The Wall Street Journal
By David Bank
Staff Reporter

Microsoft Corp. reached separate agreements with Intertainer Inc. and Liquid Audio Inc. to supply movies, music and other entertainment for both personal computers and television set-top boxes that use Microsoft's Windows media technologies.

The deals, to be announced today, are part of Microsoft's effort to assure there is an ample supply of "content" specifically formatted for Windows to help persuade consumers and network operators to adopt Microsoft's technology as the underlying platform for delivering and receiving digital audio and video.

Microsoft, based in Redmond, Wash., invested $56 million for an approximately 20% equity stake in Intertainer, a closely held start-up in Culver City, Calif., that also has investments from Comcast Corp., Intel Corp., Sony Corp.'s Sony Corp. of America unit and the NBC unit of General Electric Co. The deal gives Microsoft access to Intertainer's "on demand" service that provides movies, music, TV programs and shopping services to users with "broadband," or high-speed, connections. In return, Intertainer will adopt Microsoft's Windows media technologies.

The deal allows Microsoft to showcase the availability of high-quality content from many leading entertainment studios when pitching its technologies to cable-TV operators and other providers of highspeed services, such as telephone companies offering digital subscriber line, or DSL, services. However, Intertainer and the network operators must reach their own agreements before the service is offered to consumers.

Financial terms of the deal with Liquid Audio, one of the leading distributors of music on the Internet, weren't disclosed. Liquid Audio, of Redwood City, Calif., agreed to encode its catalog of more than 50,000 downloadable songs and one million music previews using Microsoft's Windows media format, pending agreements with individual record labels. Liquid Audio also agreed to add Windows media technology to future releases of its Liquid Player, software for playing digital music on the Internet.

The deal advances Microsoft's efforts to establish Windows media technology alongside, or instead of, popular formats such as MP3. Windows media technology offers record companies additional copyright-protection features, known as "digital rights management," that aren't available with MP3. Liquid Audio said it will operate a clearinghouse for Windows media technology digital-rights-management services.

Gerry Kearby, chief executive officer of Liquid Audio, said his company had received an increasing number of requests for the Windows media format from customers and retailers and decided to adopt it along with other formats. "We are the technology that gets the music from the labels to the retailers in the formats that they want," he said.

Separately, Microsoft said it will launch ClearLead, a new web site to enable businesses to manage customer inquiries and sales leads over the Internet. Microsoft's own CarPoint automotive site will be the first customer for ClearLead, using the service in its DealerPoint system for car dealers. The company said ClearLead will enable auto dealers to respond to more customer inquiries in less time and cut average per-car selling costs. The web site will be available for general use in the spring, Microsoft said.