Intermix Media, Inc. Issues Statement on Action of Office of New York State Attorney General

Business Wire, April 28, 2005

LOS ANGELES -- The following statement was issued by Intermix Media, Inc. (AMEX: MIX) on April 28, 2005 in response to the civil complaint filed by the Office of the New York State Attorney General and may be attributed to Christopher Lipp, senior vice president and general counsel for Intermix.

Intermix does not promote or condone spyware, and remains
    committed to putting this legacy issue behind it as soon as
    practicable. We expect to continue our discussions with the
    New York Attorney General's Office and are still hopeful of
    reaching an appropriate and amicable resolution. Many of the
    practices being challenged were instituted under prior leadership,
    and Intermix has been voluntarily and proactively improving these
    applications and related consumer disclosure and functionality for
    some time. In an abundance of caution, we voluntarily ceased
    distribution of the applications at issue earlier this month.
    While the applications and technology at issue in this case, and
    related standards of business conduct, are continually evolving,
    Intermix has always been committed to protecting consumer privacy.
    Neither the Company's toolbar nor redirect application has been
    used to collect personal information or "spy" on the Internet or
    other activities of the user. Intermix values its reputation in
    the industry and its relationships with its customers and users,
    and remains committed to instituting and promoting best practices
    on the Internet.

Background:

Scope of Matter

While the Company has not had the opportunity to analyze the NY AG's petition, as the Company has previously disclosed, this matter primarily concerns issues of disclosure sufficiency and removal functionality with respect to downloadable applications distributed by Intermix and/or third parties. The Company's download applications and business were created by previous leadership as an effort to establish a relationship with users through a presence on the desktop. That strategy and business is not material to the Company's current operations and has not been part of current leadership's vision for the Company. Intermix began scaling this part of its business down in November 2004 and, as the Company announced on April 14, 2005, has suspended distribution of the relevant applications.

Applications at Issue

The redirect and toolbar applications at issue are similar to those distributed by other major Internet brands and are often distributed together with other downloadable applications or content, such as screensavers, cursors or wallpaper. The toolbar application, once installed, resides below the user's Internet Explorer address bar and offers the ability to conduct search queries directly through the browser as opposed to navigating to a search website. The toolbar also includes buttons or links enabling other features, such as changing cursors, yellow page listings and content referral, and includes a pop-up blocking utility.

The Company's redirect application responds to error messages received from the user's browser when the user misspells a website name or the website or web page to which the user is attempting to navigate cannot be found or is otherwise unavailable. Instead of being directed to the browser's standard error web page, the user is directed to a web page hosted by the Company that enables the conduct of search queries and provides links for categorical searching. The redirect application also enables search queries directly through the Internet Explorer address bar.

The Company under prior leadership distributed a contextual ad serving application called KeenValue, but ceased distribution of that application as an active, revenue producing component in late 2003.

The Company has typically disclosed the existence and basic functionality of its toolbar and redirect applications in an end user license agreement ("EULA"), a link to which is made available to users during the download process and which users are asked to read prior to consummating a download. The Company has required that third parties, in their distribution agreements with the Company, adhere to this practice and distribute the applications on an "opt-in" basis and in conformance with all applicable laws.

The Company has, since the outset, provided a means of removing the applications from the user's desktop in one form or another. All of the more recent builds of the toolbar and redirect applications included full windows Add/Remove functionality. The adequacy of the Company's method and substance of disclosure and its provision of sufficient application uninstall features appear to be at the heart of the issues raised by the New York Attorney General's Office. The Company noted that a recent Staff Report by the Federal Trade Commission from its Spyware Workshop identified such disclosure and removal practices as part of the ongoing discussion of best practices with respect to the distribution of legitimate downloadable applications.