I guess CDNow's deal with MTV could be a waste of 22.5 mil, this is from Red Herring.
By Owen Thomas
May 21, 1998
After CDnow (CDNW) and MTV inked a three-year, $22.5 million deal where the online music retailer will get commerce links and promotion from the cable channel, the question lingers: So what? Who cares?
MTV, the Viacom-owned music video channel, so far has unequivocably failed to transfer any of the popularity of its television brand to the online world. An earlier attempt to leverage MTV's popularity online -- an ill-fated scheme to charge Internet service providers to carry content from mtv.com -- ended with MTV getting all but laughed out of cyberspace. And according to Media Metrix, its online property's audience reach is still hovering in the low single digits.
CDnow may get some boost from on-air promotions and special events such as the upcoming MTV Music Video Awards, for which it will be the exclusive online retailer, but it's not likely to make back in retail revenues what it's paying for the privilege.
The deal is, however, a blow to CDnow rival N2K (NTKI), which in January signed a deal to license some of MTV's news content and gain e-commerce exposure on MTV overseas versions, including MTV Europe and MTV Japan.
"The truth of the matter is, N2K has had [a deal like CDnow's] for a year and a half, and it didn't drive any traffic," says Dave Goldberg, CEO of Launch Media, whose MyLaunch site provides personalized music news and reviews. "If you go to [MTV Online], it's pretty obvious. But if someone hasn't gone to the site, it may sound like a good deal."
According to Mr. Goldberg, MTV has a bad history of online partnering. "UnfURLed has been a disaster for Yahoo," he says. "MTV did nothing; they basically sold Yahoo a bill of goods. MTV's an impossible company to partner with.... I don't think CDnow should congratulate themselves."
Is Mr. Goldberg biting the hand of the industry that feeds him? "I'm slamming the retail side of [music]," he says. People have confused the success of Amazon.com in books with online retailing in general, he adds. "It's just a question of when people wake up and realize that music is not books."
Launch Media inked a deal with NBC to supply music content in March.
Is Mr. Goldberg right, or do you still want your MTV? Tell us.
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