1
Exhibit 10.21
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by [****], have been
separately filed with the Commission.
LETTER OF INTENT
This letter sets forth in summary form the terms and conditions of the agreement
reached by and between MTV Networks ("MTVN"), a division of Viacom International
Inc. with its principle place of business located at 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, on behalf of MTV: Music Television ("MTV") and VH1 ("VH1") and
collectively ("MTV/VH1"), and N2K Entertainment, a division of N2K Inc.
("Music Boulevard" or "N2K"), with its principle place of business located at 00
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, relating to the relationship set forth
below. The terms of our agreement are as follows:
CONCEPT:
Music Boulevard will become the music store for MTV/VH1 Online in exchange for
MTV/VH1 "owning" the Pop & Rock section of Music Boulevard (including its
subpages), which will be renamed the MTV/VH1 section (the "MTV/VH1 Section").
The MTV/VH1 Section shall be deemed to include all genres excluding jazz,
classical, country and eclectic. It is understood and agreed that MTV/VH1 Online
will provide Music Boulevard with content and present Music Boulevard as the
exclusive partner for MTV/VH1's online music sales both on-air and online in
exchange for MTV/VH1 Online receiving promotion, the right to sell advertising
and profit sharing from Music Boulevard.
TERM:
The term of the Agreement shall be for a two (2) year period commencing on the
Launch Date, provided that either party may terminate the Agreement with respect
to the second twelve (12) month period upon written notice not later than ninety
days (90) prior to the expiration of the first twelve (12) month period.
Thereafter the term shall renew automatically for one (1) year periods, unless
either party provides written notice of its election to terminate not later than
ninety (90) days prior to the expiration of the then-current term. The Launch
Date will be defined as the date when the MTV music navigation bar is linked to
Music Boulevard in accordance with this agreement ("Launch Date"). The
additional links required pursuant to this agreement will be phased in pursuant
to a mutually agreed upon schedule.
TERRITORY:
U.S., international, to be discussed.
2
MTV/VH1 OFFER:
1) Exclusivity: MTV/VH1 agrees to partner with no other music retailer for
online music fulfillment services.
2) Promotion/Content:
a) VH1-On-air promotion on VH1 promoting Music Boulevard as the
partner in "VHl's Personal Music Store" online as more
specifically set forth on Exhibit B attached hereto.
b) MTV-On-air promotion on MTV promoting Music Boulevard as the
partner selling MTV music collections online as more
specifically set forth on Exhibit A attached hereto.
c) Online links to the MTV/VH1 Section throughout MTV/VH1 Online
(i.e., whenever an album is being presented, a link will be
provided to allow the user to purchase.) Whenever an artist is
being presented, a link to the artists discography will be
presented (see Exhibit #10). Each album of an artist's
discography that is available for sale will be linked to Music
Boulevard. In addition, a link to the MTV/VH1 Section will be
included in the MTV Online Navigation Bar utilized in its
music area.
d) Front screen headlines for MTV/VH1 Music News Stories on
MTV/VH1 Section as set forth on Exhibit 3. MTV/VH1 will make
available to N2K its news headlines for storage in the Music
Boulevard database during the term of this agreement. MTV will
assist N2K in the technical implementation of mirroring such
data from the MTV/VH1 servers to N2K servers. These headlines
will be sent to Music Boulevard to be used and stored in the
database as source material during the term of the agreement.
N2K will link from such headlines to the full stories on MTV
and VH1 sites. Spin will no longer appear on the Music
Boulevard site. Music Wire may continue to appear, but will
only cover country, jazz, classical, and "eclectic" genres.
e) Creation and maintenance of "MTV Collections" pages on the
MTVN server with links to Music Boulevard for purchasing. MTV
Collections shall include Top 20, Buzz Clips, Sonic Stew, MTV
Branded audio product (e.g. Compilation and Unplugged) and any
artists featured in MTV Online special programming (e.g. live
event).
f) Creation and maintenance of VH1 personal music shopper pages
on MTVN servers with links to Music Boulevard.
2
3
N2K WILL PROVIDE:
1) Exclusivity: No other "Competitive" Brands (other than MTV, VH1 and Music
Boulevard) will appear on the MTV/VH1 Section, and no other source will
provide music news on those pages, or anywhere else on the Music
Boulevard site where pop/rock music news not relating to country, jazz,
classical or eclectic genres appears. "Competitive Brands" shall
include Sonic Net, Spin, E Entertainment, Rolling Stone, Addicted to
Noise, The Box, Mr. Showbiz, Much Music, Details and any other webzine
covering the MTV/VH1 genres, and Rocktropolis. It is acknowledged that
N2K has a commitment to link to the Enhanced CD database called Music
Fan from the pop/rock store. N2K may continue to link to such database
as long as it continues to contain no editorial content. This paragraph
does not preclude N2K from selling advertising to such Competitive
Brands outside of the MTV/VH1 Section which link to the respective
"Competitive Brands" sites.
2) Services:
Provide MTV/VH1 site with music fulfillment services. These services
will include:
a) Competitive pricing - Maximum non-sale of [****] (single CD),
[****] (single cassette) on all "New Releases" of Pop/Rock
titles. New Releases are defined as a release which have been
commercially available for one year or less. "Sale/Special
Price" of [****] (single CD), [****] (single cassette) or less
in MTV Collections, chat specials, VH1/MTV sales items. The
"Sale/Special Price" will be applicable to a total of 25
titles per MTV, 25 titles per VH1, and 25 titles per M2 at any
one time. The Sale/Special Price shall be applicable only to
CDs with a [****] (single CD), [****] (single cassette) or
less list price.
Competitive shipping/handling - N2K will make no margin on
shipping/ handling. If MTVN can secure a better deal and such
deal is implemented by N2K, then the current shipping/handling
will be reduced accordingly.
b) Excellent customer service.
FedEx shipping on most orders.
Open return policy to Music Boulevard.
3) Advertising Sales/Share of Revenue:
a) Right for MTV/VH1 Online to sell advertising and retain [****]
of the advertising revenue on following pages:
3
4
i) MTV/VH1 Section, including all MTV/VH1 sub/pages
(e.g. New Releases, On Sale, Listening Post, Charts.)
It is understood that sub/pages are defined as pages
accessible through links from the MTV/VH1 Section of
Music Boulevard. Due to the agreement currently in
place between N2K and Billboard, for any pages
utilizing the Billboard Charts (e.g. charts subpage),
MTV will pay [****] of the net revenue from such page
to N2K, for accounting directly to Billboard.
b) MTV/VH1 has the right to sell advertising on the Store
Directory home page, Find Music home page, Browse home page
(Exhibit #4) and the subdirectory sections of Browse which
include the MTV/VH1 subgenres. (Examples include: Blues,
Christian Rock/Rap, Industrial, Techno, Pop Vocal, Pop/Rock,
R&B, Rap, and Reggae, or any pages that are substituted for
the above mentioned pages.) MTVN and N2K will split the net
advertising revenue [****] to MTV/VH1, and [****] to Music
Boulevard. In the event there is a redesign of the Music
Boulevard site, and Music Boulevard desires to remove any of
the above mentioned pages, Music Boulevard will grant to MTVN
the right to sell advertising on the same basis on other Music
Boulevard pages with similar functionality and similar levels
of traffic.
c) [****] of net profits on any sales coming from MTV/VH1 links.
d) Each party will provide the other party with a statement of
net revenues and pay the other party any amounts due within
sixty (60) days following the close of the preceding calendar
quarter. Additionally, N2K's statement will include actual
sales and expenditures. MTV/VH1 will have the ability to
access the advertising usage reports and traffic the ads
remotely.
4) Promotion:
a) All Pop/Rock pages and any references to Pop/Rock pages will
be branded with MTV/VH1, e.g., see Store Directory (Exhibit
#2), Pop/Rock Page (Exhibit #3), Browse (Exhibit #4), Pop/Rock
On Sale (Exhibit #5), Pop/Rock New Releases (Exhibit #6).
b) Links on non-artist specific pages from MTV/VH1 Section (#3),
Store Directory Page (#2), News & Views (#7), Newsstand (#8),
Related Articles (#9), to MTV Music News (replacing Music Wire
(except as set forth on #3)/Spin/Puncture). MTV and VH1 Online
will provide daily headlines.
c) Links from Pop/Rock page (#3), to MTV Collections page
featuring MTV categories (e.g. Top 20, Buzz Clips, etc.) and
links from the Browse home page (#4) directly to MTV specific
categories.
4
5
d) Links from Pop/Rock page (#3) to VH1 Personal Music Store.
e) Links on all appropriate artist specific pages, e.g.
Discography, Album Description, Recent Releases, Articles,
etc.
i) Links to MTV relevant content, e.g. Biorhythms,
reviews, editorials, etc.
ii) Link to VH1 Personal Music Store
f) Link to MTV Music News from headlines on Music Boulevard home
page.
5) Advertising Commitment:
Music Boulevard will commit to purchase a total of [****] in advertising online
in year one. In each successive year, if any, the parties will negotiate in good
faith for the advertising commitment for such year. [****] will be spent on
MTV Online and VH1 Online advertising in areas where there are no Music
Boulevard links, pursuant to this proposal (e.g. MTV/Yahoo! Guide). Music
Boulevard will be charged the lowest rate paid by any advertiser on the MTV
Online site and VH1 Online site during the initial term of the agreement. The
remaining [****] will be spent by advertising the MTV/VH1 section of Music
Boulevard on third party sites, with a direct link to the MTV/VH1 area on Music
Boulevard (e.g., Infoseek, Lycos, Netscape.)
6) Other
a) MTV/VH1 has the right of prior approval over all uses by Music
Boulevard of the MTV/VH1 logos and trademarks. N2K has the
right of prior approval over all uses by MTV/VH1 of N2K
trademarks and logos including the Music Boulevard logo. The
approval process will be mutually determined. MTV/VH1 has the
right to approve a substantial redesign of the MTV/VH1 Section
including its subpages.
b) Music Boulevard will provide a [****] discount on all CD and
cassette sales to MTV/VH1 employees. N2K will be obligated to
pay MTVN any bounty commission on those discounted sales to
MTV/VH1 employees.
c) Music Boulevard and MTV/VH1 will issue a joint press release
announcing the relationship.
d) Music Boulevard will include mention of MTV and VH1 in all
Music Boulevard inserts if included with its product. In
addition, upon MTV/VH1's request, Music Boulevard agrees to
include MTV/VH1 created inserts in its packaging, provided MTV
pays for all associated costs including
5
6
manufacturing and insertion costs. N2K shall have approval
over the inserts and will not make any profit on MTV/VH1
created inserts.
This Agreement shall be binding on the parties immediately upon execution of
this Agreement by MTV Networks, a division of Viacom International Inc. and N2K.
The parties hereto contemplate entering into a long form agreement with respect
to the matters set forth herein. Until such time as this Agreement is superseded
by a more formal agreement, this Agreement shall be binding, effective and
enforceable.
If the above terms and conditions accurately reflect your understanding of our
agreement, please sign where indicated.
Sincerely, Agreed to and Accepted:
MTV Networks, a division N2K Entertainment, a division
of Viacom International Inc. of N2K Inc.
By: /s/ Xxxxxxx Xxxxxx By: /s/ X. X. Xxxxx
---------------------------- ---------------------------------------
Name: Xxxxxxx Xxxxxx Name: X.X. Xxxxx
-------------------------- -------------------------------------
Title: Sr. Vice President Title: Sr. Vice President & General Manager
------------------------- ------------------------------------
Dated: 12/18/96 Dated: December 17, 1996
-------------------------- ------------------------------------
6
7
EXHIBIT A
MTV/MUSIC BOULEVARD ON-AIR PROMOTION
DIRECT PROMOTION
Type of Promotion Runs/Year Value
----------------------------------------------------------------------------------------
1) Incorporation in :30 Online image promo 252 (21 times a month) [****]
2) Incorporation in Soundscan show 192 (4 times a week/ [****]
16 times a month) [****]
Total Value
7
8
EXHIBIT B
VH1/MUSIC BOULEVARD ON-AIR PROMOTION
DIRECT PROMOTION
Type of Promotion Runs/Year Value
--------------------------------------------------------------------------------
1) Incorporation in :30 Online promo 520 [****]
2) Incorporation in Dayparts, i.e. House Blend 260 [****]
3) Incorporation in The Number Ones show 156 [****]
Total 1997 Promotion 936 [****]
Total 1998 Promotion* 936 [****]
TOTAL VALUE (OVER TERM OF DEAL)
ADDITIONAL VALUE
Music Boulevard will also benefit from the general VH1 Online web site on-air
promotion valued at over [****] during 1997, and at least [****] during 1998.
Total additional value over the term of the deal is OVER [****].
* Note: 1998 figures are estimated to be the same or higher than 1997 estimates.
8
9
= Boulevard - Store
xxxx://xxx.xxxxxxxxx.xxx/xxx-xxx/x_xxx'X&XXXXXXXX_XXXXx/xx0/xxxx/xxxx
2
[LOGO]
MTV/VH1 Jazz Classical Country Eclectic
Prince | Xxxx | Xxxxxx Xxxxxxxxx
Emancipation | Razorblade Suitcase | Mirror Has Two Faces
[ART] | [ART] | [ART]
| |
27.99 | 11.99 | 11.99
| |
----------------------------------------------------------------------------
| STORE PRICE Xxxxx Xxxxxxx Summer Of '78 |
----------------------------------------------------------------------------
Music Boulevard: The Ultimate Online Music Store!
MTV/VH1 Music Wire Frequent Buyers
Jazz Browse the Store Club
Classical Search for Music Store Directory
Country On Sale Music Charts
Eclectic New Releases Help & E-Mail
Newsstand Store Board
Sign in
-------------------------
| |
-------------------------
[CLICK ICON] [CLICK ICON] [CLICK ICON]
click here
--------------------------------------------------------------------------------
Frequent Buyers Club
click here
9
10
[LOGO]
Prince Xxxxxxx Xxx Xxxxxxx
Emancipation Evita If We Fall In Love
[illustration] [illustration] [illustration]
27.99 21.89 11.99
link link
------------ ------------
MTV VH1 Personal
Collections Music Store
Page
-------------------------------------------------------------------------------
Replace with MTV and VH1 Music News daily headlines
Music Wire
Covers only nonMTV/VH1 genres
-------------------------------------------------------------------------------
CLICK HERE FOR
THE CITY
that cannot sleep
--------------------------------------------------------------------------------
[illustration]
Enhanced CD Database
10
00
Xxxxx Xxxxxxxxx: Browsing Genres xxxx://xxx.xxxxxxxxx.xxx/xxx-xxx/x...00000
[LOGO]
MTV/VH1
Blues Christian Rock/Rap Industrial Pop Vocal Pop/Rock R & B
----- ------------------ ---------- --------- -------- -----
Bozz Clps MTV Top 20 MTV Heavy Rotation MTV Sonic Stew VH1 Personal Music Store
MTV Acid Jazz Big Band Jazz Jazz Vocal Latin Jazz Ragtime
--------- -------- ---- ---------- ---------- -------
branded Audio Product
Bluegrass Country Folk Western
------------------------------
Classical Opera
--------- -----
Cajun/Zydeco Children's Instrumental Irish/Celtic Miscellaneous New Age
------------ ---------- ------------ ------------ ------------- -------
Religious Shows/Movies World Music
--------- ------------ -----------
JAZZ CLASSICAL POP & ROCK COUNTRY ECLECTIC
faster text mode
----------------
X0X X0X XXXXXXX@XXXXXXXXX.XXX
---------------------
11
12
MTV/VH1 Branded
[Music Boulevard Logo]
Back to MTV/VH1 New Releases On Sale Listening Post Charts
here
Next Page
-----------------------------------------------------------------------------
Car Button Cloth MTV VH1
Lemonheads links
12.49 10.49 to
----------------------------------------------------------- content
Worm's Life (feature,
Crash Test Dummies stories,
13.99 10.49 reviews,
----------------------------------------------------------- etc.)
Factory Showroom if
They Might Be Giants available
13.99 10.49
-----------------------------------------------------------
Life Is Peachy
Korn
13.99 10.49
-----------------------------------------------------------
Picture This
Do Or Die
12.49 10.49
-----------------------------------------------------------
Load
Metallica
13.99 10.49
-----------------------------------------------------------
e. 1999 Eternal
Bone Thugs-N-Harmony
12.49 10.49
12
13
[LOGO]
BACK TO MTV/VH1 NEW RELEASES ON SALE LISTENING POST CHARTS
--------------- ------------ ------- -------------- ------
HERE
Next page Same as
--------- "On Sale"
------------------------------------------------------------------------
Emancipation
-----------
Prince
------
32.99 22.49
------------------------------------------------
Razorblade Suitcase
-------------------
Xxxx
----
14.99 10.49
Xxx Xxxx
--------
Xxx Xxxx
--------
14.99 10.49
------------------------------------------------
Hell On Earth
-------------
Mobb Deep
---------
14.99 10.49
------------------------------------------------
House Of Music
--------------
Xxxx!Xxxx!Tone!
---------------
14.99 10.49
------------------------------------------------
You Can't Stop The Reign
------------------------
Xxxxxxxxx X'Xxxx
----------------
14.99 10.49
------------------------------------------------------
Rock Spectacle
--------------
Barenaked Ladies
----------------
14.99 10.49
------------------------------------------------
T.H.U.G.S.
----------
Flesh N' Bone
-------------
14.99 10.49
------------------------------------------------
13
14
MUSIC BOULEVARD NEWS & VIEWS
[LOGO]
MTV MUSIC VH1 MUSIC MUSIC WIRE @COUNTRY
--------- --------- ---------- --------
NEWS NEWS
Newsstand
--------
What's New
----------
Web Site Seeing
---------------
JAZZ CLASSICAL POP&ROCK COUNTRY ECLECTIC
Click Here
----------
faster text mode
----------------
N2K XXXXXXX@XXXXXXXXX.XXX
--- ---------------------
14
15
[LOGO]
MTV Music News
VH1 Music News
Music Wire
@Country
JazzTimes (hosted by Jazz Central Station)
SPIN
Puncture
15
16
[LOGO]
Xxxxxx Xxxxxxxxx, Aphex Twin, Chemical Brothers, Electric Skychurch,
Loop Guru, Meat Beat Manifesto, Moby, My Bloody Valentine, Ninja Tune, Orb,
Orbital, Porno for Pyros, Presidents of the United States of America, Sonic
Boom, Spacemen 3, Underworld
MTV/VH1
____JAZZ ____CLASSICAL ____POP&ROCK ____COUNTRY ____ELECTRIC
faster text mode
N2K XXXXXXX@XXXXXXXXX.XXX
16
17
[PHOTO OF XXXXXXX XXXXXXXXX] [ILLUSTRATION]
link to Xxxxxxx Xxxxxxxxx
Music Blvd
Discography Page
[ILLUSTRATION]
[PHOTO OF (b. May 29, 1961, Leavenworth, Kansas)
XXXXXXX XXXXXXXXX] Xxxxxxx Xxxxxxxxx received her first guitar at the age of
eight, and began writing songs of personal experience at
the age of ten. During her teens she fronted local cover
bands, and at 18 Xxxxxxx left home to attend Berklee
College of Music in Boston to study guitar. While at
Berklee, she supplemented her studies by playing
coffeehouses throughout the Boston area.
Soon after, Xxxxxxx moved to Los Angeles to make music her career. She paid her
dues playing solo gigs, performing in bars in L.A., and continued to hone her
writing skills. It was about this time that Island Records founder Xxxxx
Xxxxxxxxx heard of her and, upon seeing her unique emotional set, signed her
"on the spot."
Xxxxxxxxx'x Island debut went platinum; the follow-up, Brave and Crazy, went
platinum as well, and 1992's Never Enough bore "Ain't it Heavy", the track
which earned the singer a Grammy for Best Female Rock Performance. Still, it
was album number four, 1993's Yes I Am that cemented both Xxxxxxxxx'x celebrity
and her status as one of America's premiere performers. Xxxxxxxxx'x
breakthrough set boasted three top 10 hits; "I'm The Only One," "Come To My
Window," and "If I Wanted To." Five albums later, Xxxxxxx Xxxxxxxxx remains one
of the most compelling songwriters in music. Her most recent release, Your
Little Secret, continues in the tradition of her previous albums, searching for
the perfect context for her heartfelt, intensely emotional songs.
17
