K-tel Announces Launch of Major Digital Music Initiative With Microsoft Windows Media

MINNEAPOLIS and REDMOND, Wash., April 25, 2000 — K-tel International Inc. (Nasdaq “KTEL”) and Microsoft Corp. today announced that K-tel will begin selling thousands of titles from its music library as digital downloads this spring. One of the Internet’s original retailers and distributors of music, entertainment and consumer products, K-tel will offer its content for sale directly from the K-tel Web site, at http://www.ktel.com/ .

K-tel’s music library contains some of the most popular music from the most popular artists from the last five decades. The company has long been a retail innovator; this announcement marks its most significant commitment yet to secure online digital music distribution.

K-tel will use the Microsoft® Windows Media TM Format for all digital downloads from its proprietary music database because Windows Media offers the best audio quality as well as proven security and the largest installed base of rights-protected players for digital music.

“Our new site will be launched by mid-May, and our use of Windows Media technology will allow our customers to sample and download individual songs from K-tel’s huge music library quickly while at the same time preserving audio quality,”
said Samantha Kives, director of K-tel’s online division.

K-tel downloads will be featured at WindowsMedia.com ( http://windowsmedia.com/ ), the MSN TM guide to audio and video content on the Internet. In addition, WindowsMedia.com will feature other K-tel audio content, such as K-tel radio stations.

“K-tel’s catalog of popular music spanning five decades of hits will expand the mainstream market for digital music,”
said Dave Fester, general manager of marketing, Digital Media Division at Microsoft.
“More and more people are integrating digital music into their daily lives, and this substantial commitment by K-tel helps ensure an even broader selection of high-quality music in Windows Media Format.”

With the announcement of its relationship with Microsoft, K-tel positions itself at the forefront of industry innovation in embracing the electronic distribution of musical content over the Internet. K-tel has consistently remained a leader in the retail music industry by adopting revolutionary retailing techniques for its expansive music library.

“We are very excited to be working with Microsoft, the technology leader in digital media today,”
said Ken Onstad, K-tel’s president.
“We see this as a tremendous opportunity to introduce a whole new generation to K-tel’s music database while allowing members of our traditional target demographic to access their favorite music in the nearly instantaneous digital format that they have become accustomed to. The joint promotional opportunities opened up by this relationship with Microsoft will bring the K-tel library to the millions who use Windows Media.”

K-tel’s e-commerce efforts are targeted at a very attractive demographic group on the Internet — the
“silver surfer.”
Silver surfers, or older Web surfers, are a highly sought-after demographic because they have more discretionary income and are willing to pay to download their favorite music from the 1950s, ’60s, ’70s, ’80s and ’90s. In short, K-tel has targeted a large, affluent demographic on the Web.

Investors interested in receiving the latest news from K-tel may register at ktel@visioncc.net to receive updates on the company’s progress.

About K-tel

K-tel International Inc. is a vertically integrated developer, marketer and distributor of entertainment and consumer products worldwide. The company markets its product lines through the Internet, and to retailers, wholesalers, distributors or licensees throughout the world. K-tel has two Web sites, http://www.ktel.com/ in the United States and http://www.ktel.de/ in Germany. Ktel.com features 250,000 music titles, custom CDs, digital downloads and consumer products. K-tel has active operations in the United States, the United Kingdom and Germany.

About Windows Media

Windows Media, the leading digital media platform, provides consumers, content providers, solution providers, software developers and corporations with unmatched audio and video quality. Windows Media Technologies, which include Windows Media Player, Windows Media Services, Windows Media Tools and the Windows Media Software Development Kit (SDK), are available for download at http://www.microsoft.com/windows/windowsmedia/ . The Windows Media Player is the fastest-growing digital media player and is available in 24 languages. To date, there are over 100 million licensed copies of the Windows Media Player, growing by more than one every second.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

The statements in this news release may contain forward-looking statements relating to future results of the company (including certain projections and business trends) that are
“forward-looking statements”
as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projections as a result of certain risks and uncertainties, including but not limited to, changes in political and economic conditions, demand for and market acceptance of new and existing products, the impact from competition for Internet content, merchandise and recorded music, dependence on strategic alliance partners, suppliers and distributors, market acceptance of the Internet for commerce and as a medium for advertising, technological changes and difficulties, availability of financing and other risks detailed in the company’s Securities and Exchange Commission filings. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements.

Microsoft, Windows Media and MSN are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft home page at http://microsoft.com/presspass/ on Microsoft’s corporate information pages.

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