As competition in the CD-ROM marketplace heats up, strategic alliances are becoming increasingly critical, according to industry executives at the Intermedia conference here.

Accentuating the point, Tom McGrew, vice president of market development and product planning for Compton’s New Media, announced a deal with Rhino Records and an unnamed cable network.

Rhino will provide Compton’s with music and rights clearance, McGrew says, while Compton’s will create a new interactive product that can be played in both audio CD players and CD-ROM drives on personal computers.

The impending deal with the cable network, McGrew says, will provide Compton’s with video, talent, audio and rights to text for a book from a forthcoming show. In return, Compton’s will create an interactive version of the cable network’s show.

In addition, Susan Lee-Merrow, director of marketing programs at Living Books , discussed Broderbund Software’s recent alliance with Random House; and Michael van der Kieft, director of business development and manager of new media markets for Blockbuster Entertainment Corp., updated his company’s ongoing CD-ROM test in the Bay Area with Sega, Panasonic, IBM, Apple and 3DO.

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