GNEN RESEARCH REPORT:
CDmusic.com - THE BEST e - COMMERCE ADDRESS IN THE MUSIC INDUSTRY - WILL BE
OPEN FOR BUSINESS IN MARCH
GENERATION ENTERTAINMENT CORP. (OTC BB: GNEN)
Phone: (602) 367 - 1717
website: cdmusic.com <http://www.CDmusic.com> [under construction]
GNEN is extremely under-valued compared to other music companies entering
the e-commerce arena.
GNEN's recently-announced alliance with Amazon.com and the CDmusic.com
e-commerce website will offer consumers the world's largest selection of
music and video.
WHAT IS GENERATION ENTERTAINMENT?
In addition to having very quickly building themselves into one of the four
largest independent record labels in the country, Generation Entertainment
Corp. (OTC BB : GNEN) is preparing to re-open their CDmusic.com e-commerce
site in March. This new, state-of-the-art website will include a wide
range of live music broadcasts 24 hours a day, with on-line sampling and
easy downloading of digital music selections. GNEN will be also featuring
over 200,000 titles from its own labels, as well as an association with
Amazon.com, providing a seamless interface of both company's music and
video offerings.
SHARE STRUCTURE & TRADING PRICES (as of February 3, 1999)
Shares Issued: 16.09 million 52-week High: US$1.50
Restricted Shares: 2.25 million 52-week Low: US$0.07
Free-Trading Shares: 13.84 million Current Price: US$0.39
CDmusic.com
In December 1998, GNEN purchased the on-line music retail site, CDmusic.com
Immediately following the acquisition, CDmusic.com was taken completely
off-line. Currently, the site is being transformed into a virtual
supermarket for people shopping for music or video. New graphics, software
and security packages will be installed to take the site into the 21st
century.
CDmusic.com will be back in business by the end of March.
Once back on line, the site will feature hundreds of thousands of titles in
music and video offerings; GNEN will give prominent exposure to titles
under its own labels, Harvest Music and Copper Sun. Cyber-shoppers will be
able to easily navigate thru the various categories of music and videos,
and have the ability to find titles by searching with key words or artist
names. Buyers will be able to sample their music selections prior to
buying, with the options of either making direct purchases of pre-recorded
music or downloading their selections using MP-3 or CD-R technology.
We believe that the markets have greatly under-valued the "CDmusic.com"
name, and that this Internet domain address alone is worth several dollars
per share. Here's why.
When people go on line for the first time to shop for music gifts, they
will invariably type in their search as "CD" and "music". Guess what
Internet address will always come up first ??!!
A year from now, people are going to understand and appreciate the value of
GNEN's "CDmusic.com" website. As they say in real estate, it all boils
down to location, location, location. The CDmusic.com address will be to
on-line music sales what a Rodeo Drive (Beverly Hills, CA) street address
was to the old style of retailing.
PARTNERSHIP WITH AMAZON.COM
We believe that one of the reasons that GNEN's share price is so low is
that very few investors appreciate and understand the significance of the
Amazon.com partnership announced by GNEN on December 21st.
First of all, becoming an Amazon.com "Associate" is a major step for GNEN
and the CDmusic.com website. It represents a strong endorsement of GNEN's
management and the Company's business plan that Amazon.com, a
highly-successful company and perhaps the largest seller of books
worldwide, had the confidence to award GNEN Associate status.
As part of the Amazon.com Associates program. Cdmusic.com will be
prominently displaying the Amazon.com log; in turn, Amazon.com will publish
a linked message identifying CDmusic.com as an Associate and endorsing its
services. The message will also encourage visits to CDmusic.com site to
shop for quality products, with a guarantee of the same high level of
customer service that Amazon.com provides.
The alliance with Amazon.com will gives visitors to CDmusic.com the best of
both worlds - great prices on music from GNEN's own labels, as well as a
seamless buying experience at Amazon.com for all music and video products
not owned or controlled by Generation Entertainment. Together, GNEN /
CDmusic.com and Amazon.com's virtual warehouse of rock, R&B, swing,
gospel, country, jazz and classical recordings will be the largest single
music catalog available on the Internet.
The advertising exposure and name recognition to be gained through the
Amazon.com alliance is priceless (not to mention being virtually
costless!). In addition to being the largest Internet book seller, buyers
are also routed to the Amazon.com website by links and alliances /
partnerships with most of the major Internet portals and ISP's, including
Yahoo!, Excite, American Online, GeoCities and Netscape.
GNEN's COMPETITORS.…
To appreciate what's in store for GNEN shareholders with regards to the
soon-to-be-unveiled CDmusic.com website and the Amazon.com partnership, you
need to understand both what has happened with some of Generation
Entertainment's competitors, as well as the incredible growth potential of
electronic commerce.
In October 1998, Platinum Entertainment (PTET) announced that it had
entered into a partnership with Amazon.com. During the first month of the
partnership, PTET had 13,500 people visit its web site. The following
month, 1.5 million people visited PTET's site, and, in December, there were
over 3.8 million hits on its website! During this same time, PTET's
shares ran to $12!!
Keep in mind that PTET is a much smaller label than GNEN / Copper Sun -
Harvest. PTET's entire library is just 12,000 titles - yet when GNEN
unveils the new and improved CDmusic.com, over 198,000 titles will be
available for purchase!
Market Tracking International (MTI) has just released a study showing that
Internet music sales will reach $3.3 billion by the year 2004; with its
CDmusic.com site, GNEN plans to be a major player in that market. MTI also
estimates that downloaded music purchases will eventually account for 10%
to 15% of overall Internet sales; GNEN will have this technology in place
when CDmusic.com goes back on line in March.
Intelliquest Information Group has reported that 81% of all Internet users
plan to shop or buy on-line during 1999 - a figure that has staggering
market implications, particularly when you own the best and easiest to
remember Internet music e-commerce address in the business !!
SO WHAT DOES IT ALL MEAN….??
GNEN is an amazing collaboration of well-respected, widely-known and very
successful music industry executives coming together with the goal of
building GNEN into one of the country's largest independent record labels.
In our opinion, David Chackler and Bill Craig's experience and successful
track records suggest a very dynamic and successful future for GNEN - and
that's just for the recording side of the business! Added to all this is
GNEN's soon-to-be-launched e-commerce website, CDmusic.com.
While we can only guess at the ultimate sales potential of the prime piece
of Internet real estate, the experiences of some of GNEN's competitors
suggests that the sales growth should be explosive. In fact, Bill Craig is
probably being conservative in this estimates of $6 to $15 million in sales
during the second half of 1999 based on CDmusic.com coming on line.
Remember, shares of K-Tel Records ran from $6 to over $30 last year, just
based on an e-commerce announcement. Another competitor, CDnow.com has
250,000 titles, no record labels of its own, no association with
Amazon.com, yet is selling for $20/share.
As investor awareness of the Amazon.com alliance and the sales potential of
the CDmusic.com website increases, the stock should move much, much higher.
At current prices, GNEN is STRONG BUY.
For more information, please contact:
Generation Entertainment Corp. Phone: (602) 367 - 1717
Disclaimer
PATAGONIA CAPITAL CORP. is not a Registered Investment Advisor or a Broker
/ Dealer. This electronic communication reflects opinions from Generation
Entertainment Corp. (the "Company"). Readers are advised that this
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implied, is made as to their accuracy, completeness or correctness. This
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contains forward-looking statements which are based on current expectations
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current and/or intended business activities of the Company. Readers are
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at sec.gov <http://www.sec.gov> and / or the National Association of Securities
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