Advertising Agreement

Exhibit 10.12


ADVERTISING AGREEMENT


This Advertising Agreement ("Agreement"), dated as of January 5, 1998 is made by and between CDnow, a Pennsylvania corporation, and GeoCities, a California corporation ("GeoCities"). CDnow and GeoCities sometimes are referred to collectively as the "Parties" and individually as a "Party."


In consideration of the mutual promises contained in this Agreement and intending to be legally bound, CDnow and GeoCities hereby agree as follows:


Section 1. Definitions.


The following terms (and all declensions thereof) are used in this Agreement with the respective meanings set forth below:


1.1 "Above-the-Fold" means 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.


1.2 "Affiliate" means, with respect to either Party, any individual or entity that, by virtue of a majority ownership interest, directly controls, is controlled by or is under common control with that Party.


1.3 "Beyond the Banner" means, any type of promotion which involves promotional techniques other than the placement of standard advertising banners or standard advertising buttons.


1.4 "CDnow Icons" is defined in Section 2.1 of this Agreement.


1.5 "CDnow Site" means, collectively, all points of presence and/or services maintained by CDnow or its Affiliates on the Internet or on any other public data network.


1.6 "Commencement Date" means the date GeoCities first provides CDnow with all links, advertisements and other promotional placements required under Stage I described in the attached Exhibit B to this Agreement.

1.7 "Competitor" means (a) any of the Entities listed on Exhibit C, (b) any Entity that either derives more than [XXX] of its annual gross revenues from the retail sale of Music or Video Products, or is primarily known as a retailer of Music or Video Products or (c) any Entity with more than U.S. [XXX] in annual revenues from the sale of Music or Video Products, though such entities shall only be construed to be a Competitor in the event that the advertising or promotion to be placed by such entity on the GeoCities Site is related to the category of Music or Video Products. For purposes of this Section 1.7, any commercial homepage participating in GeoCities' GeoShops Program and any Entity who exclusively manufactures or distributes, or any Entity that manufactures or distributes exclusively on behalf of a manufacturer or distributor of Music or Video Products and also engages in direct selling of Music or Video Products shall not be construed to be a Competitor. [XXX].
[Confidential treatment requested for redacted portions of document]


6.2 GeoCities, in cooperation with CDnow, will test the links, advertisements and promotional placements required under this Agreement prior to the time that they "go live" on the GeoCities Site (e.g., prior to the time that they are implemented and enabled on a production version of the GeoCities Site) and will continue to test such links, advertisements and promotional placements as is reasonable and necessary during the term of this Agreement to ensure that they function properly and as specified under this Agreement. The Parties will mutually agree when the program of links, advertisements and promotional placements will go live on the GeoCities Site.


6.3 GeoCities will not cause any link, advertisement or promotional placement under this Agreement to go live on the GeoCities Site prior to the applicable date agreed by the Parties. Further, at CDnow's discretion, traffic from promotional links and advertising placements will be enabled in stages; provided, however, that such staging will not delay the Commencement Date.


Section 7. Traffic Data


7.1 On a monthly basis, GeoCities will provide CDnow with a report in a form ...