CenterSpan Unveils C-star Peer-to-Peer Content Distribution Platform.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 23, 2001

Technology and Services Offering Enables Cost-Effective,

Secure Distribution Channel for the Digital Entertainment Industry

CenterSpan Communications Corp. (Nasdaq: CSCC), a leading developer of next generation peer-to-peer (P2P) Internet content distribution solutions, today announced C-star, a mediated P2P platform that enables the low cost, secure distribution of digital entertainment content such as music and video.

CenterSpan is unveiling the C-star platform at Jupiter Media Metrix's Plug.In Music Conference today in New York.

The C-star platform answers the growing demand for cost-effective delivery of digital entertainment on the Internet. C-star's ground-breaking mediated P2P solution combines the cost savings of P2P with centralized content management and digital rights management (DRM) solutions. C-star enables the entertainment industry to augment their successful bricks-and-mortar retail channel on the Internet at the lowest cost available today. CenterSpan estimates the cost savings of digital content delivery on its C-star P2P network to be one-ninth the cost of streaming and one-third the cost of central server-based systems.

"Consumers want to be able to download music and video for use on their PC and other portable devices," said P.J. McNealy, senior analyst with GartnerG2. "A mediated peer-to-peer network could offer content providers and aggregators a cost-effective and secure distribution solution that helps them meet consumer demand."

In addition to the C-star platform, CenterSpan will also provide branded third-party retail templates and end-to-end distribution services that include content preparation, DRM license acquisition and clearing, publication to the C-star catalog, customized and scalable network distribution, content tracking and reporting, billing, subscriptions, and ongoing catalog management. The retail templates will give companies that want to offer branded entertainment subscription services a time-to-market advantage and a presence on the consumer's desktop through their own branded client application.

CenterSpan's suite of C-star services will allow content owners and aggregators to outsource the costly and time-consuming procedures of preparing properties for online distribution. C-star supports a wide array of business models including purchase and rental subscription services and video-on-demand.

"C-star is the low cost, secure delivery solution that the digital media and entertainment community is looking for," said Frank Hausmann, CenterSpan's chairman and CEO. "C-star solves all of the major challenges of digital distribution of copyright-protected content and does so while providing the lowest cost-of-goods and highest gross margin potential. C-star delivers an easily understood economic proposition that will drive the growth of the emerging digital distribution market."

In C-star's mediated P2P network, a central server acts as a "broker" and mediates a direct communications link between individual peer computers to ensure the most efficient and robust file transfer. A white paper detailing the benefits of mediated P2P can be found at the CenterSpan corporate Web site (www.centerspan.com).

C-star's digital file security and copyright protection is currently provided by Microsoft's Windows Media(TM) DRM technology. C-star has been engineered with the flexibility to support a variety of DRM solutions. C-star's security technology is transparent to the consumer.

The first commercially available retail template of the C-Star platform launched in beta earlier this year at Scour.com, CenterSpan's branded digital media and entertainment destination. Scour is currently undergoing successful consumer testing, and its subscription service is planned for launch later this year.

About CenterSpan Communications Corp.

CenterSpan Communications (Nasdaq: CSCC) develops and markets next-generation peer-to-peer Internet content distribution solutions. The company has created one of the lowest cost channels enabling the distribution of digital entertainment content, such as music and video, in a secure and legal environment. CenterSpan is headquartered in Portland, Ore., and recently opened offices for its Digital Media and Entertainment Group in Los Angeles to spearhead its content partnership efforts. CenterSpan is an Intel Capital portfolio company. Visit www.centerspan.com for more information.

About Scour

Scour(TM), one of the most widely visited consumer online entertainment destinations in the world, was acquired by CenterSpan in December 2000. CenterSpan has redesigned Scour as the first branded retail destination built on the C-star platform and a premier source for high quality legitimate entertainment content. Visit www.scour.com to learn more.

This news release includes forward-looking statements. Investors are cautioned that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. CenterSpan is a venture stage company. The company's peer-to-peer Internet content distribution channel is a new business in an emerging and rapidly evolving market. Specific statements regarding the timely launch of content distribution services such as C-star and Scour, new products, content acquisition, number of registered users, new business opportunities, new revenue model and potential earnings leverage are forward-looking statements. Investors are encouraged to review the company's filings with the Securities and Exchange Commission, including the company's 2000 Form 10-K, for a further description of the risks and uncertainties relating to forward-looking statements made by the company, as well as to other aspects of the company's business.