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.

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