Advertising And Promotion Agreement - 08-21-97

EXHIBIT 10.9



ADVERTISING AND PROMOTION AGREEMENT



This Advertising and Promotion Agreement (the "Agreement") is entered into

--------- as of August 21, 1997 (the "Effective Date") between Yahoo! Inc., a California

-------------- corporation ("Yahoo") and CDnow, Inc., a Pennsylvania corporation ("CDnow"). In

----- ----- consideration of the mutual promises contained in this Agreement, Yahoo and CDnow hereby agree as follows:



1. Definitions.

-----------



The following terms are used in this Agreement with the respective meanings set forth below:



"Above-the-Fold" shall mean situated within the portion of a page that is

-------------- designed to be visible on a standard computer screen with a resolution of 640 pixels by 480 pixels without requiring the user to scroll horizontally or vertically through the page.



"Buyweb Link" shall mean a link which: (a) contains the CDnow logo, with

----------- dimensions no larger than 89 pixels wide by 31 pixels high (which is as large as Yahoo's standard navigational buttons), and a tag line, with no more than 16 characters, plus the artist name, as set forth in Exhibit D; (b) is placed near

--------- any appropriate references to music on the Included Pages; and (c) will permit users to navigate directly from the Included Page to a music related page on the CDnow Site, where such users may purchase the referenced Recorded Music items, as reasonably designated by CDnow (which page may be different for each Buyweb Link).



"CDnow Competitor" shall mean, collectively: (i) the Recorded Music

---------------- merchants listed on Exhibit B to this Agreement, solely if such Recorded Music

--------- merchant derives more than [XXX] of its annual gross revenues directly from the sale of Recorded Music; and (ii) any business entity, including without limitation, corporations, business units, and corporate services divisions that derives more than [XXX] of its annual gross revenues directly from the sale of Recorded Music.



"CDnow Site" shall mean the on-line store owned by CDnow and currently

---------- located at http://www.cdnow.com.



"Click-through" shall mean a user presence at the CDnow Site, which

------------- originated from the Included Pages, the Netscape Guide, or the Visa Shopping Guide, including any banner ads that are part of this Agreement pursuant to Section 2.2.



"Included Pages" shall mean, collectively: (i) certain results pages in the

-------------- Yahoo Main Site, My Yahoo and Yahoo Metro Sites with the music related key words identified in Exhibit A attached hereto; (ii) certain Recorded Music related

--------- pages of My Yahoo! to reasonably be



[Confidential Treatment requested for redacted portions of document.] 1 determined by Yahoo (by way of example, but not limitation, attached hereto in Exhibit D is a sample page from My Yahoo! illustrating an Included Page); and - --------- (iii) certain Recorded Music related pages, as identified in Exhibit A, of

---------- Yahoo's Metro Sites and Yahoo Main Site. In the event that Yahoo adds additional relevant Recorded Music related pages to the Yahoo Main Site or the Yahoo Metro Sites and/or modifies the existing Recorded Music related pages currently listed in Exhibit A, such pages shall be deemed to be incorporated

--------- into Exhibit A upon receipt by CDnow of written notification thereof. CDnow may

--------- request in writing that Yahoo add to Exhibit A any pages, existing as of the

--------- Effective Date, on the Yahoo Main Site or the Yahoo Metro Sites relevant to recorded music artists or musical genres, and Yahoo will not unreasonably withhold or delay approval and implementation of such request. Upon such approval, Exhibit A will be deemed by the parties to be so amended. In the

--------- event that Yahoo materially restructures the nature of the Yahoo Service, Yahoo warrants that such restructuring will not result in any material change in Yahoo's representations under Section 2.1.1 regarding the delivered number of Page Views.



"Initial Term" shall mean the period beginning on the Effective Date, and

------------ continue for a period of twelve (12) full calendar months following the Launch Date.



"Launch Date" shall mean the date on which Yahoo makes the Buyweb Links

----------- available to users on each Included Page, which shall be no more than two (2) weeks after Yahoo receives from CDnow any and all URLs, URL formats (as applicable), content, and other materials necessary for Yahoo to provide the Buyweb Links described in this Section; provided, however, that CDnow delivers

-------- ------- to Yahoo such URLs, URL formats, content, and other materials necessary for Yahoo to provide the Buyweb Link no later than September 15, 1997. In the event that CDnow fails to deliver such materials to Yahoo by September 15, 1997, then in any event the "Launch Date" shall be September 30, 1997.



"Netscape Guide" shall mean that property currently referred to as

-------------- "Netscape Guide by Yahoo", and located at http://netscape.yahoo.com/guide, maintained by Yahoo pursuant to the agreement between Yahoo and Netscape Corporation, in effect as of the Effective Date of this Agreement.



"Page View" shall mean a web site user's viewing of any Included Page, and

--------- any discrete page on the Netscape Guide or the Visa Shopping Guide, which includes CDnow as a featured site or content module as described in Section 5.



"Recorded Music" shall mean any musical sound performance pre-recorded on

-------------- any of the following media, which (except as set forth below) does not include any textual, video, or software elements: vinyl, compact disc, magnetic tape (cassette, reel-to-reel, or 8-track), DAT, music only DVD recordings, music only ROM (except such ROM may include animation or video clips intended by the music

------ recording artist as part of the musical sound recording), and



[Confidential Treatment requested for redacted portions of document.] 2 digitally distributed musical sound recordings of the same recited above, and expressly excluding other media and ancillary music-related merchandise, including without limitation, books, videos, laser discs, clothing, musical instruments, sheet music, musical scores, computer software, and technology used to deliver or render such sound recording.



"Subsequent Term" shall mean the twelve (12) calendar month period after

--------------- the Initial Term of this Agreement.



"Term" shall mean, collectively, the Initial Term and the Subsequent Term.

----



"Visa Shopping Guide" shall mean the Visa Shopping Guide by Yahoo as

------------------- described in Section 5.2 hereto.



"Yahoo Main Site" shall mean Yahoo's principal directory to the World Wide

--------------- Web, currently located at www.yahoo.com, and the Yellow Pages portion of the Yahoo Main Site, currently located at http://yp.yahoo.com.



"Yahoo Metro Site" shall mean the following Yahoo! Metros: Atlanta,

----------------- Austin, Boston, Chicago, Dallas/Fort Worth, Los Angles, Miami, Minneapolis/St. Paul, New York, S.F. Bay, Seattle, Wash D.C., and any other similar United States metro sites that may be created by Yahoo and provided that such sites are wholly owned, created, and branded by Yahoo.



"Yahoo Service" shall mean, collectively, the Yahoo Main Site, My Yahoo!

------------- and the Yahoo Metro Sites.



2. Marketing Links.

---------------



2.1 Buyweb Links on Included Pages.

------------------------------



(a) Yahoo will place a Buyweb Link Above-the-Fold on each Included Page and at the bottom of each Included Page which requires the user to scroll more than one standard computer screen (i.e., with a resolution of 640 pixels by 480 pixels), excluding any pages relating to My Yahoo!. Each such Buyweb Link

--------- will permit users to navigate directly from the Included Page to a page on the CDnow Site to be reasonably designated by CDnow (which page may be different for each Buyweb Link), the substantial purpose of which page shall be to enable users to purchase referenced Recorded Music items relevant to the context of the Included Page.



(b) On My Yahoo! Included Pages, Yahoo will include a so-called "Content Module" in a form similar to the example set forth in Exhibit D, with

--------- content to be mutually agreed to by the parties. Such "Content Module" will appear as a default module on the



[Confidential Treatment requested for redacted portions of document.] 3 "entertainment" section of all newly registered My Yahoo! users, and such "Content Module" will become an option available to My Yahoo! users registered prior to the Launch Date.



(c) In addition, subject to any existing contractual obligations as set forth in Section 4 hereto, Yahoo represents that it will place the Buyweb Links on each Included Page in a manner that is comparable to third party links that are of a similar nature and function to the Buyweb Links on any such Included Page. By way of example, but not limitation, the parties attach hereto as Exhibit D, an example of: (i) a directory page link; and (ii) a search page

--------- link. CDnow will discuss with Yahoo any material changes to such Buyweb Links from the examples set forth in Exhibit D prior to implementing any such changes.

---------



(d) Subject to the provisions of this Agreement, Yahoo will solely be responsible for the user interface and placement of the Buyweb Links on the Included Pages. Prior to any modifications to Above-the-Fold Buyweb Links, Yahoo will consult with CDnow in good faith. Yahoo agrees that CDnow may vary the Buyweb Links up to [XXX] per month, unless otherwise agreed to in writing by Yahoo. The parties agree to cooperate with respect to testing the performance of the Buyweb Links during the Term of this Agreement.



2.1.1 Yahoo Representations.

---------------------



(a) Initial Term. Yahoo represents that it will deliver to users of

------------ the Yahoo Service and the Netscape Guide a minimum of [XXX] Page Views, during the Initial Term of this Agreement, in accordance with the schedule set forth in Exhibit C. In the event that Yahoo fails to deliver such number of Page Views - --------- during any quarter set forth in Exhibit C, Yahoo will "make good" the shortfall

--------- during the next quarter by [XXX]. Such "substitute" Page Views will be in addition to any Page Views otherwise stated in Exhibit C for such subsequent

--------- quarter. In the event of a shortfall during the last quarter of the Initial Term, and if CDnow exercises its termination rights under Section 6 hereto, Yahoo's obligations under this Section 2.1.1(a) shall extend beyond the end of such Initial Term until such Page View obligation is satisfied.



(b) Subsequent Term. During the Subsequent Term (if any), Yahoo

--------------- represents that it will deliver to users of the Yahoo Service and the Netscape Guide a minimum number of Page Views equal to the number of actual Page Views during the last [XXX] months of the Initial Term multiplied by [XXX], but in no event less than [XXX] Page Views. Within thirty (30) days after the end of the Initial Term, Yahoo shall set forth the schedule, as reasonably agreed by CDnow, for the delivery of such Page Views of the Subsequent Term. In the event that Yahoo fails to deliver the scheduled number of Page Views during any quarter during the Subsequent Term, Yahoo will "make good" the shortfall during the next quarter by [XXX]. Such "substitute" Page Views will be in addition to any Page Views otherwise scheduled for such subsequent quarter. In the event



[Confidential Treatment requested for redacted portions of document.] 4 of a shortfall during the last quarter of the Subsequent Term, Yahoo's obligations under this Section 2.1.1(b) shall extend beyond the end of such Subsequent Term until such Page View obligation is satisfied. The provisions set forth in this Section 2.1.1 set forth the entire liability of Yahoo, and CDnow's sole remedy, for Yahoo's breach of its representations under this Section 2.1.1.


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