MINNEAPOLIS and REDMOND, Wash. -- April 25, 2000 - K-tel International Inc. and Microsoft Corp. today announced that K-tel will begin selling thousands of titles from its music library as digital downloads this spring. One of the Internet's original retailers and distributors of music, entertainment and consumer products, K-tel will offer its content for sale directly from the K-tel Web site, at http://www.ktel.com/.

K-tel's music library contains some of the most popular music from the most popular artists from the last five decades. The company has long been a retail innovator; this announcement marks its most significant commitment yet to secure online digital music distribution.

K-tel will use the Microsoft^® Windows Media™ Format for all digital downloads from its proprietary music database because Windows Media offers the best audio quality as well as proven security and the largest installed base of rights-protected players for digital music.

"Our new site will be launched by mid-May, and our use of Windows Media technology will allow our customers to sample and download individual songs from K-tel's huge music library quickly while at the same time preserving audio quality," said Samantha Kives, director of K-tel's online division.

K-tel downloads will be featured at WindowsMedia.com (http://windowsmedia.com/), the MSN™ guide to audio and video content on the Internet. In addition, WindowsMedia.com will feature other K-tel audio content, such as K-tel radio stations.

"K-tel's catalog of popular music spanning five decades of hits will expand the mainstream market for digital music," said Dave Fester, general manager of marketing, Digital Media Division at Microsoft. "More and more people are integrating digital music into their daily lives, and this substantial commitment by K-tel helps ensure an even broader selection of high-quality music in Windows Media Format."

With the announcement of its relationship with Microsoft, K-tel positions itself at the forefront of industry innovation in embracing the electronic distribution of musical content over the Internet. K-tel has consistently remained a leader in the retail music industry by adopting revolutionary retailing techniques for its expansive music library.

"We are very excited to be working with Microsoft, the technology leader in digital media today," said Ken Onstad, K-tel's president. "We see this as a tremendous opportunity to introduce a whole new generation to K-tel's music database while allowing members of our traditional target demographic to access their favorite music in the nearly instantaneous digital format that they have become accustomed to. The joint promotional opportunities opened up by this relationship with Microsoft will bring the K-tel library to the millions who use Windows Media."

K-tel's e-commerce efforts are targeted at a very attractive demographic group on the Internet -- the "silver surfer." Silver surfers, or older Web surfers, are a highly sought-after demographic because they have more discretionary income and are willing to pay to download their favorite music from the 1950s, '60s, '70s, '80s and '90s. In short, K-tel has targeted a large, affluent demographic on the Web.

Investors interested in receiving the latest news from K-tel may register at ktel@visioncc.net to receive updates on the company's progress.