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K-Tel, Playboy to launch Net store

The music company forges a partnership with Playboy to jointly launch a cobranded online music store, and watches its stock soar as a result.

K-Tel, the music company known in the '70s for its television commercials and in the present for its Internet ventures, took another wild ride on the stock market this morning after it announced an alliance with Playboy and word got out to investors that its president had resigned--two months ago.

K-Tel stock was up more than 99 percent in afternoon trading, gaining 6.8125 to 13.6875 but not even approaching its 52-week high of 39.4688 reached in April. Playboy stock was up 6.33 percent or 0.9375 to 15.75.

Playboy and K-Tel--which both have been transforming their offline businesses into online moneymakers--said today that they will jointly launch a cobranded online music store.

K-Tel also acknowledged this morning that its president, David Weiner, resigned in September "to pursue other interests," K-Tel spokeswoman Dilek Mir said.

Mir said there "is no connection" between the Playboy alliance and Weiner's resignation. "One has absolutely nothing to do with the other," she said.

K-Tel's stock nearly doubled in morning trading on the news of the alliance with Playboy, whose three-pronged approach to gaining revenue online--advertising, subscriptions to its Playboy Cyber Club, and e-commerce--has earned it a certain clout as one of the Net's great success stories.

Just last week, Playboy announced a deal, aimed at boosting its membership, in which it is teaming with Internet service provider MindSpring to launch a new cobranded online service.

Today's deal is aimed at giving Playboy's third--and perhaps most promising--branch of business, e-commerce, a big boost.

K-Tel, with its library of 250,000 titles, will be able to supply Playboy readers with music that Playboy's research has shown they want.

"We know by marketing research that our visitors like music," said Playboy spokeswoman Rebecca Theim. "We have some relatively new data showing that a third of our visitors had physically been in a record store in the last month. There's obviously a great pairing. Our site skews young and well-educated. And they like music."

Theim said that Playboy chose K-Tel as an e-commerce partner because it has a large music library and is well-known both on and off the Internet.

"We chose K-Tel because of the brand name opportunities," Theim said. "It's known around the world--it's known in some quarters better than some of the Internet companies having to spend a lot of time and money having to develop brands. Their library is essentially same in size and breadth as or CDnow.