Meet CDNow
CDNow was an early online music sales platform.
The company, founded in 1994 by brothers Jason and Matthew Olim in their parents’ Ambler, Pa. basement, was a major player in the Philly area’s dot-com scene and one of the decade’s best known websites. By scale, size and impact (having been an online retailer before 1995) it was one of the area’s most successful dot-com era technology startups. It also cultivated local talent — team members landed at firms like GSI Commerce, Monetate and Yellowbook.
The company sold music online, pre-Napster, pre-iTunes. It offered music reviews and recommendations based on a customer’s interests. It was the first online store to sell single songs instead of a full CD, said Jason Olim.
In August 1997, the company had 75 employees when it took $10 million in an initial investment round, said former CEO and COO Mike Krupit. In February 1998, CDNow went public with a $342 million valuation at $16 a share and the stock jumped 37 percent that first day.
First reported the previous fall, in March 1999, CDNow merged with its largest competitor Music Boulevard. By then it had 750 employees, was “outgrowing 90,000 square feet in Fort Washington” and sold $150 million worth of music a year, said Krupit, but failing to profit on most individual sales.
As soon as March 2000 the company was seeing stock market doubts. An attempt at an acquisition by Sony and Time Warner failed.
In July 2000, German-based media company Berteslmann acquired CDNow for $3 a share or roughly $117 million.
By 2002, Berteslmann licensed CDNow operations to former competitor Amazon.com, as noted in this New York Times story from the time, which called CDNow ‘pioneering’ but effectively marked the end of the venture. The brand and domain were phased out over time.