press release

Santa Clara, Calif., May 23, 2000 -- PortalPlayer, Inc. today announced that it has licensed Verance Corporation's SDMI Phase 1 audio watermarking system and will integrate the technology in its end-to-end solutions for delivering open and secure digital audio via the Internet.

Verance Corporation's audio watermarking system was recently selected by the Secure Digital Music Initiative (SDMI), after its evaluation of available technologies, as a required component in its Phase 1 standard for digital delivery of music. Each of the five major worldwide record companies as well as leading consumer electronics suppliers have licensed Verance Corporation's audio watermarking solution for SDMI Phase 1 and DVD Audio.

"Watermarking is one of the keys to unlocking the potential of Internet-delivered digital audio," said John Mallard, president and CEO of PortalPlayer, Inc. "The consumer electronics manufacturers we are working with want to create new products that can deliver great content to consumers, and assuring access to the broadest possible collection of quality music is a critical check-off item that watermarking makes possible."

PortalPlayer will embed Verance SDMI Phase 1 watermarking in products it offers to consumer electronics manufacturers, assuring full compliance with SDMI specifications. These products are designed to be easily upgradable, via simple phone download of new firmware, to support future SDMI specifications. - more - "PortalPlayer's product platform is taking a leadership position for the next wave in digital audio,"said David Leibowitz, Chairman of Verance Corporation. "With the Verance SDMI Phase 1 system in its firmware, PortalPlayer provides consumer electronics OEMs with the assurance of compliance with the SDMI standards defined by the music, consumer electronics and IT industries."

About the Verance SDMI Phase 1 Watermark System

When digitally delivering music to consumers, the music content can be made secure from unauthorized use by cryptographic techniques such as digital encryption. However, for its ultimate use by the consumer, the music must be decrypted and converted back to analog where digital encryption techniques are ineffective. As a result, an audio watermark that survives both digital and analog transmissions becomes necessary to carry copy protection information forward.

For this purpose, the SDMI has adopted the Verance Phase 1 Watermark System. The Verance system will indicate when the software used by initial, or Phase I, SDMI-compliant portable devices should be upgraded to incorporate Phase II technology. Until that time, all music compatible with a particular device will be playable, whether the music is in a protected or unprotected format. When Phase II technology is ready, detection of the watermark will automatically let consumers know that their software can be upgraded to play new SDMI compliant music releases. If a consumer chooses not to upgrade, the device will not play these new music releases. Upgraded SDMI-compliant portable devices will continue to play existing music, future unprotected music files and new music released with SDMI technology. Verance is working on its SDMI Phase II offering and will present its system to the SDMI Plenary in the coming months.

About Verance Corporation

San Diego based Verance Corporation is a leader in the development and implementation of watermarking technology solutions focusing on the copyright management, royalty distribution, information and product distribution needs emerging from the confluence of the entertainment, media, and wireless telecommunications industries. Additional information about Verance Corporation can be found at www.verance.com.

PortalPlayer, Inc. supplies consumer electronics manufacturers with complete platform solutions for open and secure delivery and management of digital media via the Internet. The company develops and markets advanced systems for digital audio recording and playback, using MP3 and other popular digital compression technologies, tightly integrated with e-commerce and digital rights management. Founded in June 1999, PortalPlayer is headquartered in Santa Clara, California, with major operations in Seattle, Washington, and Hyderabad, India. The company has received two rounds of venture funding from Chase Capital, Techfund Capital, FlatIron Partners, MP3.com, and individual investors. More information on PortalPlayer, Inc., and its products is available on the company's Web site, www.portalplayer.com.

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