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Virgin Megastores First to Offer In-Store On-line Digital Music Downloading and Custom CD, DVD, and MiniDisc Creation and Fulfillment

LOS ANGELES--(BUSINESS WIRE)--June 10, 1999

Historic Advance Cements Virgin's

Leadership Position Providing Entertainment Content to Consumers

Virgin Entertainment Group Thursday announced an agreement with RedDotNet, a Digital on Demand company, that will enable Virgin Megastore customers to download music and create custom CDs, DVDs, and MiniDiscs in-store, a revolutionary development heralding a new wave of music retailing.

The first unveiling of this historic development will be at the chain's newest Megastore, set to open in Columbus, Ohio next month.

The move is part of the chain's Megastore 2010 initiative, a well-guarded effort that promises to integrate a variety of new technology and retail concepts into Virgin's next-generation location-based store strategy. It follows the recent launch of Virgin Megastore Online at virginmega.com, the retailer's quickly growing e-commerce site.

Under the terms of the agreement, RedDotNet will distribute major label and on-line content over its high-speed broadband network and secure server system to Virgin Megastores, where digital kiosks will enable customers to find, preview, and select music for purchase. Once selected, the music can be pressed as a CD, DVD, or MiniDisc, or digitally uploaded to an SDMI-compatible memory device. The product is accompanied by full-color liner notes, cover, and CD art that is identical to traditionally manufactured product. As part of the agreement, Virgin will become a shareholder in Digital on Demand, RedDotNet's parent company.

RedDotNet and Sony Music Entertainment recently announced an agreement for digital distribution of Sony Music albums over the Red Dot Network. It is expected that agreements with other labels will follow, benefiting Virgin Megastore customers continent-wide.

"Virgin's relationship with RedDotNet is a further step in our ongoing effort to shape the future of digital entertainment content delivery for the benefit of all consumers" said Russ Pillar, Virgin Entertainment Group's President and Chief Executive Officer. "We're excited about the promise this and other new Megastore 2010 initiatives hold for all Megastore customers."

"We're delighted to be chosen as the first digital technology partner for the Virgin Megastores, a retailer renowned for its focus on creating great consumer experiences," said Scott Smith, President of RedDotNet. "Our technology fits perfectly into their vision for the online-enabled entertainment content retailer of the future, Megastore 2010."

About Virgin Entertainment Group

Virgin Entertainment Group provides consumers with a range of superior entertainment experiences through a family of integrated Virgin-branded entertainment retail businesses. The Virgin Megastores, part of the Virgin Entertainment Group, are "category killer" retailers of a wide range of entertainment content, including music, books, video, software, and related products.

About RedDotNet

RedDotNet, a Digital On-Demand company, is a leading distributor of digital entertainment content over its proprietary Red Dot Network into retail sales environments. System installations offer point-of-sale access to new varieties of music content and formats. By creating unlimited, universal digital access, RedDotNet increases the flexibility of the brick-and-mortar distribution model, allowing content providers and retailers to adapt faster than ever to changing technology and consumer demands. Digital On-Demand and RedDotNet have offices in Carlsbad, Burbank, and San Francisco, Calif.




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