America Online, Inc. Acquires Johnson-Grace; Technology Brings Rich
Graphics and Sounds to AOL and the Web; Enhances Interactive Experience
for Millions of Consumers Connecting at Low Speeds

Vienna, Va., February 1, 1996 -- America Online, Inc. today announced the
acquisition of Johnson-Grace, leading developers of data compression
technologies. The technologies of Johnson-Grace allow publishers to create
more engaging interactive content that includes graphics, streaming audio
and slide shows. AOL intends to make the technology widely available to
service providers and tools developers thereby allowing millions of
consumers to enjoy rich sound and graphics both on the Web and commercial
services at connection speeds of 14.4 kbps or lower.

"The success of our medium depends on being able to deliver an ever-more
engaging set of services that are fast and easy-to use," said Steve Case,
Chairman and CEO. "The technology of Johnson-Grace will create an enhanced
experience for content partners who want to enrich their publishing
capabilities, and for a new class of consumers who can, for the first
time, enjoy a rich interactive experience without frustrating and costly
delays previously experienced by users at lower speeds."

Case added, "Despite all the talk about a bandwidth explosion driven by
ISDN and cable modems, the reality is that the vast majority of consumers
now connect at 14.4 and over the next 12 -24 months will connect at 28.8,
so compression is critical to creating an engaging interactive experience
for a mass consumer audience."

AOL plans to broadly license the J-G technology, known as ART, to strategic
partners and content developers across the Internet. Additionally a
Johnson- Grace SDK (Software Developers Kit) will be available to software
application companies that wish to include support for the ART format in
their applications.

ART will work within Internet scripting languages including HTML and VRML,
offering information providers a single tool for compressing media for the
Web and AOL. Instead of dealing with different compression formats for
photos, graphics, streaming audio and MIDI, developers can use this single
format will produce highly compressed files that will play on AOL and
Internet websites at very low bandwidth . Plus the fidelity of the
decompressed audio and pictures is superior to any other available
technology. The ART format will also support "Pictureshows," collages of
pictures and graphics synchronized to a streaming audio track. With
picture shows, users could get the nightly news with photos and commentary
from Bosnia, or visit an online store, talking to sales people and seeing
products as they shop.

"We're thrilled to be joining forces with America Online," said Christopher
Grace, co-CEO of Johnson-Grace. "The combination of America Online and
Johnson-Grace will result in a new class of technology and services
designed to empower AOL's partners to expand into more innovative
publishing, while opening up access to broader base of consumers."

"Our combined engineering teams will continue to develop and integrate new
technologies that make the online medium more engaging and easy to use,"
said Steve Johnson, co-CEO of Johnson-Grace.

Case added, "Additionally, we are excited to add the Johnson-Grace
employees to the AOL family who include many of the industry's leading
experts on compression technology and can help lead the way in making
online services and the Internet more easily accessible to consumers."

Johnson-Grace, a privately held company, has been a technology partner of
AOL's since 1994 when it began providing the core compression technologies
used to deliver the AOL service. As a result of this alliance, AOL
acquired a 10% stake. Headquartered in Newport Beach, CA, Johnson-Grace
was founded in March 1992. JG has 70 employees.

America Online acquired Johnson-Grace for approximately 1.6 million shares
in stock. The merger will be effected as a tax-free exchange and accounted
for as a pooling of interests.

America Online, Inc., (NASDAQ symbol: AMER), based in Vienna, Va., is the
largest and fastest growing provider of online services in the world with
more than 4.5 million subscribers. AOL offers its subscribers a wide
variety of services including electronic mail, conferencing, software,
computing support, interactive magazines and newspapers and online
classes, as well as easy and affordable access to services of the
Internet. AOL has a global workforce consisting of 4000 people. Founded in
1985, AOL has established strategic alliances with dozens of companies,
including Capital Cities/ABC, Viacom, Bertelsmann, Hachette, IBM, Compaq
and American Express. Personal computer owners can obtain America Online
software at major retailers and bookstores, or by calling 800-827-6364.
 
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