MSN and MediaBay Join Forces to Offer Audiobooks Through Newly Launched MSN Music Service

REDMOND, Wash., and CEDAR KNOLLS, N.J., Oct. 7, 2004 — MSN and MediaBay Inc., a leader in spoken-word audio entertainment, today announced that they are working together to offer a wide range of audiobook titles via download to the millions of MSN
users in the United States. Among the audiobook titles MediaBay will exclusively offer on the MSN Music service ( ) are those from the nation’s largest audiobook publishers.

This new relationship complements the already extensive MSN Music service catalog, which provides music fans with an easy, comprehensive service for discovering and downloading legal digital music. MSN Music offers simple sign-up, no-hassle purchasing and superior sound quality, either through a Web browser or the new Microsoft® Windows Media®
Player 10.

“With the growth of broadband access having reached critical mass, we anticipate the popularity of audiobook downloads to grow exponentially,” said Jeffrey Dittus, CEO of MediaBay. “Currently, in an $800 million market that has increased 10 percent per year since 1989, sales of audiobooks should exceed $1.1 billion by 2008. We believe downloads will grow to take a much larger share of 2004 sales. We are confident that MSN will provide us with access to the growing number of audiobook listeners who are using the Internet more and more to access their entertainment and information needs, as well as attract new listeners who are unfamiliar with the format.”

“We’re excited to add MediaBay’s audiobooks to our already extensive catalog of music,” said Christine Andrews, lead product manager for MSN Entertainment at Microsoft Corp. “Our goal is to bring the largest library of music and spoken-word content to MSN Music customers, and MediaBay is helping us by providing access to a broad range of audiobooks, such as the most recent New York Times bestsellers, and new and backlist titles from best-selling authors such as John Grisham, Tom Wolfe, Mary Higgins Clark, Bill Clinton and Stephen King.”

“This announcement builds upon our leading position as a marketer and distributor of audiobooks on tapes and compact discs via the Audio Book Club,” Dittus said. “It is the first significant step in executing our digital media distribution strategy. By making our content available to the digital customer, we can expand the market for our audio content and considerably reduce the cost of delivery. The opportunity presented by this relationship is made even more significant by the multitude of compatible download devices for the MSN Music service.”

Recent research conducted by the Audio Publishers Association shows that 70 percent of audiobook users listen to them in their cars or on portable devices, making MSN Music a logical choice for MediaBay. MediaBay audiobooks add to the extensive library of the MSN Music service, which is compatible with more portable devices than any other music service.

Joseph Rosetti, MediaBay chairman and former head of security at IBM Corp., also endorsed the offering. “A significant feature on MSN Music is Microsoft’s Windows®
Media Digital Rights Management platform, which helps protect and more securely deliver content for playback on a computer, portable device or network device,” Rosetti said. “This platform provides publishers the content protection they have been looking for and is quickly becoming the industry standard.”

About MSN

MSN attracts more than 350 million unique users worldwide per month. With localized versions available globally in 39 markets and 20 languages, MSN is a world leader in delivering Web services to consumers and online advertising opportunities to businesses worldwide. The most useful and innovative online service today, MSN brings consumers everything they need from the Web to make the most of their time online. MSN is located on the Web at . MSN worldwide sites are located at .

About MediaBay

MediaBay Inc. (Nasdaq “MBAY”) is a multichannel, media marketing company specializing in the $800 million audiobook industry and classic radio program distribution. MediaBay’s industry-leading content library contains more than 75,000 hours of spoken audio content including over 50,000 hours of classic radio programming, 3,500 film and television programs and thousands of audiobooks. MediaBay distributes content through more than

20 million direct mail catalogs; streaming and downloadable audio over the Internet; over

7,000 retail outlets; a 240-station syndicated radio show and 24-hour Classic Radio channels on XM and Sirius satellite radio. For more information on MediaBay, please visit or its subsidiary sites: , , and .

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Certain statements in this press release constitute “forward-looking” statements that involve a number of known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any results, performances or achievements express or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the Company’s history of losses; the Company’s ability to anticipate and respond to changing customer preferences, license and produce desirable content, fund and execute successful marketing campaigns, protect its databases and other intellectual property from unauthorized access, pay its trade creditor and collect receivables; dependence on third-party providers, suppliers and distribution channels; competition; the costs and success of its marketing strategies; product returns; member attrition and other risks detailed in the Company’s Securities and Exchange Commission filings. Undue reference should not be placed on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements.

Microsoft, MSN, Windows and Windows Media 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.

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