Diamond Multimedia to Participate in RIAA's Secure Digital Music Initiative.

SAN JOSE, Calif.--(BUSINESS WIRE)--Dec. 15, 1998--

Diamond Intends to Join Coalition

of Record, Technology and Consumer Electronics Companies

to Address New Digital Music Opportunities

Diamond Multimedia Systems Inc. (Nasdaq:DIMD), a leader in interactive multimedia and PC entertainment, today announced that it intends to participate in the newly formed Secure Digital Music Initiative (SDMI) that is charged with developing a music delivery technology aimed at becoming an industry standard.

The Recording Industry Association of America (RIAA) announced the formation of the initiative today at a press conference in New York. The goal is to bring together the worldwide music community in an open forum with technology companies to develop a standard for digital music security through the creation of new music security architecture and specifications for digital music.

Diamond Multimedia joins major and independent record labels as well as technology and consumer electronics companies in this important initiative. "Diamond's goal is to support the digital delivery of popular music and we're pleased to see the industry working together on a solution," said Ken Wirt, vice president of corporate marketing for Diamond Multimedia.

"There is huge consumer demand for digital music which is evident in the success of our Rio PMP300 portable music player. It is Diamond's intention to support an industry standard that allows all musicians, independents as well as major acts, to participate on the Internet as an exciting new medium for distributing their music."

Other industry forums in which Diamond Multimedia holds memberships include the MP3 Association and the Digital Media Association. Diamond has also announced a strategic agreement with Liquid Audio in which the two companies are working cooperatively in bringing Liquid Audio's secure music delivery system to Diamond Multimedia's line of portable music players.

About Diamond Multimedia

Diamond Multimedia is driving the interactive multimedia market by providing advanced solutions for home, business and professional desktop computer users, enabling them to create, access and experience compelling new media content from their desktops and through the Internet.

Diamond accelerates multimedia from the Internet to the user with products that include the Rio series of Internet audio appliances, the Stealth and Viper(R) series of media accelerators, the Monster series of gaming accelerators, the Fire series of professional 3D accelerators, the Micronics series of system boards, the Supra(R) series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the Nasdaq Stock Market under the symbol DIMD, and its web site address is www.diamondmm.com.

How to Contact Diamond Multimedia

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

Internet Web Site: http://www.diamondmm.com Diamond Multimedia's Headquarters and Multimedia Division:

408-325-7000; Fax: [phone] Systems Business Unit (Micronics brand system boards)

Main Phone Number: 510-651-2300 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] Swedish Office: [phone]; 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: 541-967-2444 (to 33.6 Kbps); Europe (Germany) BBS at

[phone] (to 28.8 Kbps) or [phone] (ISDN); Europe (UK)

at [phone] (to 33.6 Kbps)

Monster 3D, Supra and HomeFree 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.