DON’T PANIC.COM

Are all Wall Street music tech stocks laying an egg?

With the ARTISTdirect IPO gone south (and stock value diminishing), CDNow stock falling through the floor and other music-techs seeing precipitous declines, the time has come to do what any responsible, far-seeing business must do in a crisis.

Call in the spin doctors. Quick.

E-tailer CDNow, still reeling from a report earlier this week by its accountant, Arthur Anderson LP, doubting it can survive and an earlier Barron’s article predicting a similar fate, saw its share price tumble another 30% on 3/29 to 3.56. Though the stock rebounded slightly today (3/30), the company continues to face the void.

No doubt hoping to stop the bleeding, CDNow issued awhat else?—press release—hyping its increased traffic. The release noted that the site enjoyed—according to its own tracking system—3.5 unique visitors last month, up from 3.2 million at the end of the last quarter of 1999. Have eyeballs now replaced retail sales as a tool in the company's attempt to rustle up more funding?

CDNow boss Jason Olim has underscored its assertion that it has enough cash and other assets to survive until September. But some insiders wonder if, at its current price, the best CDNow can hope for is to become an acquisition target. If such were the case, the veteran online vendor could do worse than to emphasize its substantial user base as an enticement. Its fate could well lie in the importance of branding its name in the emerging digital marketplace. But it stands to reason that with the promise of new ownership and a still appreciable profile in the Net-music world, the company could be a worthwhile investment.

Then again, how much longer are people going to buy those shiny round things anyway, aside from the occasional NSYNC album?

Meanwhile—perhaps to prevent the stock contagion from reaching their URL—custom-CD and download market Musicmaker.comflew a release underscoring their increased first-quarter numbers. The dot-com claims to have made and shipped over 900,000 custom discs so far in 2000, which the company asserts is a 3000% boost from the final quarter of 1999 and a 2000% spike from the latter year’s total sales, undoubtedly boosted by its recent Jimmy Page & the Black Crowes and Beastie Boys exclusives.

“The number obviously speak for themselves,” proclaimed President of Global Marketing Larry Lieberman. “You are getting sleepy. You will recommend our stock to all our friends.” Musicmaker also has deals in place with EMI Recorded Music, Zomba Music Group, Columbia House and an array of retailers.

If nothing else, today’s releases underscore the increased importance of press in the fate of tech ventures—and that publicists might want to start asking for more cash and less stock.