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Net4Music Inc. Moves To Reduce Digital Sheet Music Operating Costs

Allows Focus On New Subscription Service for SmartMusic Studio and Strong Notation Business (August 14, 2001)
Net4Music Inc. today announced strategic moves focused on its
long term growth and development. Fixed costs associated with the engraving
of sheet music for digital distribution via the Internet are expected to be
further reduced to reflect current market conditions, allowing the Company to
focus resources on its ongoing strong Finale notation business and its new subscription
services for SmartMusic Studio, its music practice system.

As a result, the Company proposes to close its Lyon engraving facilities and
divest its Madagascar engraving operations. The Company expects to benefit from
the widespread adoption of Finale by publishers in their engraving of sheet
music and plans to engage outside contract services to engrave new Finale files
for digital distribution on a more focused basis. In addition, the Company intends
to divest, its European sheet music mail order business. Technology
and marketing staff specific to the sheet music business are expected to be
reduced and concentrated in Paris, London and Minneapolis. Headcount reductions,
expected to affect all of the Madagascar positions and approximately 30 positions
in European operations, will provide significant expense reduction. The Company
expects to include a restructuring charge of $400,000 in its third quarter results.

"The digital
sheet music business, in which we are a leader in both technology and digital
rights through our close ties to music publishers, remains an important part
of our future
," commented CEO Sean Lafleur. "The market
for online distribution, however, is not developing as quickly as we anticipated.
With this much lower fixed cost structure we are better able to focus resources
on our strong notation business and the significant potential of the new subscription
service of SmartMusic Studio. Our version of Finale 2002 is receiving excellent
reviews as the market is anticipating its release. We are also receiving positive
feedback from music educators regarding our new subscription service for SmartMusic

At the end of the
second quarter, the Company had approximately $4,000,000 in cash and cash equivalents,
including an expected refund in VAT of over $900,000. The Company expects to
have adequate cash to support its operations into the next year.

About Net4Music Inc.

Net4Music Inc. is a global music technology company dedicated to improving
the way musicians, music educators, students and hobbyists practice, create
and acquire music. Among its leading products are Finale®, the world's best-selling
music notation software and SmartMusic Studio®, the complete music practice
system that features Intelligent Accompaniment® and the world's largest
interactive accompaniment library. Net4Music maintains its corporate headquarters
in Minneapolis, MN and its main international office in Paris, France. The Company
can be reached at or

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Related Keywords:sheet music, digital distribution, Finale notation, music practice system

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