ContentGuard to Focus On Digital Rights Licensing; Company to Further Pioneering Work Toward Standards Creation, Critical to Growth of Digital Content Industry.

Business Editors/High-Tech Writers

BETHESDA, Md.--(BUSINESS WIRE)--Aug. 7, 2001

ContentGuard, Inc. today announced that it is structuring its business to focus on its Digital Rights Management ("DRM") standards work, technology licensing and intellectual property -- critical building blocks to the future growth of the digital content market.

ContentGuard's revised strategy will extend the company's work to establish a rights language standard for the digital content industry. By allowing different technology vendors' and content owners' systems to interoperate, the creation of standards will accelerate use of DRM to manage high-value digital content sold over the Internet or distributed within and between enterprises.

"The market for digital content commerce and use of DRM in the Enterprise is forecast to reach $35 billion by 2005(1)," said Michael Miron, co-chairman and CEO of ContentGuard. "However, industry development is being seriously hindered by a lack of standards to enable participants' systems to work together and create a seamless experience for both content providers and end-users. The industry needs to coalesce around a single rights language specification so our common interests in growing the industry will not be hindered. Our new company structure reflects this immediate priority, focusing additional resources on addressing this issue to speed market growth."

ContentGuard's standards work will concentrate on increasing industry adoption of the eXtensible rights Markup Language(TM) (XrML(TM)), the rights specification language that ContentGuard launched as a potential DRM industry standard in April 2000. More than 2,500 technology and digital media players have already licensed XrML, which is based on more than 10 years of pioneering and patented research at Xerox's renowned Palo Alto Research Center (PARC). ContentGuard has been working with several major standards bodies and intends to submit XrML to them as the most viable XML-based rights specification language available today.

Beginning immediately, ContentGuard will focus on those products directly related to standards support and intellectual property licensing. As such, the company will exit its services business and some other product areas, scaling down the size of its operations accordingly. ContentGuard will work with customers impacted by the change to assist them in transitioning with minimum disruption.

"Microsoft supports XrML as the most comprehensive, fully developed, rights language in existence, and we believe strongly in the benefits of a single rights language for all to use," said Dick Brass, vice president of technology development at Microsoft Corp. and co-chairman of ContentGuard.

Xerox said that the future direction of ContentGuard will lead the way in solving a critical challenge facing Internet commerce. "Establishing a single standard for Web-based content protection will help to improve the distribution of premium digital content while protecting against unauthorized usage or redistribution," said Herve Gallaire, Xerox vice president, research and technology, and a member of the ContentGuard board of directors.

About ContentGuard

ContentGuard, Inc., launched in April 2000, is the catalyst for the revolution in eContent(TM)and is a joint venture of Xerox Corporation (NYSE: XRX) and Microsoft Corporation (Nasdaq:MSFT).

Customer Contact:

For more information, please visit www.contentguard.com.

Note to Editors: ContentGuard is a registered trademark and the phrase "the catalyst for the revolution in eContent" is a trademark of ContentGuard Holdings, Inc.

(1) Source: Accenture report "The New Digital Consumer: Large and In Charge", published December 2000.