MTV, CDnow pact for online ads, retailing

CDnow to hand MTV $22.5 mil in cash and stocks

Online music retailer CDnow and MTV Networks have pacted in a groundbreaking, three-year deal to team on event sponsorships, co-promotions and online advertising and music retailing. Under the terms of the deal, CDnow will provide over $22.5 million in cash and stock to MTV Networks.

Beginning next month, CDnow will begin integrating its operation into MTV Online and VH1 Online, and visitors to those sites will be steered to CDnow’s custom designed online stores for each of the music cablers.

CDnow — a publicly traded company — will also feature reviews and music news from MTV and VH1, in addition to highlighting online both cablers’ programming.

CDnow will also become the exclusive online music retailer of the 1998 MTV Music Awards, as well as developing online tie-ins with certain MTV and VH1 franchise programming, such as MTV’s “Real World” or VH1’s “Behind The Music.”

“This alliance affords CDnow the opportunity to take its integrated marketing strategy to the next level,” said Jason Olim, prexy and CEO of CDnow. “(MTV and VH1) are the only brands that have the true horsepower to move consumers from their television to their computers, and that’s what marketing convergence is all about.”

Since its inception in 1994, the Jenkintown, Pa.-based CDnow has become one of the leading online music retailers by offering more than 250,000 music related items, more than five times as many as the average music store.

“As a company we are continually working to deliver the best possible experiences both on-air and online,” said Matt Farber, senior veep of programming enterprises for MTV and VH1. “In working with (CDnow) in new and creative ways, we will both be serving our audiences better.”