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To: E. Taylor who wrote (46256)	3/18/1999 12:22:00 AM
From: JOHN W.	Read Replies (2) \| Respond to of 164684

Business News -------------------------------------------------------------------------------- CDNow, N2K Complete Merger March 17, 1999 By Michele Masterson InternetNews.com Associate Editor Business News Archives Joining forces to challenge e-commerce Goliath Amazon.com, dueling music e-tailers CDnow and N2K Wednesday finalized their $522 million merger. The new entity will be known as CDnow/N2K. The companies first announced the deal last October. N2K shareholders will get 0.83 shares of common stock for every N2K share held and CDnow shareholders will receive one share of common stock in the new company, in a tax-free exchange. Stocks for both concerns have lagged behind their Internet brethren. At mid-day CDnow was up 25 cents to $18.063 while N2K was up 56.3 cents to $14.875. The new music merchandising site is expected to debut in May. It will be headed by Jon Diamond, who will be the merged entity's chairman. Diamond was formerly the co-founder and vice chair of N2K. CDnow co-founder Jason Olim is slated to retain his president and chief executive officer title. N2K co-founder Larry Rosen will take a seat on the company's board of directors. Olim is quoted as saying the pairing will save the company $20 million in 1999 and an estimated $35 million next year. Reductions in staff from both companies have resulted. Several key N2K executives have split from the company, including N2K's former chief technology officer. Taking on former bookseller-turned e-commerce powerhouse Amazon.com will prove to be forminable. According to Amazon's figures, the Seattle-based company, which has only been retailing music products for the past six months, sold more than $50 million in CDs during the second half of last year. CDnow's total revenue for 1998 were reported at $56 million. Both CDnow and N2K have online partnerships with the major portals, including America Online, Yahoo!, Excite and Geocities. The online music retail market is expected to continue heating up. Analysts at Forrester Research estimate the online music sales will soar to $4.5 billion by 2002. "The unity of the two companies is powerful on all levels: strategic, tactical and financial...we receive a ubiquitous position online...the combined company will enjoy broad leadership in the most popular musical genres...perhaps most importantly, the merger creates opportunities for major cost reductions and new efficiencies that will be of benefit to our shareholders," Olim

To: E. Taylor who wrote (46256)	3/18/1999 12:28:00 AM
From: JOHN W.	Respond to of 164684

What PR problem? What advertising problem? Why would AMZn have a press release that gives their ad man a 30 day warning? Their meeting or exceeding their revenue projections. Right? This is a very deceptive lead into a earnings warning.. People at AMZN concurred

To: E. Taylor who wrote (46256)	3/18/1999 12:40:00 AM
From: JOHN W.	Respond to of 164684

-------------------------------------------------------------------------------- Related Quotes AMZN AOL CDNW XCIT YHOO 131 109 1/16 18 7/16 108 7/8 172 1/8 -2 13/16 +4 1/8 +5/8 +1 7/8 -2 3/4 delayed 20 mins - disclaimer Wednesday March 17, 10:33 pm Eastern Time CDNow merges, says ready to rock and roll By Andrew Hay NEW YORK, March 17 (Reuters) - CDNow Inc.(Nasdaq:CDNW - news) and N2K Inc. NTKI.O sealed their $522 million merger Wednesday and set about the task of persuading Wall Street they can make great music as they battle arch rival Amazon.com (Nasdaq:AMZN - news). The combined company, to be known as CDNow, is the largest online music seller and the third largest online retailer, based on revenues. Its most immediate goals are to show investors it can cut spending, turn a profit and make CDNow as synonymous with music as Barnes & Noble is with books. While other Internet stocks have shown unstoppable gains, CDNow and N2K have languished. Some investors question how CDNow will compete with leading online retailer Amazon.com and its 6.2 million customer base. They ask how a firm can survive as a specialty music seller while Internet companies like Amazon become virtual discount department stores. CDNow Chief Executive Jason Olim likens CDNow to a Tower Records or HMV while he compares Amazon to a WalMart or Kmart. He expects investors to come around to his conclusion. ''We are somewhat of a sleeper,'' said Olim, 29, who created CDNow in 1994 in his parents' basement. ''Investors don't understand our story today, I have faith they will understand it soon.'' Wall Street has linked CDNow's problems with Amazon.com's successes. Amazon was not even selling CDs until June 11. A household name, it took six months to outpace CDNow and become the No. 1 music seller on the Web. In contrast to CDNow, Amazon does not have to shovel out millions of dollars for shop space on high-rent Internet sites. The Seattle company sells most of its wares straight from its spot on the Web. The combined CDNow will have a bigger bargaining chip as it negotiates leases with Internet heavyweights like America Online Inc. (NYSE:AOL - news), Yahoo Inc. (Nasdaq:YHOO - news) and Excite Inc. (Nasdaq:XCIT - news). With its new-found clout, CDNow can outmaneuver Amazon and every other online and bricks-and-mortar competitor, Chairman Jon Diamond said. At the same time it can be a better music store. ''You have one company that will be the music brand on the Internet,'' said Diamond, N2K's chief executive and a saxophonist who toured with Kool & The Gang and the Four Tops. CDNow hopes to expand its product line, while sticking to core music-related products. It will launch a new site in May that combines the lush rock-and-roll look of N2K with CDNow's sparse, efficient image. Caging the Amazon brand is key to CDNow's success, said Kevin Wagner, an analyst with Adams Harkness. ''This whole e-tailing game is all about brand names and how you contain the 600-pound gorilla that got into that space,'' Wagner said. ''The Amazon issue is still a psychological issue on the stock.'' Olim said Amazon is nothing to be scared of. ''People point to Amazon as the company that seems to be able to put anyone out of business, but they haven't put anyone out of business that I know of,'' he said. Shares of CDNow closed at $18.44, up 63 cents but down over 50 percent from a year high of $39.25 reached in April 1998.