Terminating Netflix.com’s relationship with Amazon.com, the company today announced a new strategic alliance with Musicland’s Sam Goody.

Set to launch today, both companies will support this unique alliance through links between the Web sites – SamGoody.com and NetFlix.com – and through consumer offers, in-store signage, and point-of-purchase merchandising.

Under the agreement, NetFlix.com, will direct its customers to Musicland’s primary Web site for DVD purchases. SamGoody.com will act as the “buy” side of the NetFlix.com “Test drive,” the “try before you buy program for DVD users.” Musicland will offer its customers from all Musicland stores (Sam Goody, Suncoast, Media Play and On Cue) special DVD promotions including one free rental from Netflix.com with every DVD purchase.

The sites will be joined by a comprehensive product-by-product, cross-linking program. For example, if a customer goes to “The Matrix” DVD page on
NetFlix.com, they will be given the option to rent the DVD from Netflix.com or to purchase it from SamGoody.com. Similarly, customers who visit “The Matrix”
DVD page at SamGoody.com will be given the option to purchase the DVD at SamGoody.com or rent it from NetFlix.com.

As an incentive for consumers to purchase DVDs from Musicland’s stores, NetFlix.com will insert coupons ranging from $2.49 off to as much as $3.49 off of DVD purchases with each of the customers’ DVD rentals. NetFlix.com also will encourage customers to become members of Musicland’s growing customer
loyalty program, “Replay(R).” Each NetFlix.com customer who registers to become a Replay(R) member will receive eight free DVD rentals from NetFlix.com.