Microsoft and Reciprocal Extend Strategic Alliance to Deliver Digital Rights Management Solution Based on Windows Media Technologies 4.0

Reciprocal Will Provide Music Industry With Scalable, End-to-End DRM Solution Based on Windows Media Rights Manager

LOS ANGELES - April 13, 1999 - Microsoft Corp. and Reciprocal^TM today announced a complete, end-to-end DRM solution from Reciprocal tailored for the music industry. This announcement marks the next step in the companies' strategic alliance to deliver digital rights management (DRM) solutions for the digital content economy. Today at the Windows^® Media Technologies 4.0 launch, executives from Microsoft and Reciprocal appeared onstage, with the Reciprocal representative demonstrating a prerelease version of the end-to-end DRM solution based on the Microsoft^® Windows Media Rights Manager, a component of Windows Media Technologies 4.0. The solution provides consumers with new ways of accessing, downloading and purchasing digital music over the Internet while enabling content providers to build new revenue streams.

The Windows Media Rights Manager helps artists, publishers and distributors derive long-term value from their content assets when distributing them over the Internet. The system enables copyright holders to package their songs or videos in such a way that end users can be informed of the authenticity of content and easily obtain a license for its use. Reciprocal's digital rights management solution offers all-encompassing DRM capabilities for content owners, aggregators and distributors that want to enter the digital marketplace quickly and on a scale and budget that meets their needs. The solution is a software and service offering that goes beyond addressing piracy issues; it creates a simple, robust environment for driving continual business opportunities and implementing sophisticated business models, such as digital subscriptions and limited-term promotional licenses, while providing cost-effective management of the associated back-office operations.

"We expect that consumer demand for music and video over the Internet will explode with the availability of Windows Media Technologies 4.0," said Paul Bandrowski, CEO and president of Reciprocal. "The challenge for content owners is to meet this growing demand with solutions that enable them to distribute their content profitably while providing a highly satisfying experience for the consumer. Our DRM solution for the music industry clearly illustrates that Reciprocal and Microsoft are uniquely qualified to meet the needs of both content owners and consumers. We look forward to working with Microsoft to enable new markets for digital content that will truly drive the content economy."

"As a strategic partner, Reciprocal plays an important role for Microsoft customers by providing a robust and comprehensive DRM solution. This solution enables content providers to make optimal use of the Internet as a profitable distribution channel for music," said Will Poole, senior director of marketing and business development for the Streaming Media Division at Microsoft. "We are pleased to be moving forward in our relationship with Reciprocal with the release of our technology platform and Reciprocal's comprehensive suite of applications and services."

Enabling Digital Commerce

The Reciprocal DRM solution, based on Windows Media Rights Manager, provides all the software, back-office infrastructure and professional services necessary to enable businesses to fully capitalize on the new and unique revenue opportunities of the digital content economy:

• Packaging of digital content. Advanced technology and processes ensure the protected distribution of any digital content through an encrypted "container" that continuously carries the content and access rules designated by the content owner.
• Hosting of digital content. The solution provides availability of turnkey hosting of digital content, which works seamlessly with the associated back-end reporting services.

• E-commerce and transaction processing services. Part of the end-to-end solution is a state-of-the-art, content-centric clearinghouse facility, which provides content owners, aggregators and distributors and their customers with all essential e-commerce and informational transaction-processing services in a highly flexible manner. The clearinghouse includes a license authorization infrastructure, which seamlessly interoperates with the packaging and hosting components.

• DRM information services. Through content access analysis, the solution gives content providers mission-critical insight into sales and consumer behavior, allowing them to build and extend customer relationships and develop new content products.

• Professional services. The solution also provides education and consulting services. A primary objective is identifying new commercial opportunities for content distribution as well as providing support services for meeting customer and consumer needs.

Availability

The beta version of Windows Media Technologies 4.0, including Windows Media Rights Manager, is available now from http://www.microsoft.com/windows/windowsmedia/. Reciprocal's DRM solution is available in limited release now, with general availability expected in the third quarter of this year.

Reciprocal and Microsoft recognize the piracy problems faced by the music industry and artists worldwide. Reciprocal's solution, based on Windows Media Technologies 4.0, takes important steps in addressing these issues while offering new commercial possibilities for digital music distribution. Both companies are looking forward to working with the industry's Secure Digital Music Initiative (SDMI) to further define requirements for software systems that will help make high-quality music accessible over the Internet.

About Reciprocal

Reciprocal, formerly Rights Exchange Inc., offers a global DRM solution that enables copyright protection, distribution, usage of and payment for digital content such as text, music, images or software via the Internet or any electronic medium.

Privately held, Reciprocal has received funding from Microsoft, as well as from venture capitalists Adams Capital Management, Chase Capital Partners, Constellation Ventures, Flatiron Partners, SOFTBANK Technology Ventures, Venrock Associates, XDL Capital Corp. and Web Ventures. It has formed strategic relationships with Microsoft and InterTrust Technologies Corp. Reciprocal maintains offices in New York City; Buffalo, N.Y.; and Research Triangle Park, N.C.

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