HITS+AOL=$$$$$, HITS cut a deal with the monster....
Thursday September 23, 7:00 am Eastern Time
Company Press Release
musicmaker.com and America Online Announce $20 Million Marketing Agreement
Custom CD's and Digital Downloads from 200,000 Music Tracks Available to Members and Visitors to America Online's Family of Brands
DULLES, Va. & RESTON, Va.--(BUSINESS WIRE)--Sept. 23, 1999-- America Online, Inc. (NYSE: AOL - news), the world's leading interactive services company, and musicmaker.com (NASDAQ NMS: HITS - news), the largest custom CD service and licensed digital download site on the Internet, today announced that musicmaker.com will offer custom CD's and downloadable music across America Online's family of brands.
The three-year, $20 million agreement calls for musicmaker.com to sell personalized CD compilations and secure digital music downloads on America Online's AOL service, AOL.COM, Netscape Netcenter, and ICQ, as well as on two of its new music brands, Spinner and Winamp. This marketing pact marks the latest in a series of America Online initiatives to achieve leadership in the exploding online music category and to capture an increasing share of the more than $50 billion music industry.
Visitors to AOL brands will have access to musicmaker.com's library of 200,000 music tracks from over 100 labels, including content from Fantasy, Jive, Platinum and EMI music, one of the largest major record label in the world and the home of Virgin Records and Capital Records. Musicmaker.com has an exclusive five-year agreement with Zomba, the world's largest independent music group with such leading pop artists as the Backstreet Boys, Britney Spears, R. Kelly and Too Short.
America Online and musicmaker.com will cross-promote their music sales through reciprocal links, advertising and other marketing initiatives. Musicmaker.com also will develop co-branded sites with the AOL service, AOL.COM, Netscape Netcenter, ICQ, Spinner and Winamp for the sale of custom CD's and digital music downloads. In addition, the two companies will premiere music tracks exclusive to musicmaker.com's extensive catalog throughout the year, including during the holiday shopping season.
Under the agreement, musicmaker.com is making more than $18 million in guaranteed payments to America Online, Inc. over the term of the deal. The companies also will share in the profits from music products sold through the AOL brands. In addition, America Online, Inc. is receiving a $2 million equity stake in musicmaker.com.
Bob Bernardi, musicmaker.com Chairman and Co-Chief Executive Officer, said: ''This agreement brings together two Internet leaders that hold the keys to success in the emerging market for digital distribution of music. It's a great opportunity for both of us because musicmaker.com will now be able to reach AOL's industry-leading audience, and AOL members and users of their other brands will have access to the best music available online.''
Bob Pittman, America Online's President and Chief Operating Officer, said: ''Music is already an enormously popular feature across America Online's family of brands, and we're committed to taking the online music category to new levels of popularity. Musicmaker.com offers a large catalog of song tracks -- helping to extend our leadership in the online music arena as AOL brings online music mainstream.''
Ted Leonsis, President of AOL Interactive Properties, said: ''Our goal is to provide AOL members and users of our other brands the most diverse possible selection of music on the Internet. We want to make online music as popular as e-mail, and through AOL, Netscape, ICQ, Spinner and Winamp, music lovers will easily and conveniently create their own personalized CD's with the music they choose from their favorite artists and bands.''
America Online's Music Strategy
Over the past several months, America Online has entered into a series of acquisitions and alliances, which have substantially added to its online music capabilities and positioned the Company for leadership in this fast-growing sector.
The Company is building out its newly acquired music brands -- Spinner, Winamp, and SHOUTcast -- as stand-alone services and businesses. In addition, the Company will use these brands' best features and functionality to create custom-branded music services for AOL.COM, CompuServe, Netscape Netcenter and ICQ -- including live and Internet-only radio, sporting events, downloadable music, directory search, and e-commerce opportunities.
The Spinner brand, the Internet's first and largest broadcaster of original content, turns the computer into a radio and delivers more than 200,000 full-length digitized songs over more than 130+ specialized music channels -- across all genres -- to millions of listeners nationwide. During the past year, the Spinner Networks supported the broadcast of more than 10 million songs broadcast weekly with user sessions lasting two hours on average.
As the no. 1 high-fidelity music player for Windows, Winamp supports all music formats and has supported an estimated 20-plus million music downloads to date. Winamp is the most popular music application on Download.com -- and second only to ICQ overall -- with 60,000 software downloads daily. Two-thirds of Winamp users are under age 26, with one-third living outside the United States. SHOUTcast enables its users to broadcast or tune into Internet streaming audio, virtually creating their own micro-broadcasting station on their desktop.
Since acquiring these brands last Spring, the Company has focused on making them technologically more robust, improving their navigation, and enhancing the music consumer experience. The Spinner Networks, Winamp, and SHOUTcast brands are expected to be launched this Fall on the Netscape Navigator, version 5.0, and ICQ. Later in the year, they will be incorporated into the new AOL 5.0 client.
All three brands will drive traffic to America Online's next-generation music and audio portal, scheduled for launch this Winter. This vertical portal will enable users to listen to music and other audio content, read interviews and reviews about it, chat, and then buy the music in the form of CDs, customized CDs, and secure digital downloads. The Company is building a full portfolio of music providers and retailers.
About America Online, Inc.
Founded in 1985, America Online, Inc., based in Dulles, Virginia, is the world's leader in interactive services, Web brands, Internet technologies, and e-commerce services. America Online, Inc. operates: two worldwide Internet services, America Online, with more than 18 million members, and CompuServe, with approximately 2 million members; several leading Internet brands including ICQ, AOL Instant Messenger and Digital City, Inc.; the Netscape Netcenter and AOL.COM portals; the Netscape Navigator and Communicator browsers; AOL MovieFone, the nation's no. 1 movie listing guide and ticketing service; and Spinner Networks, Winamp and SHOUTcast, leaders in Internet music. Through its strategic alliance with Sun Microsystems, the Company develops and offers easy-to-deploy, end-to-end e-commerce and enterprise solutions for companies operating in the Net Economy.
About musicmaker.com
Musicmaker.com, headquartered in Reston, Virginia, is the largest custom compilation CD and secure digital download music site on the Internet. Founded by executives, including Robert Bernardi, co-founder of PictureTel and TranSwitch, Raju Puthukarai, former president of RCA/BMG Music and Video Club and President of Warner Music Media, and Irwin H. Steinberg, former Chairman and CEO of PolyGram Records, USA, musicmaker.com offers music lovers the opportunity to build their own CD's by selecting and organizing songs from a library approaching 200,000 tracks from over 100 labels, including EMI Recorded Music, Virgin Records, Capital Records, Zomba, Jive, Platinum, Fantasy, Rounder, Alligator, Roadrunner, and TVT, to name a few. Musicmaker's library spans a wide range of music genres, including rock, alternative, pop, hip-hop, jazz, punk, classical, blues and country. Powerful search engines help find selections by genre, artist, title and label, and RealAudio allows tracks to be sampled before selection. CD's include up to 20 tracks or 70 minutes of music and can be personalized with unique labels as well as imprints on jewel boxes. CD's range from $9.95-$24.95, depending on the number of tracks, and orders are taken through secure credit card links and are shipped within two business days. Musicmaker.com offers nearly 100,000 licensed songs in three secure digital downloading formats: Liquid Audio, Microsoft MS Audio 4.0 and a musicmaker.com proprietary secure MP3 format. Each digitally downloaded track is available at $1.00 per song. Musicmaker.com also has exclusive marketing agreements with Columbia House, the world's largest music club, Tunes.com, RollingStone.com, Downbeatjazz.com, thesource.com, Audio Book Club, Platinum Entertainment and Woodstock.com
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Contact:
Rachel Carr/Greg Gibson
Dan Klores Associates
tel: 212/685-4300
or
Dave Kesick
Musicmaker.com Investor Relations
tel: 703/904-4110
or
Regina Lewis
America Online, Inc.
tel: 703/265-1746
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