Five Major Music Companies and IBM Successfully Complete Electronic Music Distribution Trial.

Business/Entertainment Editors &Music/High-Tech Writers

SAN DIEGO--(BUSINESS WIRE)--Feb. 2, 2000

Five major music companies -- BMG Entertainment, EMI Music, Sony Music Entertainment, Universal Music Group and Warner Music Group -- and IBM announced today the successful completion of their six-month electronic music distribution trial called AlbumDirect(TM). The AlbumDirect trial was the first-ever market trial of an end-to-end digital music delivery system that offers a rich set of security features for fast and convenient distribution of CD-quality music -- full-length albums and singles as well as album artwork and liner notes -- to consumers over the Internet. The AlbumDirect trial remains the most comprehensive initiative of its kind to date.

IBM and the five music companies achieved their primary research goals during the trial. The AlbumDirect trial emulated the consumer experience of a retail store in an online environment. The trial validated the security features and viability of the technology, demonstrated high ease of use and overall positive consumer experience, and generated a wealth of technical and consumer research findings to assist the participating companies in making decisions regarding the commercial roll-out of electronic music distribution.

The AlbumDirect trial began in June 1999 and continued through December 1999, and follow-up research extended through mid-January 2000. Approximately 1,000 households subscribing to Road Runner cable modem service in the San Diego area took part in the trial. Participation levels were high, with more than 95 percent of participants remaining involved throughout the trial period. Approximately 100 additional households in Portland, Maine, joined the trial during October to evaluate music delivery via connectivity that partially relied upon open Internet distribution.

During the course of the trial, AlbumDirect participants successfully executed nearly 4,000 downloads comprising more than 50,000 music tracks. By the conclusion of the trial, participants had access to a selection of more than 1,000 different albums and more than 200 singles from both current and catalogue titles.

The trial was conducted using IBM's Electronic Music Management System (EMMS), a comprehensive digital rights management and electronic media delivery system. EMMS's end-to-end offerings were used in the AlbumDirect trial to prepare, host and distribute music content over the Internet. In addition, EMMS's clearinghouse capability protected against unauthorized copying and use of music content by allowing content owners to specify consumer usage parameters and providing transaction reporting for financial clearing. The clearinghouse function is similar in concept to that used by major banks to assure that financial transactions are authorized. Trial participants also used the EMMS client software for music playback.

Specific data about the AlbumDirect trial's consumer experience will not be released due to the proprietary nature of the research conducted. With the AlbumDirect trial concluded, individual participating companies may choose to comment on their respective plans for digital distribution.

AlbumDirect(TM) Trial Fact Sheet

Overview: First-ever market trial of an end-to-end digital music

delivery system that offers a rich set of security features for

fast and convenient distribution of CD-quality music to consumers

over the Internet.

Purpose: To gather proprietary research about the consumer experience

of purchasing and receiving music online and test the integrity

of IBM's digital rights management system in downloading music

from the Internet

Sponsoring Companies: BMG Entertainment, EMI Music, IBM, Sony Music

Entertainment, Universal Music Group, Warner Music Group

Duration: Six-month trial, from June 29 to Dec. 15, 1999

Participants: Approximately 1,000 households in the San Diego area and

100 households in Portland, Maine, selected from among the local

subscribers to Road Runner high-speed cable modem service

Trial Format: Participants downloaded rights-protected music onto

their personal computers from AlbumDirect, a closed-end, online

retail store established specifically for this test. The

downloaded music could then be transferred to a CD recording

device, which was the recordable digital medium complying with

the trial's copy control policies that trial sponsors decided to

use for the test.

Music Offering: Participants had access to a selection of more than

1,000 albums and more than 200 singles from both current and

catalogue titles. Participants also were able to download and

print artwork and liner notes for each release. During the trial,

participants successfully executed approximately 4,000 downloads

comprising more than 50,000 music tracks.

Broadband Connection: The Road Runner system is a 750 MHz, two-way,

hybrid fiber/coaxial cable network offering Internet access at

speeds up to 100 times greater than the speeds of residential

telephone lines. Trial participants used standard Internet

protocols to access the AlbumDirect electronic music store to

purchase music and to receive electronic content from the content

host.

Evaluation: Sponsoring companies achieved their primary research

goals. The AlbumDirect trial emulated the consumer experience of

a retail store in an online environment, validated the security

features and viability of the technology, demonstrated high ease

of use and overall positive consumer experience, and generated a

wealth of technical and consumer research findings to assist the

participating companies in making decisions regarding the

commercial roll-out of electronic music distribution efforts.

AlbumDirect(TM) Trial

Technical Fact Sheet

Digital Rights Management System:

IBM's Electronic Music Management System (EMMS) is the digital rights management (DRM) system used in the AlbumDirect trial. EMMS's end-to-end offerings specify how creative works are prepared, distributed over open networks, licensed to consumer devices in both connected and disconnected environments, and protected against unauthorized copying or use.

EMMS Elements:

-- Content Preparation: The five music companies participating in

the AlbumDirect trial -- BMG Entertainment, EMI Music, Sony Music

Entertainment, Universal Music Group and Warner Music Group --

used the EMMS Content Preparation Application at their mastering

studios to prepare music and promotional materials to be used in

the trial. Music companies were able to specify content usage

conditions such as, but not limited to, the number of copies

permitted for download, availability dates and usage periods,

ability to offer custom compilation, and content compression

rates. In addition, EMMS's encryption and secure container

technology protected the digital content against unauthorized

interception or modification as it was transferred over open

networks to the content hosting facility and, ultimately, to the

consumer.

-- Content Hosting: Encrypted albums and songs were then stored at

an EMMS content hosting facility at the Road Runner headend

facility in San Diego. The content host was connected to the Road

Runner infrastructure using standard Internet protocols and

served content to test participants in both San Diego and

Portland, Maine. As the content host was located in San Diego,

participants in Portland were added to evaluate music delivery

via connectivity that partially relied upon open Internet

distribution.

-- Clearinghouse: The EMMS Clearinghouse provided a trusted

custodian for rights management, transaction reporting for

royalty payment, and financial clearing. As each consumer

transaction was authorized by the Clearinghouse, appropriate

information was sent to the consumer to unlock the downloaded

music.

-- Retail Software: An EMMS Electronic Music Store Application

enabled the AlbumDirect on-line store to use the promotional

secure containers created in the mastering process and build its

own retail offering based on rights granted by the content

owners. The EMMS application also provided a customer service

function, enabling the store to track the electronic content

transactions

-- Client Software: The AlbumDirect player allowed the consumer to

download music, manage the acquired music library, control the

permitted interaction with CD-R devices, and listen to the music

in a secure environment. Participants could download both singles

and albums, print cover art and liner notes, and link to

artist-related Web sites for which the URLs were transferred

during a download as part of the metadata that describes each

album/song.