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Press releases | Archive 2008

RBC acquires online digital content store FIDEL.RU

Moscow, January 31, 2008 - OAO RBC Information Systems (RTS, MICEX: RBCI) announces that it has completed the acquisition of the controlling stake in Fidel.ru. The portal was established by Fidel Solutions in 2005 and is currently one of the largest online stores selling copyright protected digital content such as music, audio books, mobile content and computer games.

The website contains tracks from 75 leading music companies, including western majors1 Sony BMG, Universal Music Group and Russian music record companies СD Land, Pervoye Muzikalnoye Izdatelstvo, Misteriya Zvuka and Pravitelstvo Zvuka. All tracks are posted with an official permission of copyright and related rights holders and protected against illegal copying being provided in the wma format.

RBC acquired a 51% stake in Fidel.ru with the option to further increase its controlling block to 75% during the next three years. According to the purchase agreement, the amount of the transaction including investments in the project over the next three years was set at $8.5m. RBC's subsidiary Media Mir, which specializes in mass Internet services, will be in charge of the further development of Fidel.ru.

"Today Fidel.ru is almost an exclusive source of copyright protected music content for Russian users on the still-developing civilized online music market. And we believe that this project will prove popular among the mass audience, owing to its competitive prices as well as additional services, and the variety and quality of music files will make music lovers truly happy," Mikhail Gurevich, General Director of Media Mir, said.

Commenting on the choice of investor for Fidel.ru, Boris Golikov, General Director of Fidel Solutions, said: "Media Mir is a perfect strategic partner for us. With its resources it has access to a wide and diversified audience, and knows the most efficient way of dealing with it. Fidel.ru is an innovative project. For the first time in Russia, it will sell content on a subscription basis. These advantages have to be explained to the audience, and without Media Mir it would have been something extremely difficult for us to do."

Additional information

According to the eMarketer research company, the world's on-line music market grew 47% in 2007 to $2.8bn and is expected to reach $7.5bn by 2011. Jupiter Research expects 20% of Internet users to buy music online by 2012, with digital music accounting for a quarter of total music sales. Meanwhile, booming online music business has been causing a steady decline in the profits of record companies from music sales on physical storage media.

Much of Russia's online digital music market, worth about $30m in players' estimation, remains illegal. However, Part 4 of Russia's Civil Code, which regulates intellectual property matters, came into force on January 1, 2008 and bans online music sales through so-called collective copyright management. From now on, only direct agreements between copyright owners and retailers are considered legal.

Market players hope that new laws, combined with the rising number of online users and growing broadband access, will boost digital sales in Russia.

Media Mir is a dynamically developing company and is part of the RBC Group. The company's websites have a combined daily audience of more than 2m people. Media Mir's projects include Loveplanet.ru dating and social networking website, Photofile.ru photo hosting, Anekdot.ru entertainment website, Pochta.ru email service, Memori.ru social bookmarking service, Magna contextual advertising network, and web hosting services.

Fidel Solutions is the supplier of information and entertainment content for mobile and online users. The company's policy is to operate in full compliance with intellectual property rights protection of music record companies.

1 - The major music record companies


Press and investor contacts:
Egor Timofeev
Tel: +7 (495) 363-1111
Email: pr@rbc.ru
Web: www.rbcholding.com