cover article called "Burning Up", which noted that the company was running out of cash. In March 2000, the Columbia House merger was called off. In June 2000, the company closed its London office to cut costs. In July 2000,
Bertelsmann Music Group Bertelsmann Music Group (BMG) was a division of a German media company Bertelsmann before its completion of sale of the majority of its assets to Sony Corporation of America on 1 October 2008. Although it was established in 1987, the music c ...
acquired the company, intending to combine it with its BMG Direct record club as a new venture called BeMusic, and eventually add
Napster Napster was an American proprietary peer-to-peer (P2P) file sharing application primarily associated with digital audio file distribution. Founded by Shawn Fanning and Sean Parker, the platform originally launched on June 1, 1999. Audio shared ...
to the service. Bertelsmann paid just $117million (~$ in ), a price that was down over 90% from the valuation of the company at its peak in April 1998. The founding Olim brothers received a total of $17million. In April 2001, the company cut 40 employees, 10% of its staff. In August 2001, the company closed its Japanese website and laid off 200 employees. In November 2002, Bertelsmann announced it would close CDnow's Fort Washington facility and lay off the company's remaining 33 employees. Later that month, they signed a deal to outsource CDnow website operations to Amazon. The new deal retained a revised version of the BMG Direct model called the "Preferred Buyers Club", offering a 20% discount for club-edition records; all other music was sold at standard Amazon prices. In 2011, the CDnow.com URL was redirected to a maintenance notice, and in 2013, it was permanently taken offline.


References


Further reading

''The CDnow Story: Rags to Riches on the Internet'' by
Jason Olim Jason Olim is the former CEO and co-founder of CDNow, Inc., one of the first e-commerce companies (founded in February, 1994). He has earned Entrepreneur of the Year awards from the Small Business Association, Arthur Andersen, the Greater Philadelph ...
and Matthew Olim {{DEFAULTSORT:Cdnow 1994 establishments in Pennsylvania 1998 initial public offerings 2000 mergers and acquisitions American companies established in 1994 Retail companies established in 1994 Internet properties established in 1994 Retail companies disestablished in 2000 Defunct retail companies of the United States Dot-com bubble