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Can Amazon Tune Up CDNow? - InternetNews.
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Can Amazon Tune Up CDNow?

In a deal similar to its arrangement with bookseller Borders, Internet retailer Amazon.com will take over operation of the CDNow online music store.

The move comes as CDNow's owner, Germany's media conglomerate Bertelsmann, continues to cut back on its e-commerce efforts. Bertelsmann began distancing itself from the Internet a year ago when e-commerce group manager Andreas Schmidt departed.

A spokesman for Amazon confirmed that the company had reached an agreement to provide services for the CDNow site, but would not provide details.

However, Amazon is expected to take over service and fulfillment in return for some substantial remuneration. Amazon reportedly recognizes sales on Borders.com as revenue, paying Borders a commission on those sales, and it's likely the financial arrangements will be similar.

CDNow is part of Bertelsmann's BeMusic arm, which also manages the company's BMG Music Service record club. BeMusic said earlier this month it would shut down myplay, a Web site selling digital music files, in December.

Thomas Middelhoff, the former Bertelsmann CEO who was ousted last summer, had admitted that he overestimated e-commerce growth. Bertelsmann acquired CDNow for $117 million in 2000.

Amazon took over the Borders online sales operation at a time when the book group was faltering. Amazon reportedly recognizes sales on Borders.com as revenue, paying Borders a commission on those sales.