Music Boulevard Online Sales Triple Over Holidays

Looks like N2K (Nasdaq: NTKI) is singing anything but the blues, with fourth quarter revenues from its online music store up by 325%, the company said, in a preliminary report released on Tuesday. Music Boulevard is a large-scale competitor to and CDNow (Nasdaq: CDNW), although a merger between Music Boulevard and CDNow is expected to be completed by March 31, 1999. Total revenue for 1998 is expected to increase over 500% to approximately $42 million from $8.1 million reported in 1997.

Much of Music Boulevard’s success came from the company’s online store on America Online. Music Boulevard is an exclusive music retailer on America Online. According to AOL, music and books were ranked #3 for holiday gifts this season on its Shopping Channel.

“Music was one of our members’ favorite shopping categories again this holiday season, and its popularity contributed to the record growth of online shopping,” said Bob Pittman, President and COO of America Online, Inc. “For the second consecutive year, AOL members have expressed a strong preference for music in their holiday gift-giving.”

N2K credits his company’s growth to the industry-wide explosion in e-commerce, as well as increased consumer willingness to purchase music online, in particular. According to Jon Diamond, Vice Chairman and CEO of N2K Inc.”As one of the pioneer e-commerce categories, music sales showed continued strength and were also bolstered by our ability to offer proprietary products at higher margins, as well as new products unique to the Internet.”

During the holiday season, Music Boulevard debuted a custom holiday CD compilation area and a digital downloading area of the store, which allowed music to be downloaded to customers’ PCs rather than shipping the physical CDs.

Results Released

As of December 31, 1998, the company reported that it had approximately 720,000 customers, who have ordered and received product, of which approximately 275,000 were first time customers added in the fourth quarter.

Approximately 51% of revenues in the fourth quarter came from existing customers. In 1998, N2K has added a total of approximately 603,000 new customers.

Total revenue from the Music Boulevard Network, which includes the online music store and other similar operations was reported to reach approximately $17 million in Q4, which represents a sharp increase from $4.0 million reported for the same period last year.

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