N2K's Music Boulevard Reports 325% Increase In Fourth Quarter Revenue And Adds 275,000 New CustomersPR Newswire - January 19, 1999 06:16Music Boulevard Has Record-Setting Triple Sales Growth For 1998 Holiday Shopping Season NEW YORK, Jan. 19 /PRNewswire/ -- N2K Inc. (Nasdaq: NTKI) today announced preliminary sales results for the fourth quarter and year ended December 31, 1998 as well as sales for the holiday season. The Company expects to report final results for the fourth quarter and year ending December 31, 1998 in the first week of February 1999. Revenue from continuing operations on N2K's online division, the Music Boulevard Network, for the 1998 fourth quarter is expected to increase 325% to approximately $17 million from $4.0 million for the same period last year. N2K reported that sales on Music Boulevard increased over three times for the holiday period beginning November 27 through December 24, 1998 compared to the same period last year. In December, the Board of Directors authorized the transfer and assignment of certain assets of the N2K Encoded Music operation. As a result, this part of the business will be accounted for as a discontinued operation. Revenue from discontinued operations, N2K Encoded Music, for the fourth quarter is expected to be approximately $1 million versus $800,000 in the prior year. Revenue from continuing operations on the Music Boulevard Network for the year ended December 31, 1998 is expected to increase over five times to approximately $42 million from $8.1 million reported in 1997. At December 31, 1998, the Company 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, which represents a customer acquisition ramp up of over 60%. Approximately 51% of revenues in the fourth quarter came from existing customers. For 1998, N2K has added approximately 603,000 new customers. "This was a landmark year for e-commerce and in particular for music as an online category. Our strong sales reflect the confidence our customers have in the ability of N2K's Music Boulevard to deliver a complete music shopping solution and their comfort level participating in what is already a maturing category," commented 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. We are grateful for the support of our customers and the tremendous fourth quarter effort of our employees." This holiday season, Music Boulevard customers were able to take advantage of a variety of new products and incentives, including the addition of holiday music titles in the custom CD compilation area and the e-mod digital downloading area of the store. Music fans shopping in the Gift Center at Music Boulevard were offered a variety of music gift ideas with the exclusive Music Boulevard version of The Time Life Treasury of Christmas leading the sales charts. Additionally, holiday gift-buyers at Music Boulevard were able to earn frequent flier miles redeemable at any of seven major airlines through the Click Rewards program. Music Boulevard is the exclusive music partner for Click Rewards. Contributing to the holiday season's strong performance were sales results that exceeded expectations from Music Boulevard's co-branded store on America Online. Music and books were ranked #3 for holiday gifts this season on AOL's Shopping Channel. As the exclusive music retailer in America Online's Music Space, on AOL International and in the music areas of AOL.COM, Music Boulevard provided music gift solutions to AOL's base of over 15 million users. "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. This underscores the value of our worldwide partnership with Music Boulevard and enables us to provide the broadest selection and best online shopping experience to our membership." On October 23, 1998, CDnow, Inc. (Nasdaq: CDNW) and N2K Inc. jointly announced the signing of a definitive merger agreement. The merger is expected to be completed prior to March 31, 1998. N2K Inc. is a leading online music entertainment company and the Internet's complete resource for music content, community and commerce. The Music Boulevard Network, combines Music Boulevard, the world's #1 online music store and the award-winning music channels: Rocktropolis, Jazz Central Station, Classical Insites and the Star Sites including Stones World and the official sites for Leonard Bernstein, Miles Davis and Wynton Marsalis. Music Boulevard (musicblvd.com) offers a choice of more than 470,000 music titles and over 350,000 sound samples. The Music Boulevard Network is the preferred or exclusive music partner for America Online (AOL Keyword: MB), AOL Japan, AOL Europe, Netscape, Excite, Disney.com, ABC.com, ABC Radio Networks, Infoseek, Microsoft Plaza, iVillage, @Home, AT&T WorldNet, StarMedia, MJI Broadcasting, CBS Cable's TNN, CMT and country.com and MTV International sites in Europe, Japan, Asia and Brazil. Traded on Nasdaq under the symbol "NTKI," N2K Inc. is based in New York at 55 Broad Street, New York, NY 10004. Internet address: http://www.n2k.com. Telephone: 212-378-5555. This release may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to the impact from competition for Internet content and merchandise and recorded music; dependence on strategic alliance partners, suppliers and distributors; market acceptance of the Internet for commerce and as a medium for advertising; technological changes and difficulties; and other risks detailed in the Company's Securities and Exchange Commission filings. SOURCE N2K Inc. /CONTACT: Paula Batson, Sr. VP, Public Relations, 212-378-0331, or Lauren Hackett, Mgr. Public Relations, 212-378-6109, both of N2K; or Andrea Kaimowitz, 212-850-5634, or Katherine Mittelbusher, 212-850-5649, or Lee Foley or Evan Goetz, 212-850-5613, all of Morgen-Walke Associates for N2K/ /Web site: http://www.musicblvd.com http://www.n2k.com/ (NTKI)
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