NEW YORK (CNNfn) - N2K Inc., the online music seller, said Tuesday it has reached a two-year marketing alliance with Ticketmaster Group Inc.
The agreement calls for N2K's Music Boulevard unit, an online music store, to contribute $12 million to Ticketmaster for an extensive co-branding arrangement that will include both online and offline promotions.
The cross-promotional alliance underscores the importance such partnerships have in determining the success of electronic commerce companies. Although some observers believe N2K is paying a high price, the Ticketmaster deal does provide substantial value for a start-up company.
"They are paying a pretty steep price," said Craig Bibb, analyst at PaineWebber. "They don't have tons of traffic but they do have a highly targeted traffic."
Ticketmaster Online boasts volume as high as 75,000 transactions per day. Monthly ticket sales have grown from $100,000 in November 1996 to more than $7.5 million in March 1998. In its first full year of operation, Ticketmaster Online sold more than one million tickets.
As part of the agreement, Music Boulevard will produce a co-branded version of its site that will be integrated into Ticketmaster Online. In exchange, consumers interested in purchasing the CDs or tapes of acts currently selling tickets through Ticketmaster will be sent back to Music Boulevard's online superstore.
In addition to online promotions, Ticketmaster also will carry the Music Boulevard brand name on the back of tickets, ticket envelopes and other media such as Live Magazine.