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Custom CDs Number 1 On CDNOW Sales Chart For Valentine's Day Gift-Giving

Custom CDs Outsold CDNOW's Best-Selling Full-Length Album by 67%

Revenues Rise 184% Over 1999

FORT WASHINGTON, Pa., Feb. 24 /PRNewswire/ -- CDNOW, Inc., a leading online music destination, announced today custom CDs were the Valentine's Day gift of choice for music lovers, outselling by 67 percent Santana's multi-platinum album, Supernatural, which held the number one sales position for the prior 12 weeks.

This year's Valentine's Day Custom CD promotion (January 11 to February 14) showed strong sales growth over last year's offer: Unit sales grew 156 percent and revenues increased 184 percent. Gross margins were up 10 percent.

CDNOW's Custom CDs achieved tremendous next-day sales spikes, averaging 78 percent, following a series of promotions on AOL, the world's leading interactive service.

For $19.95, buyers could select up to 12 songs from a collection of 175 love songs for their Custom CD, arranged the tracks in any sequence, and write a personalized title and gift note (or select a pre-penned love message). CDNOW produced the CDs and shipped them to the destination of the customer's choice (within the U.S.).

The music featured love songs by past and present artists. Classic crooners Percy Sledge and Frank Sinatra ranked number one and two in sales with "When a Man Loves a Woman," and "My Funny Valentine," respectively, while the current pop radio hit, "Kiss Me," by 1999 Grammy nominee Sixpence None the Richer was the third most selected song.

CDNOW's Valentine's collection also included songs from top current artists, including:

  • 1999 Grammy nominee Luther Allison
  • 1997 Grammy winner Taj Mahal
  • Platinum artists Squirrel Nut Zippers
  • Platinum artist John Tesh
  • Gold artist Eric Carmen

According to CDNOW's Tracie Reed, Vice President, Merchandising, "The sales success of the Valentine's Day promotion shows that Custom CDs are a powerful vehicle for driving incremental revenues from traditional music products, both old and new. By demonstrating real sales momentum with Custom CDs, we expect more record labels to open their catalogs for Custom CD licensing."

"The popularity of CDNOW's Custom CDs is a great example of how e-commerce has fundamentally changed the way people shop," said Katherine Borsecnik, Senior Vice President, E-Commerce, America Online, Inc. "The increased ease and convenience of online shopping, coupled with innovative promotions from Shop@AOL partners like CDNOW, is encouraging more online consumers to do both everyday and holiday shopping online."


CDNOW, Inc., is the online music destination that offers the most comprehensive, personalized connection to the world of music. CDNOW's offerings consist of more than 500,000 music and entertainment-related items, including CDs, DVDs, videotapes, cassettes, vinyl albums and Custom CDs, as well as music samples and intelligent album recommendations. CDNOW Media, the company's newly formed interactive division, develops CDNOW's interactive content, including, allstar(TM) News, artist interviews and reviews, music downloads, Cosmic Music Network and the company's cybercasting and entertainment.

Planned Merger with Sony and Time Warner's Columbia House

On July 12, 1999, CDNOW entered into a definitive agreement with Sony Corporation of America and Time Warner Inc. to merge with Columbia House, the leading club-based direct marketer of music and videos. The new public company resulting from the merger will be owned 37 percent each by Sony and Time Warner. CDNOW's existing stockholders will own the remaining 26 percent. The company anticipates that the merger will close in the second quarter of 2000, following receipt of regulatory approval from the FTC, clearance from the SEC, and shareholder approval.

This release contains statements relating to future results of the Company(including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, demand for and market acceptance of new and existing products, as well as other risks and uncertainties detailed from time to time in the filings of the Company with the Securities and Exchange Commission.


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