Arbinet Acquires Flowphonics, Ltd. UK Firm Specializes in Music and Video Rights, Licensing, Distribution

Flowphonics offers a license management platform for intellectual property rights and digital content distribution through its patented Rightsrouter® system. It currently enables music and video rights owners to locate, transact, distribute, and manage their content with many of the world's major online and mobile retail services including iTunes, Rhapsody, Napster and Beatport.

Curt Hockemeier, Arbinet President and Chief Executive Officer, explains, "Content licensing exhibits the same high degree of fragmentation, lack of transparency and time consuming manual negotiation process we saw in telecommunications. Simplifying the way rights are discovered, licensed, digitally distributed, with rights owners getting paid timely is of growing importance and a key element of our digital media strategy."

The Rightsrouter® solution provides rights holders (licensors), and retailers (licensees), an electronic marketplace to meet and transact with the capability to administer and negotiate rights agreements, encode and distribute content, report, bill, and clear all licensing transactions. Arbinet expects to leverage its existing relationships with the world's broadband and mobile communications companies to facilitate their offering of music and video services.

"Within the $500 billion global media content industry, the management of licensing and distribution is extremely complex," stated Bob Barbiere, Chief Operating Officer, Arbinet Digital Media Corp, the Company's digital media subsidiary. "This is an opportunity for Arbinet to apply its expertise in developing electronic marketplaces for fragmented industries. The acquisition allows us to combine our core competencies with Flowphonics' patent-protected contract management and digital distribution platform to address today's challenges of content licensing."

"Arbinet brings the capabilities to help us take this business to the next level," adds Flowphonics Founder and Managing Director, Gavin Robertson. "Our pioneering Rightsrouter® platform and media relationships, combined with Arbinet's advanced electronic exchange platform, automated clearing and settlement capabilities, and their more than 700 Members, creates the most powerful offering in this space."

Technology and accessibility are driving rapid growth in demand for digital content; ownership of this content is highly fragmented, especially in the music business, where today there are more than 22,600 separate record labels. PricewaterhouseCoopers predicts that the value of licensed, digitally distributed content will grow from $653 million in 2005 to $4.9 billion in 2010, a 49.5 percent compound annual increase. As an example, digitally distributed recorded music is predicted to rise from a five percent share of industry revenues in 2005, to 33 percent of recorded music spending in 2010.

Beth Appleton, Head of New Media and Business Development at V2 Records adds, "The Flowphonics platform enables us to manage our licensing and reporting processes and deliver content to digital and mobile services around the world. This Arbinet acquisition of Flowphonics will enable V2 to increase the capabilities of licensing, delivery and reporting in this ever challenging space where efficiency, accuracy and adaptability are critical to successfully managing the digital distribution of our repertoire globally."