CDnow, the Internet’s leading music retailer, has received $10 million in funding through a private placement. The growing online service will use the capital to expand its consumer marketing efforts and increase its market leadership position.
The investment into the 3-year-old CDnow was led by Grotech Capital Group and Keystone Venture Capital, two Internet-friendly investment outfits based in the East.
Based in Philadelphia, CDnow has nabbed a 33% share of the market for Internet music sales, more than twice the size of its nearest competitor, according to Jupiter Communications’ most recent report on the music industry and the Internet.
The report also suggested that the U.S. market for online music sales will explode to $1.6 billion in 2002. CDnow is known for its innovative merchandising programs and wide variety of music genres.
CDnow recently inked merchandising pacts with AT&T WorldNet Service and USA Today and plans on becoming one of the top advertising spenders on the Internet.