Beatnik, Inc. - Enhanced Audio Solutions

BEATNIK SECURES $11 MILLION IN VENTURE FUNDING

Success of Company's Interactive Audio Technology Attracts Leading Investment Firms Mayfield Fund, Entertainment Media Ventures, and Zomba Group of Companies

San Mateo, CA - September 21, 1999 - Beatnik Inc., the leader in interactive audio technology for the Web, today announced it has secured $11 million in new financing from a group of investment firms, including Mayfield Fund, Entertainment Media Ventures and Zomba Group of Companies.

"Beatnik is thrilled with this significant round of funding provided by key influential investors in the technology, entertainment and music industries," said Lorraine Hariton, President and CEO of Beatnik Inc. "We are now poised to realize our growth potential, and this funding further validates Beatnik's leadership in the interactive audio industry."

Recently the company has gained significant industry acclaim for its audio content partnerships with Yahoo Digital! and MTV Online Web sites. The Beatnik Audio Engine has been licensed to an expanding family of strategic partners, including Microsoft, Sun Microsystems, Intel and Liberate (formerly NCI). The Beatnik Player allows more than seven million Web surfers to experience the power of interactive music and audio. The company's Rich Music Format™ (RMF®) is emerging as a Web standard for high quality, interactive, multi-track music that does not require large file sizes or streaming, and provides secure Web-site licensing, usage and artist copyright protection.

Mayfield Fund, the Menlo Park-based venture capital firm, was encouraged by Beatnik's partnerships with several well-known companies such as Microsoft's WebTV Networks, MTV and Yahoo!, which validate the company's aggressive moves to extend its leadership in interactive audio and demonstrated the viability of Beatnik authoring tools, applications and the Beatnik Player to become the standard for interactive audio on the Internet.

"Beatnik's ability to consistently and elegantly execute on their vision of 'sonifying' the web is generating a lot of excitement and momentum for the company, not to mention for the industry at large," said Allen Morgan, Partner of Mayfield Fund. "The company is quickly gaining marketshare and mindshare for their authoring tools and Beatnik Player, which is enabling Web developers to add rich layers of sound and music to their sites for an entirely new competitive advantage."

Entertainment Media Ventures, the Los Angeles based venture capital firm, cited the potential for Beatnik to have a dramatic impact on the music industry. Beatnik samples and remixes enable musicians and recording artists to promote their craft directly to their fans on the Internet by offering audio previews, multiple variations and truly interactive versions of new songs on Web sites, such as those featured on MTV Online, Yahoo! Digital, and davidbowie.com.

"Beatnik has created an innovative platform for promotion opportunities in the music industry," said Sandy Climan, Managing Director of Entertainment Media Ventures. "The ease at which anyone can record and promote music on the Web with Beatnik is already causing ripples in the recording industry, and this new business model will be highly profitable."

The Zomba Group of Companies, the world's largest independent music company, through its European venture capital division, bolstered its interests in Beatnik. Zomba's continued commitment is due in part to the company's unique position to create new opportunities for expanding the use of music content for a new Web audience. In March, Zomba and Beatnik announced a strategic partnership and equity investment which enables Beatnik to promote and license a significant portion of Zomba's extensive music production libraries on the Web.

"We believe that Beatnik's management team is uniquely qualified in terms of creative talent, technical savvy and a deep understanding of the music industry to lead the merger of music and the Internet," said Brian Roberts, Sr. VP Finance and Commercial Operations of Zomba Music Publishing. "Beatnik is well on the way to becoming the ultimate one-stop Web site for all synchronized audio needs."

About Beatnik, Inc.
Beatnik, Inc. is the premier platform for delivering the promise of Interactive sound and music. By combining, technology, tools, content and turn key applications, Beatnik delivers the total solution for interactive audio on the Web. The Beatnik Audio Engine for the digital playback of audio has been licensed to an expanding family of strategic partners, including Microsoft's WebTV Networks, Sun Microsystems JavaSound 2.0, and Liberate (formerly NCI). Beatnik's web authoring tools are used by Web designers in the creation of Web sites such as MTV Online, Yahoo, Altoids and David Bowie.com and also ship with products from Intel, Macromedia, and Netscape. The Beatnik Player currently allows over 7 million Web surfers to experience the power of interactive music and audio. Its Rich Music Format™ (RMF®) is the Web standard for high quality, multi-track music with file sizes that are small enough not to require streaming and are secure per Web site usage. By coupling expert engineering skills with an expanded catalogue of musical content, Beatnik, Inc. is dedicated to realizing new possibilities for interactive music and audio on the Internet. Beatnik, Inc. (formerly Headspace, Inc.) was incorporated in 1996 with a team of software innovators and world-renowned visionary, musician and composer Thomas Dolby Robertson.

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