Sonic Foundry Media Services Announces Encoding Partnership with Digital Entertainment, a Subsidiary of Navarre Corporation

Sonic Foundry, Inc. (Nasdaq: SOFO), a leading developer and marketer of digital media and Internet software tools, services, and systems, announced that Sonic Foundry Media Services[TM] will be an encoding partner for Digital Entertainment, a subsidiary of Navarre Corporation, to encode audio CDs for their new online digital content aggregation and secure download service.

Digital Entertainment will use Sonic Foundry Media Services to provide the encoding technologies needed to convert a wide array of CD content for Digital Download of Music (DDM). The content will be part of an online catalog offered by Digital Entertainment that provides resellers with integration of digital content within their online store catalogs and secure download of music supported by SDMI compliant Digital Rights Management (DRM) solutions. Each reseller will be able to control pricing, merchandising, and customer experience while allowing the combining of physical and digital goods within the same transaction. The digital content can be downloaded to RealMedia[TM] G2, Windows[R] Media, Epac, and other popular media formats.

"Digital Entertainment is excited to begin this partnership with Sonic Foundry Media Services," stated Ian Warfield, chief executive officer for Digital Entertainment. "Because of the state-of-the-art technologies offered by Sonic Foundry Media Services, we can now offer the first truly integrated channel solution that includes downloadable music."

"Digital Entertainment is forging ahead with new offerings for digital content distribution in the reseller channel, and we are excited to play a role in this technology solution," stated Rimas Buinevicius, chairman and chief executive officer for Sonic Foundry. "This is the first step in a long partnership with Digital Entertainment, and we look forward to meeting all of their media encoding needs."

About Navarre Corporation

Navarre Corporation, a Russell 2000 Index and Russell 3000 Index stock, operates a "business to business" Internet E-Commerce Web site (www.navarre.com) and provides fulfillment for retail sites through traditional, e-Commerce, and digital technologies. Navarre's major business groups are: Computer Products Division, which distributes quality consumer software to retailers nationwide; Independent Music Distribution, which distributes independent music labels in the United States and now Canada; Alternative Retail Markets, which distributes major label music to non-traditional retail outlets and also distributes DVD Home Video product; and Digital Entertainment, Inc., which digitally distributes music, software, and movies over the Internet. Navarre has an ownership position in NetRadio Corporation featuring originally programmed audio content at www.netradio.com and its online store CDPoint.

About Digital Entertainment

Digital Entertainment, Inc., a wholly owned subsidiary of Navarre Corporation, aggregates and distributes digital content including music and software utilizing industry-leading solutions for encoding, encryption, digital rights management, and playback. With access to a large catalog of music and software content in digital form, Digital Entertainment has the ability to offer secure download solutions to the broadest possible base of e-commerce customers. With worldwide digital distribution rights, Digital Entertainment is now able to provide global solutions to customers with a multi-national presence.