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Business






Posted on Sat, Nov. 09, 2002 story:PUB_DESC
The song's over for CDNow: Last employees set to go
The company will close its Pa. office. There are no plans to darken the Web site, the No. 2 online music retailer.

Inquirer Staff Writer

CDNow, we'll see thee later.

The online music retailer that was born in the Philadelphia suburbs in 1994 is set to vanish from the local landscape.

CDNow's parent company, BeMusic Inc., a unit of the German media giant Bertelsmann AG, has notified the Pennsylvania Department of Labor and Industry that it will lay off the last 33 workers at the cavernous CDNow facility in Fort Washington on Dec. 27.

"We are planning on closing the offices there at the end of the year," BeMusic spokeswoman Melinda Meals said yesterday.

She said, however, that there is no plan to shut down the popular CDNow.com Web site, which still gets millions of visits per month from music and video shoppers. "Nothing is happening to the CDNow brand," she said. "CDNow still exists, and we're not selling CDNow."

The Web site has been managed from BeMusic headquarters in New York for the last year.

The local job cuts are in addition to 33 layoffs at the Fort Washington offices that BeMusic announced just last week. Meals said the cuts are part of an "internal restructuring" to streamline operations.

Employees at the local facility, which houses some technical operations for BeMusic, either did not return phone calls, referred questions to BeMusic offices in New York, or declined to comment.

The 92,000-square-foot building, topped with the CDNow logo, is visible from the Pennsylvania Turnpike, just east of the Fort Washington interchange. More than half of the space has been for rent for the past year, according to the commercial real estate information service CoStar Group Inc.

CDNow, the brainchild of twin brothers Jason and Matthew Olim, originally of Ambler, was bought two years ago by Bertelsmann. CDNow once employed more than 400 in Fort Washington. Staffing there fell to 66 after 248 workers were let go last fall.

Bertelsmann has gradually moved the CDNow operations to New York, and to a corporate customer-service center in Indianapolis.

The CDNow.com Web site had 8.6 million visitors in October, down 15 percent from the same month a year ago, Max Kalehoff, a spokesman for online traffic measurement service ComScore Media Metrix, said.

In a study released this week, ComScore said overall online music sales were down 25 percent for the three months ending Sept. 30, compared to the same quarter in 2001.

ComScore lists CDNow as the No. 2 retail Web site devoted to music. It comes behind the music club site ColumbiaHouse.com, which had 12 million users in October, and ahead of music club BMGmusic.com, which had 4.5 million users in October, Kalehoff said. The BMG Music Service is another unit of BeMusic, as is the online listening service myplay Inc.

"So, it's likely... they'll continue to use the CDNow.com brand or domain just because they've got a significant number of people going to it," Kalehoff said. "They're not likely to throw it away."


Contact Reid Kanaley at 215-854-5026 or rkanaley@phillynews.com.
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