SNOCAP Melts Barriers to Growth in the Digital Music Marketplace

SAN FRANCISCO--(BUSINESS WIRE)--Dec. 3, 2004--SNOCAP:

-- Labels and Individual Artists Can Now Embrace Peer-to-Peer Networks as a Channel to Sell Music

“SNOCAP represents the future of online music. We are excited to work with Shawn Fanning and his team in greatly expanding the boundaries of the digital media universe.”

-- Music Lovers to See the Emergence of Compelling New Digital Music Services

-- Universal Music Group First Major Label to Sign Agreement

-- New Company Receives $10 Million Capital Investment Led by WaldenVC and Morgenthaler Ventures

SNOCAP officially announced today the first end-to-end solution for online music licensing and copyright management. SNOCAP will expand the digital music marketplace by finally making available on authorized services the broad and deep selection of content that has made peer-to-peer services so popular.

Founded by Shawn Fanning, Jordan Mendelson and Ron Conway, SNOCAP provides value to record labels, artists, online services and consumers alike through its innovative music registry and technology platform, which will power a vibrant and diverse digital music marketplace.

"SNOCAP envisions a world where consumers can discover, share and purchase music from a massively deep, almost infinite catalogue-- constantly updated with new and old releases, live, out-of-print tracks, and more," said Shawn Fanning, Founder and Chief Strategy Officer at SNOCAP. "By giving record labels and artists what they need to deliver their music over any digital platform, including peer-to-peer networks, we are finally realizing the full potential of the Internet as a source of music for fans everywhere."

Fanning continued, "Today there is still a great divide and consumers are caught in the middle. There are some good authorized online music services but they have limited content and a comparatively small number of users. There are unauthorized services that have content and users orders of magnitude higher, but the service they provide is inferior and they are at odds with rights holders. SNOCAP is the means to bridge that divide for the consumer."

The company also announced that it has signed a landmark agreement with Universal Music Group to provide technology and database services for the online distribution of the company's entire catalogue. Universal has already begun to register its catalogue with SNOCAP, the first step in greatly expanding its digital offerings. Financial terms of the deal were not disclosed.

"SNOCAP presents one of the first real solutions that will bring peer-to-peer consumers a broad array of choices in authorized services," said Larry Kenswil, President, eLabs, Universal Music Group.

SNOCAP gives rights holders the comfort level they need to make their content available on P2P networks, enabling them to sell more music through more channels. After registering their music and copyright information in SNOCAP's database, labels and artists can manage the online distribution of all their content through SNOCAP's copyright management interface, which enables them to set business rules for each track, on a global basis. This one-stop ability to manage rights and distribution across multiple online retail locations decreases costs and increases revenue.

SNOCAP provides P2P networks and online retailers with a single clearinghouse to access the broadest possible selection of authorized digital music, allowing them to concentrate on providing compelling user experiences rather than trying to develop and maintain relationships with thousands of copyright holders. This will help existing online retailers grow, permit P2Ps to become authorized distribution channels and propel a new generation of innovative services to enter the market.

With SNOCAP, consumers will finally have authorized options with comparable selection to today's file sharing services, removing the threat of litigation, spoofed downloads, and the risk of spyware and other unwanted advertising. SNOCAP will eliminate degraded and poorly recorded files thus insuring higher quality and a better overall consumer experience.

SNOCAP received a $10 million round of financing led by WaldenVC, a San Francisco-based venture capital firm that has a strong focus on digital media companies, and Morgenthaler Ventures, a leading national venture capital firm focused on information technology, internet services and life sciences.

According to WaldenVC General Partner Art Berliner, "SNOCAP represents the future of online music. We are excited to work with Shawn Fanning and his team in greatly expanding the boundaries of the digital media universe."

"SNOCAP uniquely addresses the biggest opportunity in digital music and video today -- legally enabling consumers to access the enormous breadth and depth of content available on the hugely popular file sharing networks," said Gary Little, General Partner, Morgenthaler Ventures. "The unique history of the founders makes SNOCAP the logical firm to successfully bridge both the technical and cultural barriers between the consumers and producers of digital entertainment."

SNOCAP has developed a proprietary Content Identification Service (CIS) that uses audio fingerprinting technology licensed from industry leader Philips Royal Labs to identify, register and track music that is available for licensing. It allows artists and labels to find live, remixed and unreleased works and then include them in their catalog for sale. CIS is the engine that allows retailers to enable and authorize transactions on their networks.

"Philips has a strong track-record in researching, developing and implementing technologies that enable both rights management and new business models for content owners. We are delighted to see our Audio Fingerprint technology deployed for exactly that purpose," says Dr. Rick Harwig, CEO of Philips Research.

Full platform deployment is slated for 2005. SNOCAP invites labels and artists to sign up and begin the registration process by visiting www.snocap.com

About SNOCAP

Founded in September 2002, SNOCAP, Inc., based in San Francisco, offers record labels, publishers, and artists an end-to-end solution for digital licensing and copyright management services. Through SNOCAP, operators of authorized peer-to-peer services and online retailers will have access to the largest possible catalog of authorized content that has historically been available only on unauthorized services. SNOCAP's easy-to-use service for registering digital content and managing online distribution will enable a more vibrant digital marketplace with better selection and a variety of compelling business models. SNOCAP's database will include current hits, new releases, live recordings, remixes, B-sides and out-of-print tracks culled from major labels, independent and unsigned artists. For more information, visit www.snocap.com.

About WaldenVC

WaldenVC is a venture capital firm that focuses on investments in digital media companies. Additional focus areas include software as a service and information services. With over $350 million under management, WaldenVC invests across all stages of growth, from startups to public corporations. Leveraging its operating experience, corporate investors, investment banking expertise and worldwide network, WaldenVC has consistently generated above-average returns over its thirty-year history. Additional information can be found at http://www.waldenvc.com.

About Morgenthaler

Founded in 1968, Morgenthaler is a leading, national venture-capital firm with offices in Menlo Park, CA (headquarters); Boston, MA; Boulder, CO; and Princeton, NJ. It focuses its investments in information technology and life sciences. Communications companies in which it has invested include Premisys, Nuance, Catena, Force 10 and Cortina. Morgenthaler has a total of $2 billion under management. Its most recent fund, capitalized at $850 million, was raised in July of 2001. The firm has funded more than 200 companies over its 36-year history. Additional information can be found at http://www.morgenthaler.com.