Case 1:14-cv-02396-PGG-SN Document 239-26 Filed 11/12/20 Page 1 of 5
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`Exhibit 44
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`Case 1:14-cv-02396-PGG-SN Document 239-26 Filed 11/12/20 Page 2 of 5
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`From: Jim Scivem pp <j_schrempp@audiblemagic.com>
`Sent: Tuesday, August 01, 2000 4:46 PM
`To: Ede?, Alan; Kvitek, Lou
`Subject 1W: Audible Magic July Update
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`All the news that's fit to print.
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`Jim
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`Audible Magic Corporation
`J_Schrempp@audiblemagic.com
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`408.399.6425 fax: 408.399.6406
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`- Confidential -
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` Original Message-----
`From: Vance Ikezoye [rnailto:v_ikezoye@audiblemagic.comj
`Sent: Tuesday, August 01, 2000 3:03 PM
`To: Vance E Ikezoye; Tim Tomlinson; Sam Quezacia; Peter Ashley; Michael S. Battaglia; Larry Williams; Jim Schrempp; Jill
`Fishbein; Jeffrey Pfeffer; David J. Teece; Addison Fischer; Mike McTeigue
`Cc: Melanie Kirkpatrick; Sarah McMullen
`Subject: Audible Magic July Update
`
`July has been a busy month from both an internal and external perspective.
`We continue to make steady progress within the company. Externally, we have begun to talk more directly with
`potential customers/partners. We are very optimistic.
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`FINANCIAL HIGHLIGHTS
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`Expenses Actual Budget Notes
`Engineering: "$40K $42K
`Operations: -$27K $29K
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`Support: -$2K $13K
`Delay in new hire start date. Budget to be revised.
`Marketing: -$25K $28K
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`Lower contractor fees than budgeted.
`Bus Dev: -$11K $18K
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`MuscleFish: -$11K $15K
`Revised target due to delay in closing.
`G&A -$21K $23K
`Total $135K $169K
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`Series B First Closing Cash In: $792K
`Muscle Fish Purchase Cash Out: $1,200K
`Cash Position: August 1 cash balance $258K Series B Second Closing Projected Cash In: $470K
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`With current budget cash lasts through October.
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`INDUSTRY ALLIANCESJSTRATEGIC RELATIONSHIPS In July, with confidence in our technology and the ability to
`demonstrate much of our systems infrastructure, we have begun to talk with the key players in the recording industry.
`These discussions have validated our assumptions about the need for our technology and greatly expanded our view of
`the potential for the business_ In mid-July we met with BMI, the RIAA, and Muze - all established industry players.
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`Confidential - Outside Counsel Only
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`6
`Da !I.: Name:
`h-f trAxrt CRR, CCP, CSR No, 9667
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`AU DMAG00042407
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`Case 1:14-cv-02396-PGG-SN Document 239-26 Filed 11/12/20 Page 3 of 5
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`BM I BMI is a performing rights organization that represents song writers and publishers and is responsible for
`collecting royalties for song performances.
`These royalties amount to approximately $1.3B a year. We spent 2 hours at their offices overviewing the technology and
`discussing their needs. With the rapid growth of Internet radio, BMI is interested in applying our technology to the
`monitoring and auditing of Internet radio. The result of our meeting was the intent to formalize a joint test of Audible
`Magic systems to monitor and develop playlists for a set of Internet and broadcast radio stations. We are currently
`working out the details of that agreement.
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`RIAA -The RIAA has made the most news with respect to its lawsuits of Napster and mp3.com. The RIAA is a trade
`association of artists and the recording industry. In addition, the RIAA has been tasked with the responsibility of
`collecting and distributing royalties for the content owners by the US Copyright office_ We approached the meeting to
`discuss our technology and its application to the problems of royalty monitoring and anti-piracy. Those areas were
`validated by the people we met, but in addition, they suggested that we could be of service to 'every Internet radio
`station' by providing them tools to standardize reporting of royalties. The RIAA suggested that they would like to be able
`to recommend a solution to every station. They are tentatively scheduling to come out to our office to spend time with
`our technical people on August 18.
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`Muze - Muze is an established supplier of information to the music industry.
`They are extremely interested in the development of a music ID service that can be marketed to software media player
`developers. For example, WinAMP or MusicMatch. Although the first pass term sheet they gave us was not acceptable,
`this is a serious program for them and we are optimistic that we will come to an agreement.
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`In conclusion, each of these 'deals' by themselves are extremely valuable to us. However, more importantly they
`indicate the uniqueness of our technology and the high level of need within our target market.
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`ENGINEERING
`This month we stayed on schedule with our release of dango to beta test on July 28 - four weeks after our alpha release.
`This version of clango has most of the functionality we need for the final release. We expect to have a clean up pass in
`two to three weeks depending on the feedback from our beta users.
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`Our identification server at Concentric Irvine has been running continuously over the last three weeks. We have
`upgraded our core identification software twice, each time improving accuracy and speed. Our server now requires only
`one second to complete a search of the 20,000 signatures in the tier 1 database. Our tier 2 database is in place and we
`can make daily updates to insure a high hit rate on the tier 1 database. Our accuracy is over 94% positive IDs, 4% false
`negatives, and 2% false positives. This is very close to our original design goals. We are working to reduce our false
`positive rate to below the 1% goal. In August we will bring up a second ID server at Concentric to double our on line
`capacity.
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`Our purchase web site is up with the first pass graphics and we have deep e-commerce links to both Amazon.com and
`TWEC. We have also improved our back end infrastructure to support our production environment.
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`In the next month we will review our schedule to release, and receive final web graphics from the design firm.
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`On other fronts, we have started the design work on a monitoring network to meet the needs of BMI and Xenote. In
`August we should complete a proof of concept test for each of these customers.
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`OPERATIONS
`The initial server at Concentric has been stable over the past month.
`In order to better service our software, we had to take full ownership of the system administration. Through this added
`administrative access, we are better able to configure the server to meet our needs. The second server should be
`brought on-line the week of July 31. This second server will be identically configured to the first server and will act as a
`back up and be used to share the load.
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`Confidential - Outside Counsel Only
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`AUDMAG00042408
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`Case 1:14-cv-02396-PGG-SN Document 239-26 Filed 11/12/20 Page 4 of 5
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`We have four goals for the month of August:
`Get the second server up and running and completely debugged.
`a)
`Get our load-sharing configuration implemented.
`b)
`Complete our update and maintenance procedures
`c)
`Configure and start using a statistics gathering software package
`d)
`on the servers.
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`SUPPORT
`In the month of July, we received 34 distinct e-mails requesting some kind of support of these 31 issues have been
`resolved. Additionally, we have added 24 articles to the support knowledge database. The logic flow of the system
`seems to be working well and all incoming e-mail is being routed to the right destinations_
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`For the month of August, our goal is to establish benchmarks that we can measure and better statistics on incoming
`requests. All incoming messages should be categorized into major categories and we should be able to measure average
`time for closure on these categories.
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`Identification Database for Beta
`During the period from late June through July we have manually added 5400 entries to the signature database. We
`continue to focus on the Modern Rock f Adult Contemporary genre. On a weekly basis we track the Billboard
`200 songs, Billboard 100 Albums, Top Amazon CD sales and top Internet Sales. Additionally, we are completely
`monitoring the play list of a local station in our genre.
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`For the month of August, we hope to develop some automated tools to help us track radio stations and their play lists.
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`BUSINESS DEVELOPMENT
`Our new VP of Business Development officially started on July 10th. Peter has coordinated efforts with our Business
`Development contractor, Mike McTiegue and, although the team did not achieve the July goal of closing two deals, the
`two have successfully moved some significant deals forward while bringing some big new prospects into the picture.
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`In July, Business Development brought three deals to the level of actively negotiating the terms sheet (the Muze, Xenote
`and Audio Ramp deals are detailed
`below.) We received a proposal outline from BMI on the 31st and are currently drafting a more formal proposal.
`Following a very productive meeting in DC on July 20th, we will be taking the next steps with RIM on August 20th.
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`Peter, Jim and Mike will be presenting to a Real Networks contact of Mike's on August 1st. Conversations with Akoo are
`expected to escalate to a proposal in the next two weeks. Finally, as Peter focuses on the audio monitoring deals, Mike
`McTiegue will evaluate the Sound Fisher product (sound effects management and cataloging technology aimed at the
`Movie
`industry) and initiate some deals in that area_
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`Big Deals:
`The Muze Deal is critical to building our signature database quickly.
`As the database is a core asset to Audible Magic, the negotiations continue to be slow but thorough and we have made
`it clear to Muze that Audible Magic must have sole ownership of the database created from their proprietary database
`of music clips. Our re-draft of a terms sheet was returned to Muze on July 31; we expect this deal to close by mid
`August and to begin processing the clips soon after that.
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`Xenote represents a unique, consumer and industry branding opportunity to Audible Magic. Xenote will be competing
`with Sony's eMarker to allow consumers to "bookmark the radio" and order CD's that include favorite songs they hear
`on the radio. The leading player in this category must have broad coverage coupled with fast and accurate play list
`generation.
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`Confidential - Outside Counsel Only
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`AUDMAG000424O9
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`Case 1:14-cv-02396-PGG-SN Document 239-26 Filed 11/12/20 Page 5 of 5
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`Sony has a contract with BDS to supply their data and Xenote currently has a contract with Premier, which they
`acknowledge will be an obstacle to succeeding. We are establishing a Pilot program in San Francisco to compete with
`BDS in a head to head competition, which will yield clear and measurable competitive performance data.
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`Audio Ramp manufacturers an Internet radio appliance that they have internally dubbed "Smart Radio" because of its
`ability to provide title and artist information. Audio Ramp is considering Audible Magic's technology as the backbone of
`their Smart Radio and would promote Audible Magic as such.
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`Business Development is prepared to carry over their goal of two signed deals into August and to add two more, for a
`total of four signed deals in August.
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`MUSCLEF1SH ACQUISITION
`The acquisition of Musde Fish closed on July 21. This effort was much more grueling than expected for both sides. The
`good news is that it is over and we can both concentrate more to the business at hand. With the next update, we will
`also include information on the 'Muscle Fish' business.
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`FUND RAISING
`With the upcoming 2nd closing of the Series B, we now are turning our focus to a Series C round. We have developed a
`list of potential VC and corporations which meet our criteria. We are focused with this round on adding music/media
`industry knowledge and contacts. So far, we're furthest down the path with Softbank, having had two meetings and a
`third scheduled in our offices.
`Their
`stature in the VC community, combined with their interest in digital media are very attractive.
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`Since our current forecasts project cash to last until the end of October and August is a tough time to raise money, we
`will need to work hard and keep focused on this effort.
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`If you have any questions, do now hesitate to call.
`
`Vance lkezoye
`
`Audible Magic Confidential
`
`Audible Magic Corporation
`985 University Avenue Suite 35
`Los Gatos, CA 95032 USA
`v. 408.399.6422
`f. 408.399.6406
`e. v_ikezoye@audiblemagic.com
`
`Confidential - Outside Counsel Only
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`AUDMAG00042410
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