Napster Announces Key Building Block of New Business Model / Bertelsmann Subsidiary Digital World Services Will Work with Napster to Enable Secure Management of

Redwood City, CA and New York, NY (ots) -- Napster todayannounced progress on the development of a key aspect of thetechnology necessary to implement a new, membership-basedbusiness model supported by the recording industry. The solution,which enables secure administration of transferred files within apeer to peer structure, has been in the works for several monthsand will be implemented by Digital World Services (DWS), aBertelsmann subsidiary with extensive experience in innovativedigital rights management solutions. "Today's announcement underscores one key fact: the realquestions about Napster's future are economic, not technical orlegal. Our alliance with Bertelsmann and the BertelsmanneCommerce Group was our first important step toward a model thatmakes payments to artists, songrwriters and other rightsholders.This solution is further evidence of the seriousness of oureffort to reach an agreement with the record companies that willkeep Napster running, reliable, and enjoyable," said Hank Barry,Napster's Interim CEO. Barry reiterated that Napster hopes to move to a membership-based service as soon as possible. The solution the two companies have been working on willmaintain the peer to peer structure of Napster, but will allow inthe future restrictions to be placed on what can be done with thetransferred files, such as limits on the ability to burn musicfiles onto CDs. "To work with Napster on the design and operation of a keycomponent of its new business model is an extraordinaryopportunity for DWS," said Johann Butting, CEO of Digital WorldServices. "The successful combination of Napster's verycompelling user friendliness and popularity with an architecturethat addresses the needs of rightsholders will be a verysignificant step for secure sharing of content over theInternet." The technology will enable the sharing of MP3 files to which aprotection layer will be added as the file is transferred fromone Napster user to the other. The Napster client will beenhanced to support this protection. The solution will not useany existing multi-purpose DRM but a new security architecturethat is specially tailored to the requirements of file-sharing. "We are extremely pleased to partner with Digital WorldServices in bringing together and operating a key aspect of thetechnology we need to preserve file sharing and build anindustry-supported business model. Through this agreement withDWS and the work we have done together to date, the architecturefor one important component of our new model is now in place; weare building out this aspect of the system," Hank Barry added. "We have been working with Digital World Services for severalmonths to design this solution. They really understand thetechnologies involved and are sensitive to the user experience.We are confident that the new system will allow us to accomplishkey goals of the record companies in terms of restricting use,while still maintaining and improving the performance and servicelevels of the Napster system," said Napster CTO Eddie Kessler. About Napster Napster is the world's leading person-to-person file sharingcommunity. Napster provides music enthusiasts with an easy-to-use, high quality service for discovering new music andcommunicating their interests with other members of the Napstercommunity. Napster's software application enables users to locateand share music files through a user-friendly interface, andfeatures instant messaging, chat rooms, and Hot List UserBookmarks. Shawn Fanning, then an eighteen year-old freshman atBoston's Northeastern University, founded Napster in 1999. InOctober 2000, Bertelsmann AG and Napster announced the formationof a strategic alliance to further develop the Napster person-to-person file sharing service. In January 2001, edel Music and TVTRecords joined the alliance. This year, Napster won several WiredMagazine Readers Rave Awards, including Best Music Site, BestInnovative Start-up, and Best Guerilla Marketing. About Digital World Services Digital World Services provides Digital Rights Management(DRM) solutions and services enabling the convenient use todigital works by making the process transparent for the consumer,retailer and publisher while protecting the owners' copyrights.The company offers clearinghouse services such as rightsclearing, financial settlement, and administration of usageinformation. Digital World Services are experts in the digitaldelivery of music, content hosting, system integration, projectmanagement and distribution platforms. Based in New York City andHamburg, Germany, Digital World Services is a Bertelsmannsubsidiary. ots Original Text Service: Bertelsmann eCommerceGroup Internet: http://recherche.newsaktuell.de Contact: Mediacontacts for Napster: Business/Technology media KarenDeMarco/Julie Gladders, mPRm Public Relations 323.933.3399x238/x204, kdemarco@mprm.com/jgladders@mprm.com Consumer mediaJill Mango/Tobey Dorschel, Girlie Action Media, +1 212-334-3200x111 mango@girlie.com/tobey@girlie.com Media Contact for DigitalWorld Services: Trish Naudon, Executive Director of Marketing,+1 212-782-7611 Media Contact for Bertelsmann eCommerce Group:Frank Sarfeld, Senior Vice President and CCO, +1 646-758-0531,Frank.Sarfeld@Bertelsmann.de

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