FullAudio Raises $13.5 Million In Third Round Financing.

Business Editors

CHICAGO--(BUSINESS WIRE)--June 19, 2002

FullAudio strengthens position as premier provider of

on-demand digital media services to its channel partners

FullAudio Corporation today announced that it has received $13.5 million in its third round of funding, which brings total venture investment in the company to $36 million. The Series C funding strengthens FullAudio's position as the only independent provider of content, infrastructure and platform technology to enable its channel partners to quickly expand their relationships with consumers by offering on-demand media subscriptions services.

"The interest from new investors demonstrates the quality of FullAudio's business strategy," said Chris Gladwin, CEO of FullAudio. "This new round of funding endorses our efforts in developing content, a channel partner strategy and a platform for delivering digital media services and will accelerate our growth."

Existing investor New Enterprise Associates led the Series C round of funding. William Harris Investors (WHI) Ventures Fund I made the largest contribution amongst FullAudio's four new investors. New investors Rocket Ventures, Millennium Technology Ventures and Odyssey Venture Partners also participated in the round. The capital will fuel FullAudio's expansion in business development, marketing and its digital music subscription services.

"The key to the future of digital music is to balance the needs of the consumer with those of the artist and the music industry," said Stewart Alsop, general partner at New Enterprise Associates. "While many other companies have been playing to the media with one flashy business plan after another, FullAudio has been doing the spade work to provide a legitimate, licensed solution that really works for consumers. We think FullAudio has tremendous potential to be the market leader in a major new distribution system for music on the Internet."

All of FullAudio's original and previous venture investors also participated in the Series C round, including: New Enterprise Associates, Venture Strategy Partners, Kettle Partners and IDEO Ventures.

"We have followed this market's development for some time, and believe FullAudio has built a leading position that will propel it to great success," said Peter Martin, Managing Director, WHI Ventures Fund I. "We believe FullAudio's focus on `white label' media services, rather than selling directly to consumers, provides it with a distinct advantage in the digital media subscription services industry."

The FullAudio Service

In April 2002, FullAudio launched an on-demand, music subscription service called MusicNOW with distribution partner Clear Channel Communications, the largest radio station owner in the U.S. The national MusicNOW service--powered by the FullAudio platform--allows Clear Channel to expand its existing relationship with radio listeners and music lovers, who can enjoy their favorite songs from its mix of stations and explore new music.

FullAudio has secured sound recording rights from four of the five major labels: EMI Recorded Music, Universal Music Group, Warner Music Group and BMG. FullAudio also has obtained publishing rights from Universal Music Publishing, EMI Music Publishing, BMG Music Publishing, Sony Music Publishing, and the Harry Fox Agency. Both sets of rights are required to appropriately compensate the wide variety of performers and songwriters represented in FullAudio's extensive catalog of digital music.

About FullAudio Corporation

FullAudio Corporation provides a platform and infrastructure that enables our distribution partners to deliver digital media services, such as digital sampling, streaming, and music downloads. The company's unique approach allows our partners to quickly expand their relationships with consumers by offering on-demand subscription services or short-term promotions. FullAudio's platform and infrastructure makes it easy for partners, such as Clear Channel, to offer branded music services by incorporating the software and systems that cover every aspect of music content aggregation and delivery including: content acquisition and management; media storage and secure delivery; digital rights management; and a service infrastructure. FullAudio provides all of the back-office functionality, including billing, reporting and analysis, and usage analysis.

Founded in April 1999, FullAudio's advisors and investors include top-tier venture capital firms and music industry experts. For more on the company, please visit www.fullaudio.com.