Stanford University Students Go 'Digital' As Digital Distribution In Publishing Heats Up.

NEW YORK--(BUSINESS WIRE)--Oct. 6, 1999--

Houghton Mifflin, Follett Higher Education Group, and Reciprocal, following on their success at SUNY Buffalo, continue their educational

pilot series that will shape the future of interactive learning

Reciprocal(TM) in partnership with Houghton Mifflin Company, a leading publisher of educational textbooks and materials, and Follett Higher Education Group, the nation's largest contract-managed chain of university and college bookstores across the country, announced today another educational pilot milestone in deploying a digital textbook at Stanford University. The Houghton Mifflin textbook chosen for this pilot is used in an introductory Economics course being taught during the current fall semester.

In this pilot, Reciprocal is protecting and delivering Houghton Mifflin's valuable content along with timely, up-to-date information customized to meet the students' and faculty's needs. This pilot will also aid Follett in assessing student and faculty acceptance of digital textbooks, and define new ways to adopt learning methods to electronic media like the Internet.

"We are excited to continue our educational pilot series with Houghton Mifflin and Follett to discover more about how universities and colleges can take advantage of the digital distribution of textbooks and on-line learning," said Reciprocal Publishing's General Manager, Matthew Moynahan. "With digital rights management, publishers and distributors of content can capture all the benefits of our networked world. They will be able to safely and profitably provide the consumer with an `as you like it' consumption experience while simultaneously protecting their intellectual property."

"For over a century and a half, Houghton Mifflin has shaped ideas, information, and instructional methods into a variety of forms to satisfy the life-long needs of people to learn," added June Smith, executive vice president, Houghton Mifflin College Division. "We are committed to exploring digital delivery of our content. We were pleased with what we learned from the SUNY Buffalo pilot this summer, and anticipate learning even more with the Stanford pilot this fall, because Reciprocal's system now offers more sophisticated functionality, further enhancing the value of our content for the student."

Reciprocal's digital rights management (DRM) service solution for the pilot, built upon platform technology licensed from InterTrust Technologies Corporation, allows educational publishers to control access to digital content, enable new revenue streams, and prepare their offerings for the evolving needs of students and educational institutions.

Transforming the Student Experience

Among the benefits to students of choosing a digital textbook are:

-- students only pay for the chapters going to be used by the professor, as opposed to buying the whole text;

-- on-line availability to rich ancillary course materials and research, which are linked to the digital textbook's home page;

When students in Economics 001 went to Stanford's Follett-managed bookstore to buy their textbook, they were presented with a choice: purchase a digital textbook or a hard-copy print edition. Those students who chose the digital version were then given a CD-ROM at checkout that contained the software necessary to participate in the pilot.

After students installed the CD on their PC, they were directed to a Web site, hosted and secured by Reciprocal. Here they had the option to download all the "must read" chapters at once or download only by individual chapters, with the latter saving the student time.

Once on the homepage, the students could also click on: "Get Help," "The Professor's Home," "About This Beta Test" and "Want More?" When a student clicked on the latter, they were given a digitized study guide for the textbook, over 60 links to web sites containing written materials, statistics, current economic news, interviews with famous economists, and animated interpretations of many of the important concepts in the study of economics.

Benefits of Reciprocal's DRM-Enabled Content Delivery

The flexibility of Reciprocal's DRM service allows secured digital distribution of content over the Internet or any electronic media. At Stanford, students download the course materials directly from a protected Web site, whereas at SUNY Buffalo the course materials were pre-packaged on a CD-ROM.

Once the student has the digitized content on his or her PC, Reciprocal's DRM clearinghouse tracks usage of the text and study guide by whom, when, and how (all chapters at once or by chapter as needed), determines whether the students took advantage of the "extras" i.e., the additional links to economics sites, and generates usage reports based on the tracking. While not implemented during this pilot, for the first time, both the publisher and the distributor could have the knowledge necessary to conduct one-on-one marketing with their customers.

Houghton Mifflin and Follett can take the information gathered from these reports to design more efficient business and pricing models for the future. They can also use this valuable information to tailor product and promotional offerings to address the changing needs and expectations of students and educational universities. This informational aspect of the clearinghouse is one of the most important marketing benefits and a core component of Reciprocal's complete DRM service.

About Reciprocal

Reciprocal combines its digital rights management knowledge and publishing industry expertise with flexible informational and financial clearinghouse services. These services are enabled by desktop software, built upon the platform technology of InterTrust Technologies, which allows educational publishers and/or their distributors to easily and securely package digital content and gives students the necessary tools to acquire and manage rights, and to consume secure content. By providing all necessary components of a true DRM service, Reciprocal gives educational publishers the ability to exercise complete control over their digital assets, with the flexibility to support ever-changing digital business models and create new revenue opportunities. And it gives students a whole new world of choices and ways in which to access textbooks.

Reciprocal's DRM service is built to work with the DRM platform technology that best suits customers' needs, and is currently available on the platform technologies of Reciprocal's strategic partners, InterTrust Technologies Corporation and Microsoft Corp.

Reciprocal Publishing was formed in June 1999 as a division of Reciprocal Inc. Reciprocal Publishing is a member of both the Open eBook Initiative and the EBX(TM) Electronic Book Exchange, two bodies developing common standards for electronic books.

Privately held, Reciprocal has received funding from Microsoft Corp. and Reuters Group Plc, as well as from venture capitalists Adams Capital Management, Chase Capital Partners, Constellation Ventures, Flatiron Partners, SOFTBANK Technology Ventures, Venrock Associates, XDL Capital Corporation, and Web Ventures. The Company maintains offices in New York City, Buffalo, and Research Triangle Park, NC.

About Follett

Follett Higher Education Group is the leading provider of academic services to the higher education market. Follett offers a comprehensive suite of services from ecommerce solutions and used book programs to store design and contract bookstore management, all designed to help college stores become world class multi-channel academic retailers. Currently Follett operates more than 600 college and university bookstores throughout the United States and Canada and serves more than 4 million students and over 300,000 faculty.

About Houghton Mifflin

Houghton Mifflin Company (NYSE:HTN) is a leading publisher of textbooks, instructional technology, assessments, and other educational materials for elementary and secondary schools and colleges. The Company also publishes an extensive line of reference works, fiction and non-fiction for adults and young readers, and multimedia entertainment products. The Company's Internet site can be found at http://www.hmco.com.

Reciprocal is a trademark in the USA and other countries of Reciprocal Inc. For more information on Reciprocal, visit its web site: http://www.reciprocal.com