Arbinet Acquires Flowphonics, Ltd.

NEW BRUNSWICK, New Jersey, December 5 /PRNewswire/ --
    - UK Firm Specializes in Music and Video Rights, Licensing, Distribution
    Arbinet-thexchange, Inc. (Nasdaq: ARBX), the leading provider ofsolutions to simplify the exchange of digital communications, today announcedthe acquisition of Flowphonics, Ltd. Terms of the transaction were notdisclosed.
    Flowphonics offers a license management platform for intellectualproperty rights and digital content distribution through its patentedRightsrouter(R) system. It currently enables music and video rights owners tolocate, transact, distribute, and manage their content with many of theworld'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 oftransparency and time consuming manual negotiation process we saw intelecommunications. Simplifying the way rights are discovered, licensed,digitally distributed, with rights owners getting paid timely is of growingimportance and a key element of our digital media strategy."
    The Rightsrouter(R) solution provides rights holders (licensors), andretailers (licensees), an electronic marketplace to meet and transact withthe capability to administer and negotiate rights agreements, encode anddistribute content, report, bill, and clear all licensing transactions.Arbinet expects to leverage its existing relationships with the world'sbroadband and mobile communications companies to facilitate their offering ofmusic and video services.
"Within the US$500 billion global media content industry, the managementof licensing and distribution is extremely complex," stated Bob Barbiere,Chief Operating Officer, Arbinet Digital Media Corp, the Company's digitalmedia subsidiary. "This is an opportunity for Arbinet to apply its expertisein developing electronic marketplaces for fragmented industries. Theacquisition allows us to combine our core competencies with Flowphonics'patent-protected contract management and digital distribution platform toaddress today's challenges of content licensing."
"Arbinet brings the capabilities to help us take this business to thenext level," adds Flowphonics Founder and Managing Director, Gavin Robertson."Our pioneering Rightsrouter(R) platform and media relationships, combinedwith Arbinet's advanced electronic exchange platform, automated clearing andsettlement capabilities, and their more than 700 Members, creates the mostpowerful offering in this space."
    Technology and accessibility are driving rapid growth in demand fordigital content; ownership of this content is highly fragmented, especiallyin the music business, where today there are more than 22,600 separate recordlabels. PricewaterhouseCoopers predicts that the value of licensed, digitallydistributed content will grow from US$653 million in 2005 to US$4.9 billionin 2010, a 49.5 percent compound annual increase. As an example, digitallydistributed recorded music is predicted to rise from a five percent share ofindustry revenues in 2005, to 33 percent of recorded music spending in 2010.
    Beth Appleton, Head of New Media and Business Development at V2 Recordsadds, "The Flowphonics platform enables us to manage our licensing andreporting processes and deliver content to digital and mobile services aroundthe world. This Arbinet acquisition of Flowphonics will enable V2 to increasethe capabilities of licensing, delivery and reporting in this everchallenging space where efficiency, accuracy and adaptability are critical tosuccessfully managing the digital distribution of our repertoire globally."
    About Arbinet
    Arbinet solutions simplify the exchange of digital communications in aconverging world. These include exchanges, a transaction management platform,and managed services which streamline performance and improve profitabilityfor Members.
    Arbinet's 700+ voice and data Members, including the world's 10 largestinternational carriers, use Arbinet's Internet based electronic platforms tobuy, sell, deliver and settle transactions valued at about US$500 million in2005. These Members include fixed, mobile and VoIP carriers, ISPs and contentproviders from more than 60 countries who exchange voice, data, content andvalue added services.
    Forward-Looking Statements
    This press release contains forward-looking statements, including but notlimited to statements about the Company's strategic and business plansincluding the acquisition of Flowphonics. Various important risks anduncertainties may cause the Company's actual results to differ materiallyfrom the results indicated by these forward-looking statements, including,without limitation: the ability of Flowphonics and Arbinet to successfullyintegrate their systems and processes; retain key Flowphonics employees;retain key Flowphonics customer contracts; and, successfully enter intoagreements with additional licensors and licensees; the effects and outcomesof the Company's exploration of strategic alternatives; members (inparticular, significant trading members) not trading on our exchange orutilizing our new and additional services (including data on thexchange,DirectAxcess(SM), PrivateExchange(SM), AssuredAxcess(SM), PeeringSolutions(SM), and Rightsrouter(R)); continued volatility in the volume and mix oftrading activity (including the average call duration and the mix ofgeographic markets traded); our uncertain and long member enrollment cycle;the failure to manage our credit risk; failure to manage our growth; pricingpressure; investment in our management team and investments in our personnel;system failures, human error and security breaches which could cause theCompany to lose members and expose it to liability; and the Company's abilityto obtain and enforce patent protection for our methods and technologies. Fora further list and description of the risks and uncertainties the Companyfaces, please refer to the Company's Amendment No. 1 to its Annual Report onForm 10-K/A and other filings, which have been filed with the Securities andExchange Commission. The Company assumes no obligation to update anyforward-looking statements, whether as a result of new information, futureevents or otherwise and such statements are current only as of the date theyare made.
    Carolyn Robertson    STC Associates    +1-212-725-1900 ext. 204    carolyn@stcassociates.com    Chris Reid    Arbinet-thexchange    +1-732-509-9160    creid@arbinet.com
    Web site: http://www.arbinet.com
Arbinet-thexchange, Inc.
Carolyn Robertson of STC Associates, +1-212-725-1900 ext. 204, carolyn@stcassociates.com; or Chris Reid of Arbinet-thexchange, +1-732-509-9160, creid@arbinet.com