Major Record Companies and IBM Announce Trial to Test New Digital Distribution System

Test Marks First Time Full-Length Albums Can Be Quickly Downloaded to Consumers' Homes With Protection From Piracy

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New York City - 08 Feb 1999: - Five major record companies announced today that they are joining with IBM to conduct the first-ever market trial of a system that permits convenient and fast distribution of full-length, CD-quality albums to consumers in a highly secure form over the Internet. The five music companies are BMG, EMI, Sony Music, Universal Music, and Warner Music.

The trial will enable consumers to purchase and download music to their homes faster and with better quality than has ever been available before, while protecting legal rights. By using a broadband, cable modem delivery system, consumers in the test will be able to download a 60-minute album in less than 10 minutes. Over 2,000 albums will be available for download during the trial, which is expected to begin in the spring and last for more than six months. The trial will involve approximately 1,000 cable subscribers in San Diego who will be recruited for the test.

Initially, the trial will be limited to broadband cable modem delivery. A narrowband telephony modem test will also be conducted during the trial. The trial will allow the music companies and IBM to test a variety of technical issues such as compression and network delivery, as well as generate valuable consumer feedback.

The trial will be conducted using an IBM-developed delivery system based on an open architecture that includes a clearinghouse that authorizes and processes transactions. The system provides a highly secure rights management capability that allows online retailers to offer their customers music from record companies working with the clearinghouse. The clearinghouse is similar in concept to that used by major banks to assure that financial transactions are authorized.

Initially, consumers will select from approximately 1,000 albums and a selection of commercially available singles that will be offered through an online store created for the trial. New content will be added on a weekly basis, and it is anticipated that between 2,000 and 2,500 titles will be available by the end of the trial. After music is selected and credit card information is processed, participants will be able to download the music onto their PCs. The downloaded music can then be transferred to any recordable digital media or device which complies with the trial's copy control policies. In addition to downloading music, consumers will be able to download artwork for each release.

As has previously been reported, all companies participating in the trial support the recently announced Secure Digital Music Initiative (SDMI). SDMI is an initiative which seeks to create a forum to bring music and technology companies together to develop voluntary standards for digital security and interoperability. This trial will work toward SDMI's goal of developing ways for consumers to conveniently access music while protecting artists' intellectual property.

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Executive Quote Sheet

"BMG believes actual trial work like that to be conducted in San Diego will help us to move quickly toward addressing the critical objectives of responding to consumer demand for convenient access to quality recordings and ensuring copyright protection for our artists' works. Consumers, artists, technology companies, consumer electronics companies and music companies will all benefit if approaches to digitally delivered music are both interoperable and secure. We are pleased to be among a group of companies playing a leadership role in pursuing effective ways to fully use the Internet, and we will continue our strong commitment to new media."

Kevin Conroy

Senior Vice President, Worldwide Marketing,

BMG Entertainment

"This trial offers a window on a very exciting future for everyone who loves music. Technology has always advanced music. We are now on the threshold of another great advance. It will allow us to bring more music to more people in a more convenient way. What could be better for our consumers, our artists and our business?"

Roger Faxon

Senior Vice President, Business Development

The EMI Group

"We believe adoption of IBM's Electronic Music Management System by the music industry could accelerate the development of a new, convenient way for consumers to purchase music. We have developed this technology working in cooperation with many in the music industry and we look forward to continue this cooperative effort with music companies to help them expand choices for their customers."

Rick Selvage

General Manager, IBM Global Media and Entertainment Industries


"This trial represents the natural next step in using the Internet to strengthen ties between artists and their fans. From the artists' perspective, the system provides a new and highly effective means for connecting with existing fans while broadening the reach of their music and protecting their intellectual property rights. From the perspective of music consumers, it will enable fans to download CD-quality albums faster and with better quality than ever before. We are pleased to be part of this historic test, and look forward to reviewing the results."

Al Smith

Senior Vice President

Sony Music

"Digital distribution of music over the Internet has the potential to provide consumers with immediate access to a vast selection of music. Not only will this system allow consumers to purchase popular and current recordings, but it will also open the door to catalog and hard-to-find recordings rarely available through existing retail outlets. This market trial is an important step in assessing consumers' needs and desires when buying music online. Universal Music believes this information will be extremely useful in developing future plans for the secure delivery of digital music while providing the greatest value to consumers and artists."

Larry Kenswil

Executive Vice President/Global Head of e-Commerce and Advanced Technology

Universal Music Group

"When consumers go to an online store in the future, they will have two choices: click one button to have a CD mailed to their home in a few days or click a different button to have CD-quality music electronically downloaded to their home computer in a few minutes. Electronically downloaded music will be just another format choice, just as online stores are another shopping choice. That's good for consumers, retailers and music companies."

Paul Vidich

Executive Vice President

Warner Music Group

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