Diamond Multimedia, RIAA and AARC Settle AHRA Lawsuit.

SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 4, 1999--

Diamond Multimedia Systems, Inc. (Nasdaq:DIMD), the RIAA and AARC today announced the settlement of all pending litigation related to Diamond's Rio portable Internet music player.

All three parties have dismissed their legal actions and announced the mutually satisfactory resolution of outstanding legal issues.

"Diamond Multimedia and our RioPort subsidiary are pleased to bring an end to this legal dispute as we move forward with the music industry on the development of secure e-commerce music offerings through the Secure Digital Music Initiative (SDMI)," said Ron Moore, general counsel of Diamond Multimedia. "Rio has set in motion a new age in digital music enjoyment. We felt it was important to bring this exciting new technology to market for all of those who create, distribute or enjoy music. Diamond Multimedia, and RioPort, intend to continue to be the leading providers of digital audio technology and to offer consumers a way to access and enjoy legitimate music offerings, and we can't do that unless that legitimate, online music market develops. We were among the first technology companies to join SDMI and we believe that this voluntary, cross-industry effort is quickly producing a technology solution that will protect creative rights while enabling new ways for consumers to access music. It is the combined goal of meeting consumer and music industry needs that brought together all SDMI participants and that has spurred the initiative's rapid pace. We applaud the RIAA for being the catalyst that made this process possible"

"The RIAA is also pleased to bring a formal end to this legal process," said Cary Sherman, senior executive vice president and general coetplace itself, enabled by initiatives like SDMIven as this case went through the legal system,mely ambitious timetable to adopt the initial pohich new consumer electronic products and metho Director Linda Bocchi. "Diamond Multimedia, RIA work will be subject to rampant piracy. Througronment that will protect artists and benefit everyone, especially music fans."

About Diamond Multimedia

Diamond Multimedia is a leader in PC multimedia and Internet connectivity, providing advanced products that enable desktop computer users to create, access and experience compelling new media content from their PC's and through the Internet. Products include the Rio series of portable digital audio appliances, the Stealth and Viper(R) series of video accelerators, the Monster series of 3D gaming accelerators, the Fire series of professional graphics accelerators, the Supra(R) series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the NASDAQ under the symbol DIMD, and its web site address is www.diamondmm.com. The Company's Internet music portal site is at www.RioPort.com and its e-commerce site is at www.estore.diamondmm.com.

How to Contact Diamond Multimedia

There are many ways to reach Diamond for sales support, technical assistance, driver updates and general information: -0-

Internet Web Sites:  www.diamondmm.com and www.RioPort.com
Diamond e-commerce Site:  www.estore.diamondmm.com
Diamond Multimedia's Headquarters and Multimedia Division:
  408-325-7000; Fax:  [phone]
Communications Division (Supra brand modems) Main Phone Number:
  360-604-1400; Fax: [phone]
European Division (Germany):  [phone]; (UK):  [phone];
  (France) [phone]
Korean Office (Seoul):  [phone];  Fax:  [phone]
Japanese Office (Tokyo):  [phone];  Fax:  [phone]
ASEAN Office (Singapore):  [phone];  Fax:  [phone]
Hong Kong Office:  [phone]; Fax:  [phone]
Australian Office (Sydney): [phone]; Fax [phone]
Latin America Office (Miami): 305-593-8777; Fax: [phone]
Product Support (Voice), United States:  541-967-2450;
  Europe (Germany) [phone];
  Europe (UK) [phone]; Europe (France) [phone];
  TDD/TTY Support 541-967-2451
  Product Support (Fax), United States: 541-967-2401;
  Europe (Germany) [phone];
  Europe (UK):  [phone]; (France) [phone]
Pre-sales Information:  1-800-468-5846
24-Hour Fax-On-Demand Service:  1-800-380-0030
Investor Relations:  408-325-7476; 1-888-474-3463 (U.S. and Canada)
FTP site: ftp.diamondmm.com
BBS: Europe (Germany) BBS at [phone]
  (to 28.8 Kbps) or [phone] (ISDN);
Europe (UK) at [phone] (to 33.6 Kbps)

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HomeFree, Monster 3D, Rio, Shotgun, SpeedStar and SupraSonic are either trademarks or registered trademarks of Diamond Multimedia Systems, Inc. Monster is a registered trademark of Monster Cable. Viper is a registered trademark of Directed Electronics, Inc., Used under License. All other trademarks referenced are the service mark, trademark or registered trademark of their respective manufacturers. This announcement relates to products whose introductions are in North America. The product name, contents, prices and availability may differ elsewhere in the world according to local factors and requirements.

Except for historical information contained herein, the matters set forth in this press release, such as statements relating to the Company's ability to successfully exploit technological and market developments, the timing and success of new product introductions by the Company and its competitors, and the Company's ability to invest in new technologies and to enhance its existing systems are forward-looking statements that are subject to risks and uncertainties, including the impact of competitive products and pricing and alternative technological advances, the timely and successful development and market acceptance of new products and upgrades to existing products, and other risks as detailed from time to time in Diamond Multimedia's SEC filings, including its most recent Forms 10-K and 10-Q.