AMAZON ENTERS INTO AN ALLIANCE

Alliance Entertainment has entered into a distribution pact with Amazon.com.

Though others have made claims in the past to making inroads with the dot-com, inside sources assure us that this agreement could cost Valley Media (and sister company Amplified) 30% of Amazon's business. Valley's Amazon revenues have dropped over the last two years, from a high of some $100 million to somewhere in the $50- $60 million range as more majors ship to the Internet titan directly.

Under terms of the agreement, Alliance will be fulfilling some 200,000 skus to Amazon's distribution centers. The titles will include not just product from BMG and Sony (who have yet to ship Amazon directly), but also catalog from those majors that have already gone direct.

Said Valley's new President Jim Miller: "Our relationship and service levels with Amazon are very good; we have a 92-93% fill rate. But Alliance has been aggressive with their pricing, and I could picture them turning someone's head with that."

However, sources close to the situation tell us the deal just cut with Alliance is very similar to the one with Valley/Amplified. Amazon maintains seven warehouse/distribution centers nationwide and will begin by giving Alliance all of the current business at the Atlanta warehouse, one of the larger facilities, with a plan to slowly ramp up over the next year.

Added Alliance CEO/Chairman Eric Weisman: "This is just further confirmation of our credibility in the Internet marketplace."

Said Miller: "The industry's becoming more competitive and Alliance is being very aggressive. We'll see who can keep the business." Stay tuned for more action to come…