TVT Records, Napster End Lawsuit

Label Becomes First To Settle, Pledges Support To File-Sharing Community For New Initiative

New York, NY and Redwood City, CA (January 25, 2001) - TVT Records, the nation's leading freestanding record label, announced today that it has withdrawn its copyright claims against Napster, the Internet's premier person-to-person file sharing community.

TVT said the basis for its decision to end the lawsuit and provide its support to Napster is the new service Napster is evolving under the strategic alliance it recently announced with Bertelsmann AG. As Bertelsmann is still a party to litigation, TVT becomes the first record label to fully settle with Napster.

"I am afraid that copyright owner's resistance to finding workable solutions with Internet music providers may result in consumers, artists and the industry itself ultimately being harmed," said Steve Gottlieb, President and founder of TVT. "The future Napster offers the opportunity to reach music fans in unprecedented and as yet unimagined ways. Word-of-mouth has always been critical to breaking our artists -- now we have harnessed the power of the fastest growing 'word-of-net' vehicle in existence. It is high time that the industry embraces a service that the public has so emphatically said they want."

Under terms announced today, TVT will allow the master recordings and musical compositions it owns or controls to be used for file sharing on the Napster service. TVT will join Napster in promoting further acceptance of the new Napster business model. Steve Gottlieb has also agreed to act as advisor to Napster as part of the company's ongoing effort to address the concerns of artists, songwriters, and record and publishing companies.

"We are very happy to be working with TVT," said Hank Barry, CEO of Napster. "Our new model will benefit tremendously from the expertise that Steve Gottlieb and the TVT team bring to the table on behalf of independent labels and artists. Moving this conversation from the courtroom to the boardroom helps us advance file sharing as a benefit to artists and songwriters as well as music fans. This new arrangement is further evidence that the alliance we developed with Bertelsmann is the right direction for the industry to take."

Napster has developed a business model for a membership-based service that will provide Napster community members with high-quality file sharing that preserves the Napster experience while at the same time providing payments to rights holders, including recording artists, songwriters, recording companies and music publishers. On October 31, 2000, Napster and Bertelsmann's eCommerce Group announced a strategic alliance to further develop the Napster person-to-person file-sharing service.

The agreement between TVT and Napster Inc. takes effect immediately.

About Napster
Napster is the world's leading person-to-person file sharing community. Napster provides music enthusiasts with an easy-to-use, high quality service for discovering new music and communicating their interests with other members of the Napster community. Napster's software application enables users to locate and share music files through a user-friendly interface, and features instant messaging, chat rooms, and Hot List User Bookmarks. In October 2000, Bertelsmann AG and Napster announced the formation of a strategic alliance to further develop the Napster person-to-person file sharing service. In January 2001, edel Music joined the alliance. This year, Napster won several Wired Magazine Readers Rave Awards, including Best Music Site, Best Innovative Start-up, and Best Guerilla Marketing.

About TVT
Founded in New York City in 1985, TVT Records has become the nation's leading freestanding record company. Know best as the label that discovered and broke Nine Inch Nails, TVT's deep roster runs the musical gamut from hard rock (Sevendust, Nothingface) to pop (2gether) to hip-hop (Snoop Dogg's Doggy's Angels, Mr. Short Khop) to R&B (Ram-Z, Gil Scott-Heron) to alternative rock (Guided by Voices, XTC.) Through TVT Soundtrax the label is also a force in motion picture soundtrack albums with new releases including three of the current top ten films; Guy Ritchie's "Snatch," Steven Soderburgh's "Traffic," and Sandra Bullock's "Miss Congeniality."

TVT is a leader in music delivery on the Internet. Its pioneering efforts to nurture the digital marketplace have been marked by TVT's still unprecedented offering of its entire catalog of music and video for free timed-out digital download from its own website (TVTrecords.com). This commenced in the fall of 1999. The label's strategic partnerships with Microsoft, Yahoo!, Real and others have put it on the cutting edge of the evolving music market online. TVT also has equity stakes in top digital rights management company Reciprocal, web video enabler IVT, web audio enabler DoTell, and intellectual property security firm Viatech.