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CDnow and First USA Sign Ad Pact

Fort Washington, PA-based music retailer CDnow signed a multi-year, multi-million dollar agreement with First USA, the world's largest Visa credit card issuer.

The alliance makes First USA the exclusive credit card issuer on CDnow, and gives it significant online advertising and marketing exposure throughout the store.

Under the agreement, First USA will promote its credit card products and services on CDnow through integrated placements and sponsorships, including banner ads, buttons, text links and special offers that take CDnow customers to a First USA marketing page where they can apply for credit cards. If the agreement runs its full term, CDnow could potentially generate in excess of $8 million in revenue.

"This partnership marks a significant extension of CDnow's business model, which is expected to include other long-term advertising and sponsorship relationships in the future," said Bob Saltzman, vice president, corporate sales and advertising of CDnow. "The relationship is indicative of the growing value of CDnow's brand to marketers and customers alike. This deal and others like it will significantly impact our gross margins and be instrumental in achieving future profitability."

On March 17, CDnow and N2K Inc. announced the completion of the planned merger between the two companies, creating an online music entity, which would have had on a combined basis 1.6 million customers and $98.5 million in revenues at the end of 1998. The merged company is called CDnow.