<PAGE>

                                                                    Exhibit 10.4

                               ARTISTDIRECT, INC.
                         NOTICE OF GRANT OF STOCK OPTION

            Notice is hereby given of the following option grant (the "Option")
to purchase shares of the Common Stock of ARTISTdirect, Inc. (the
"Corporation"):

      Optionee:  Jon Diamond

      Grant Date:  September 29, 2003

      Vesting Commencement Date:  August 16, 2003

      Exercise Price:  $0.85 per share

      Number of Option Shares:  259,659 shares

      Expiration Date:  August 15, 2010

      Type of Option:             Incentive Stock Option
                             -----
                               X  Non-Statutory Stock Option
                             -----

      Date Exercisable:  Immediately Exercisable.


      Vesting Schedule: Although the Option is immediately exercisable,
seventy-five percent (75%) of the Option Shares shall initially be unvested and
subject to repurchase by the Corporation at the Exercise Price paid per share.
Optionee shall acquire a vested interest in twenty-five percent (25%) of the
Option Shares as of the Vesting Commencement Date and those shares shall not be
subject to the repurchase right. Optionee shall acquire a vested interest in,
and the Corporation's repurchase right shall accordingly lapse with respect to,
the remaining Option Shares in a series of three (3) successive equal annual
installments upon Optionee's completion of each year of Service over the three
(3)-year period measured from the Vesting Commencement Date. Notwithstanding the
foregoing, the Option Shares are subject to accelerated vesting as specifically
provided for in the attached Stock Option Agreement and Stock Purchase
Agreement. Except as set forth in Section 6 of the Stock Option Agreement
attached hereto as Exhibit A or in Section D.6 of the Stock Purchase Agreement
attached hereto as Exhibit B, in no other event shall any additional Option
Shares vest after Optionee's cessation of Service.

      REPURCHASE RIGHTS. OPTIONEE HEREBY AGREES THAT CERTAIN OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS
ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE AGREEMENT.
<PAGE>
      Optionee and the Corporation hereby agree to be bound by all the terms and
conditions of the Option as set forth in the Stock Option Agreement and Stock
Purchase Agreement attached hereto as Exhibits A and B, respectively.

            All capitalized terms in this Notice shall have the meaning assigned
to them in this Notice or in the attached Stock Option Agreement or Stock
Purchase Agreement.

DATED:  SEPTEMBER 29, 2003


                                  ARTISTDIRECT, INC.




                                  By:      /s/ FREDERICK W. FIELD
                                           ----------------------------------

                                  Title:
                                           ----------------------------------

                                  By:      /S/ JON DIAMOND
                                           ----------------------------------
                                           OPTIONEE:  JON DIAMOND

                                  Address:
                                           ----------------------------------

                                           ----------------------------------


ATTACHMENTS:
EXHIBIT A - STOCK OPTION AGREEMENT
EXHIBIT B - STOCK PURCHASE AGREEMENT
EXHIBIT C - PROSPECTUS FOR STOCK OPTION GRANT
<PAGE>
                                    EXHIBIT A

                             STOCK OPTION AGREEMENT
<PAGE>


                               ARTISTDIRECT, INC.
                      NON-STATUTORY STOCK OPTION AGREEMENT

                                    RECITALS

            A.    The Board, including a majority of the independent directors
(as defined in Nasdaq Marketplace Rule 4200(a)(14)), of the Corporation and the
Board's Compensation Committee, comprised of a majority of independent
directors, have approved a stock option grant to Optionee as an inducement
material to Optionee's entering into employment with the Corporation.

            B.    Optionee has not previously been an Employee or director of
the Corporation, and the option evidenced by this Agreement (the "Option") is
granted to Optionee in order to attract and retain Optionee to serve the
Corporation in the capacity of Chief Executive Officer.

            C.    The Option is granted to Optionee in consideration of the
services Optionee is to render the Corporation and not for any capital-raising
purposes or in connection with any capital-raising activities.

            D.    The Option is intended to be a Non-Statutory Option which does
NOT satisfy the requirements of Section 422 of the Code.

            E.    All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

            NOW, THEREFORE, it is hereby agreed as follows:

            1.    GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, an Option to purchase up to the number of Option Shares
specified in the Grant Notice attached hereto. The Option Shares shall be
purchasable at any time or from time to time during the Option term specified in
Paragraph 2 at the Exercise Price.

            2.    OPTION TERM. The Option shall have a term of seven (7) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraphs 5 or 6.

            3.    LIMITED TRANSFERABILITY. The Option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee or as otherwise set forth herein. However,
the Option may, in connection with the Optionee's estate plan, be assigned in
whole or in part during Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established for the exclusive benefit
of one or more such family members. The assigned portion shall be exercisable
only by the person or persons who acquire a proprietary interest in the Option
pursuant to such assignment or as set forth


                                        1
<PAGE>
herein. The terms applicable to the assigned portion shall be the same as those
in effect for the Option immediately prior to such assignment and shall be set
forth in such documents issued to the assignee as the Board may deem
appropriate.

            4.    DATES OF EXERCISE. The Option shall be immediately exercisable
for all of the Option Shares, and shall remain exercisable for all of the Option
Shares as to which it has not been exercised until the Expiration Date or sooner
termination of the Option term under Paragraphs 5 or 6.

            5.    CESSATION OF SERVICE. The Option term specified in Paragraph 2
shall terminate (and the Option shall cease to be outstanding) prior to the
Expiration Date in accordance with the following provisions:

                  (a)   Should Optionee cease Service by reason of an
Involuntary Termination or Permanent Disability, then Optionee's right to
exercise the Option shall lapse, and the Option shall cease to be outstanding,
upon the later of (i) the expiration of the twelve (12)-month period measured
from the date of Optionee's cessation of Service or (ii) the expiration of the
twelve (12)-month period measured from the date Optionee's initial three-year
employment term expires as set forth in the Employment Agreement. In no event,
however, shall the Option be exercisable at any time after the Expiration Date.
In the event that such Permanent Disability prevents Optionee from personally
exercising the Option, the Option may be exercised by Optionee's personal
authorized representative to the same extent that Optionee could otherwise
exercise the Option.

                  (b)   Should Optionee cease Service on or prior to August 15,
2006 for any reason other than (i) an Involuntary Termination, (ii) a
termination for Cause or (iii) Optionee's death or Permanent Disability, then
Optionee's right to exercise the Option shall lapse, and the Option shall cease
to be outstanding, upon the earlier of (x) the expiration of the ninety (90)-day
period measured from the date of Optionee's cessation of Service or (y) the
Expiration Date.

                  (c)   Should Optionee cease Service after August 15, 2006 for
any reason other than (i) an Involuntary Termination, (ii) a termination for
Cause or (iii) Optionee's death or Permanent Disability, then Optionee's right
to exercise the Option shall lapse, and the Option shall cease to be
outstanding, upon the earlier of (x) the expiration of the twelve (12)-month
period measured from the date of Optionee's cessation of Service or (y) the
Expiration Date.

                  (d)   Should Optionee's Service be terminated for Cause, then
the Option shall terminate immediately and cease to be outstanding.

                  (e)   Should Optionee cease Service by reason of his death,
then the personal representative of Optionee's estate or the person or persons
to whom the Option is transferred pursuant to Optionee's will or in accordance
with the laws of descent and distribution or, if the Option has been transferred
to a trust in accordance with the terms herein, the trustee of such trust, shall
have the right to exercise the Option. Such right shall lapse, and the Option
shall


                                       2
<PAGE>
cease to be outstanding, upon the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or (ii) the
Expiration Date.

                  (f)   During the applicable post-Service exercise period, the
Option may not be exercised in the aggregate for more than the number of Option
Shares that are vested at the time of Optionee's cessation of Service, except
that, if Optionee ceases Service by reason of an Involuntary Termination,
Optionee thereupon shall be deemed to be fully vested in all of the Option
Shares. Upon the expiration of the applicable post-Service exercise period or
(if earlier) upon the Expiration Date, the Option shall terminate and cease to
be outstanding for any vested Option Shares for which the Option has not been
exercised. However, the Option shall, immediately upon Optionee's cessation of
Service for any reason, terminate and cease to be outstanding with respect to
any Option Shares in which Optionee is not at that time vested (under the first
sentence of this paragraph 5(f) or otherwise).

            6.    CORPORATE TRANSACTION

                  (a)   The Option, to the extent outstanding at the time of a
Corporate Transaction, shall automatically accelerate immediately prior to the
effective date of such Corporate Transaction so that all of the Option Shares
shall be deemed to be fully vested. No such acceleration of vesting of the
Option shall occur, however, if and to the extent: (i) the Option is, in
connection with the Corporate Transaction, to be assumed by the surviving or
successor entity (or parent thereof) or (ii) the Option is to be replaced with a
cash incentive program of the surviving or successor entity (or parent thereof)
which provides Optionee with substantially equivalent economic benefits by
preserving the spread existing at the time of the Corporate Transaction on the
Option Shares for which the Option is not otherwise at that time vested (the
excess of the Fair Market Value of those Option Shares over the aggregate
Exercise Price payable for such shares) and provides for subsequent payout in
accordance with the same Option vesting schedule set forth in the Grant Notice.

                  (b)   Immediately following a Corporate Transaction, this
Option shall terminate and cease to be outstanding, except to the extent assumed
by the surviving or successor entity (or parent thereof) in connection with the
Corporate Transaction.

                  (c)   If the Option is assumed in connection with a Corporate
Transaction, then the Option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the Option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price per share to provide that the aggregate Exercise Price shall remain the
same as before such Corporate Transaction.

                  (d)   To the extent the Option is to be assumed by the
surviving or successor entity (or parent thereof) in connection with a Corporate
Transaction, or a substitute option is issued to the Optionee as provided above,
vesting of the Option shall not accelerate upon the occurrence of that Corporate
Transaction, and the Option shall accordingly continue, over Optionee's period
of Service after the Corporate Transaction, to vest in one or more


                                       3
<PAGE>
installments in accordance with the provisions of the Grant Notice, subject to
acceleration upon an Involuntary Termination as provided in Paragraph 5(f)
above.

                  (e)   This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

            7.    ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, in order to reflect such change and thereby preclude a dilution
or enlargement of benefits hereunder appropriate adjustments shall be made to
(i) the number and/or class of securities subject to the Option and (ii) the
Exercise Price, but no change shall be made in the aggregate Exercise Price.

            8.    STOCKHOLDER RIGHTS. The holder of the Option shall not have
any stockholder rights with respect to the Option Shares until such person shall
have exercised the Option, paid the Exercise Price and become a holder of record
of the purchased shares.

            9.    MANNER OF EXERCISING OPTION.

                  (a)   In order to exercise the Option with respect to all or
any part of the Option Shares for which the Option is at the time exercisable,
Optionee (or any other person or persons exercising the Option) must take the
following actions:

                        (i)   Execute and deliver to the Corporation a Notice of
      Exercise for the number of Option Shares for which the Option is
      exercised.

                        (ii)  Pay the aggregate Exercise Price for the purchased
      shares in one or more of the following forms:

                              (A)   cash or check made payable to the
            Corporation;

                              (B)   shares of Common Stock held by Optionee (or
            any other person or persons exercising the Option) for the requisite
            period necessary to avoid a charge to the Corporation's earnings for
            financial reporting purposes and valued at Fair Market Value on the
            Exercise Date; or

                              (C)   through a special sale and remittance
            procedure pursuant to which Optionee (or any other person or persons
            exercising the Option) shall concurrently provide irrevocable
            instructions (a) to a brokerage firm, not arranged by and not having
            any pre-existing business relationship with the Corporation, to
            effect the immediate sale of


                                       4
<PAGE>
            all or some of the purchased shares and remit to the Corporation,
            out of the sale proceeds available on the settlement date, not later
            than three (3) days after the Exercise Date, sufficient funds to
            cover the aggregate Exercise Price payable for the purchased shares
            plus all applicable federal, state and local income and employment
            taxes required to be withheld by the Corporation by reason of such
            exercise and (b) to the Corporation to deliver the certificates for
            the purchased shares directly to such brokerage firm in order to
            complete the sale.

                  Except to the extent the sale and remittance procedure is
            utilized in connection with the Option exercise, payment of the
            Exercise Price must accompany the Notice of Exercise.

                        (iii) Furnish to the Corporation appropriate
      documentation that the person or persons exercising the Option (if other
      than Optionee) have the right to exercise the Option.

                        (iv)  Execute and deliver to the Corporation such
      written representations as may be requested by the Corporation in order
      for it to comply with the applicable requirements of federal and state
      securities laws.

                        (v)   Make appropriate arrangements with the Corporation
      (or Parent or Subsidiary employing or retaining Optionee) for the
      satisfaction of all federal, state and local income and employment tax
      withholding requirements applicable to the Option exercise.

                  (b)   As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising the Option) a certificate for the purchased Option Shares.

                  (c)   In no event may the Option be exercised for any
fractional shares.

            10.   LOCK-UP. Optionee agrees that prior to the one-year
anniversary of the commencement of his employment with the Corporation (or any
earlier date upon which Optionee's Service ceases by reason of an Involuntary
Termination), he will not sell, make any short sale of, hedge, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
of or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to the Option Shares without the written consent of
the Corporation's Board.

            11.   COMPLIANCE WITH LAWS AND REGULATIONS.

                  (a)   The exercise of the Option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the Nasdaq
Stock Market or other national market, if applicable, or the Over The Counter
Bulletin Board) on which the Common Stock may be listed for trading at the time
of


                                       5
<PAGE>
such exercise and issuance. The Corporation and Optionee shall use reasonable
efforts to comply with all such requirements of law and applicable regulations.

                  (b)   The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to the Option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.

            12.   SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.

            13.   GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.

            14.   NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

                                       6
<PAGE>
                                    EXHIBIT 1

                               NOTICE OF EXERCISE

      I hereby notify ARTISTdirect, Inc. (the "Corporation") that I elect to
purchase ______________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $_____________________________ per
share (the "Exercise Price") pursuant to that certain option (the "Option")
granted to me on ________________________________, 20_____.

      Concurrently with the delivery of this Exercise Notice to the Corporation,
I shall hereby pay to the Corporation the Exercise Price for the Purchased
Shares in accordance with the provisions of my agreement with the Corporation
(or other documents) evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker-dealer sale and remittance
procedure specified in my agreement to effect payment of the Exercise Price.

____________________, 20_____

Date

                                          --------------------------------------
                                          Optionee

                                          Address:
                                                  ------------------------------

                                          --------------------------------------

Print name in exact manner it is to
appear on the stock certificate:          --------------------------------------

Address to which certificate is to be
sent, if different from address above:    --------------------------------------

                                          --------------------------------------

Social Security Number:                   --------------------------------------

Employee Number:                          --------------------------------------
<PAGE>
                                    APPENDIX

            The following definitions shall be in effect under the Agreement:

            A.    AGREEMENT shall mean this Stock Option Agreement.

            B.    BOARD shall mean the Corporation's Board of Directors.

            C.    CAUSE shall have the meaning given such term in the Employment
Agreement.

            D.    CODE shall mean the Internal Revenue Code of 1986, as amended.

            E.    COMMON STOCK shall mean the Corporation's common stock.

            F.    CORPORATE TRANSACTION shall mean any of the following
transactions effecting a change in control or ownership of the Corporation:

                  (i)   a stockholder-approved merger or consolidation in which
      the Corporation is merged into or consolidated with any other corporation
      or entity and immediately following consummation of the transaction the
      persons who held the Corporation's capital stock immediately prior to such
      transaction hold less than an aggregate of fifty percent (50%) of the
      total combined voting power of the surviving entity's outstanding
      securities, or

                  (ii)  a stockholder-approved sale, transfer or other
      disposition of all or substantially all of the Corporation's assets, or

                  (iii) the acquisition, directly or indirectly, by any person
      or related group of persons (other than the Corporation or a person that
      directly or indirectly controls, is controlled by, or is under common
      control with, the Corporation), of beneficial ownership (within the
      meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
      of securities possessing more than fifty percent (50%) of the total
      combined voting power of the Corporation's outstanding securities pursuant
      to a tender or exchange offer made directly to the Corporation's
      stockholders.

            G.    CORPORATION shall mean ARTISTdirect, Inc., a Delaware
corporation.

            H.    EMPLOYEE shall mean the Optionee in his capacity as an
employee of the Corporation (or any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance.

            I.    EMPLOYMENT AGREEMENT shall mean that certain Employment
Agreement dated as of September 29, 2003, between Optionee and the Corporation.
<PAGE>
            J.    EXERCISE DATE shall mean the date on which the Option shall
have been exercised in accordance with Paragraph 9 of the Agreement.

            K.    EXERCISE PRICE shall mean the exercise price per share as
specified in the Grant Notice.

            L.    EXPIRATION DATE shall mean the date on which the Option
expires as specified in the Grant Notice.

            M.    FAIR MARKET VALUE per share of Common Stock on any relevant
date, for purposes of Paragraph 9 only, shall be determined in accordance with
the following provisions:

                  (i)   If the Common Stock is at the time traded on the Nasdaq
      National or SmallCap Markets, then the Fair Market Value shall be the
      average of the high and low selling prices per share of Common Stock on
      the date in question, as such prices are reported by the National
      Association of Securities Dealers on the Nasdaq National or SmallCap
      Markets (or, if not listed on such market, any other national market) and
      published in The Wall Street Journal. If there are no selling prices
      quoted for the Common Stock on the date in question, then the Fair Market
      Value shall be the average of the high and low selling prices on the last
      preceding date for which such quotations exist.

                  (ii)  If the Common Stock is at the time listed on any Stock
      Exchange, then the Fair Market Value shall be the average high and low
      selling prices per share of Common Stock on the date in question on the
      Stock Exchange determined by the Compensation Committee to be the primary
      market for the Common Stock, as such prices are officially quoted in the
      composite tape of transactions on such exchange and published in The Wall
      Street Journal. If there are no selling prices quoted for the Common Stock
      on the date in question, then the Fair Market Value shall be the average
      of the high and low selling prices on the last preceding date for which
      such quotations exist.

                  (iii) If the Common Stock is at the time traded on the
      over-the-counter market, then the Fair Market Value shall be the average
      of the closing bid prices over the 30-day period prior to the date in
      question, as such prices are reported on the Over The Counter Bulletin
      Board.

                  (iv)  If the Common Stock is NOT at the time traded on the
      over-the-counter market, a Stock Exchange or the Nasdaq National or
      SmallCap Markets, then the Fair Market Value shall be as determined in
      good faith by the Corporation's Board of Directors.

            N.    GOOD REASON shall have the meaning given such term in the
Employment Agreement.

            O.    GRANT DATE shall mean the date of grant of the Option as
specified in the Grant Notice.
<PAGE>
            P.    GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the Option evidenced hereby.

            Q.    INVOLUNTARY TERMINATION shall mean the termination of
Optionee's Service by reason of:

                  (i)   Optionee's involuntary dismissal or discharge by the
      Corporation for reasons other than (X) for Cause or (Y) by reason of death
      or Permanent Disability, or

                  (ii)  Optionee's voluntary resignation for Good Reason.

            R.    NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.

            S.    NOTICE OF EXERCISE shall mean the written notice of exercise
in the form attached hereto as Exhibit 1.

            T.    OPTION SHARES shall mean the number of shares of Common Stock
subject to the Option as specified in the Grant Notice.

            U.    OPTIONEE shall mean the person to whom the Option is granted
as specified in the Grant Notice.

            V.    PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

            W.    PERMANENT DISABILITY shall mean the inability of Optionee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.

            X.    SERVICE shall mean the Optionee's performance of services for
the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.

            Y.    STOCK EXCHANGE shall mean the American Stock Exchange or the
New York Stock Exchange.

            Z.    SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
<PAGE>
                                    EXHIBIT B

                            STOCK PURCHASE AGREEMENT
<PAGE>



                               ARTISTDIRECT, INC.

                            STOCK PURCHASE AGREEMENT

            AGREEMENT made this _____ day of ___________________, _____ by and
between ARTISTdirect, Inc., a Delaware corporation, and Jon Diamond, Optionee.

            All capitalized terms in this Agreement shall have the meaning
assigned to them in this Agreement or in the attached Appendix.

      A. EXERCISE OF OPTION

            1. EXERCISE. Optionee hereby purchases from the Corporation, and the
Corporation hereby sells to Optionee ____________ shares of Common Stock (the
"Purchased Shares") pursuant to that certain option (the "Option") granted
Optionee on September 29, 2003 (the "Grant Date") to purchase up to 259,659
shares of Common Stock (the "Option Shares") at the exercise price of $0.85 per
share (the "Exercise Price").

            2. PAYMENT. Concurrently with the delivery of this Agreement to the
Corporation, Optionee shall pay the aggregate Exercise Price for the Purchased
Shares in accordance with the provisions of the Option Agreement and shall
deliver whatever additional documents may be required by the Option Agreement as
a condition for exercise.

            3. STOCKHOLDER RIGHTS. Until such time as the Corporation exercises
the Repurchase Right with respect to any Purchased Shares, Optionee (or any
successor in interest) shall have all the rights of a stockholder (including
voting, dividend and liquidation rights) with respect to those Purchased Shares,
subject, however, to the transfer restrictions of Articles B and C below.

      B. SECURITIES LAW COMPLIANCE

            1. RESTRICTED SECURITIES. While the Purchased Shares have been
registered under the 1933 Act, Optionee hereby confirms that Optionee has been
informed that the Purchased Shares are control securities under the 1933 Act
because Optionee is an affiliate of the Corporation and accordingly, the
Purchased Shares may not be resold or transferred except in compliance with the
federal securities laws.

            2. RESTRICTIONS ON DISPOSITION OF PURCHASED SHARES. Optionee shall
make no disposition of the Purchased Shares (other than a Permitted Transfer)
unless and until Optionee shall have complied with all requirements of this
Agreement applicable to the disposition of the Purchased Shares.

            The Corporation shall not be required (i) to transfer on its books
any Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or



<PAGE>
liquidation rights to, any transferee to whom the Purchased Shares have been
transferred in contravention of this Agreement.

      3. RESTRICTIVE LEGENDS. The stock certificates for the Purchased Shares
shall be endorsed with one or more of the following restrictive legends (to the
extent applicable):

      (a)   "The shares represented by this certificate are "control" securities
            under the Securities Act of 1933 because the holder is an affiliate
            of the Corporation. The shares may not be sold or offered for sale
            in the absence of satisfactory assurances to the Corporation that
            such sale or offer complies with all applicable federal and state
            securities laws."

      (b)   "The shares represented by this certificate are subject to certain
            repurchase rights and other restrictions on transfer granted to the
            Corporation and accordingly may not be sold, assigned, transferred,
            encumbered, or in any manner disposed of except in conformity with
            the terms of a written agreement dated ____________, 20____ between
            the Corporation and the registered holder of the shares (or the
            predecessor in interest to the shares). A copy of such agreement is
            maintained at the Corporation's principal corporate offices."

Upon request by Optionee, the Corporation agrees to remove the legends above, in
each case, when the applicable restrictions or repurchase rights have lapsed and
are no longer applicable.

      C. TRANSFER RESTRICTIONS

            1. RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right.

            2. TRANSFEREE OBLIGATIONS. Each person (other than the Corporation)
to whom the Purchased Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such transfer, acknowledge in
writing to the Corporation that such person is bound by the provisions of this
Agreement and that the transferred shares are subject to the Repurchase Right to
the same extent such shares would be so subject if retained by Optionee.

            3. LOCK-UP. Optionee agrees that prior to the one-year anniversary
of the commencement of his employment with the Corporation (or any earlier date
upon which Optionee's Service ceases by reason of an Involuntary Termination),
he will not sell, make any short sale of, hedge, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose of or transfer for
value or otherwise agree to engage in any of the foregoing transactions with
respect to the Purchased Shares without the written consent of the Corporation's
Board.



                                       2
<PAGE>

      D. REPURCHASE RIGHT

            1. GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date Optionee ceases for any reason to remain in Service or (if
later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Exercise Price any or all of the Purchased
Shares in which Optionee is not, at the time of his cessation of Service, vested
in accordance with the Vesting Schedule applicable to those shares or the
special vesting acceleration provisions of Paragraph D.6 of this Agreement (such
shares to be hereinafter referred to as the "Unvested Shares").

            2. EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall be
exercisable by written notice delivered to each Owner of the Unvested Shares
prior to the expiration of the sixty (60)-day exercise period. The notice shall
indicate the number of Unvested Shares to be repurchased and the date on which
the repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The stock certificates representing the Unvested
Shares to be repurchased shall be delivered to the Corporation on the closing
date specified for the repurchase. Concurrently with the receipt of such stock
certificates, the Corporation shall pay to Owner, in cash, an amount equal to
the Exercise Price previously paid for the Unvested Shares which are to be
repurchased from Owner. Notwithstanding the foregoing, in the event such stock
certificates are not delivered to the Corporation at the time the Exercise Price
is so paid, such Unvested Shares shall nonetheless be deemed cancelled as of the
time of such payment and the Corporation may take such action as is necessary,
including the imposition of stop transfer orders, with respect to such Unvested
Shares. The Corporation's right to exercise the Repurchase Right shall be
conditioned on the Corporation having taken all corporate action required to be
taken to exempt such repurchase from the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3(e), or
successor rule, thereunder, and providing the Owner with satisfactory written
evidence thereof with its notice of exercise.

            3. TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under Paragraph D.2. In addition, the Repurchase Right shall terminate
and cease to be exercisable with respect to any and all Purchased Shares in
which Optionee vests in accordance with the Vesting Schedule or the special
acceleration provisions of Paragraph D.6 of this Agreement. All Purchased Shares
as to which the Repurchase Right lapses shall, however, remain subject to any
Lock-up restrictions set forth in Paragraph C.3 hereof.

            4. AGGREGATE VESTING LIMITATION. If the Option is exercised in more
than one increment so that Optionee is a party to one or more other Stock
Purchase Agreements (the "Prior Purchase Agreements") which are executed prior
to the date of this Agreement, then the total number of Purchased Shares as to
which Optionee shall be deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not exceed in the aggregate
the number of Purchased Shares in which Optionee would otherwise at the time be
vested, in accordance with the Vesting Schedule or the special vesting
acceleration provisions of



                                       3
<PAGE>

Paragraph D.6 of this Agreement, had all the Purchased Shares (including those
acquired under the Prior Purchase Agreements) been acquired exclusively under
this Agreement.

            5. RECAPITALIZATION. Any new, substituted or additional securities
or other property (including cash paid other than as a regular cash dividend)
which is by reason of any Recapitalization distributed with respect to any of
the Purchased Shares shall be immediately subject to the Repurchase Right, but
only to the extent those Purchased Shares are at the time covered by such right.
Appropriate adjustments to reflect such distribution shall be made to the number
and/or class of Purchased Shares subject to this Agreement and to the price per
share to be paid upon the exercise of the Repurchase Right in order to reflect
the effect of any such Recapitalization upon the Corporation's capital
structure; provided, however, that the aggregate purchase price shall remain the
same.

            6. SPECIAL VESTING ACCELERATION.

            (a)   If Optionee ceases Service by reason of any Involuntary
                  Termination, Optionee thereupon shall be deemed to be fully
                  vested in all of the Purchased Shares (and none of the
                  Purchased Shares shall be subject to the Repurchase Right).

            (b)   If the Repurchase Right is NOT assigned to a surviving or
                  successor entity (or its parent) and is NOT otherwise
                  continued in full force and effect pursuant to the terms of a
                  Corporate Transaction, then the Repurchase Right shall
                  terminate automatically in its entirety, and all the Purchased
                  Shares shall vest in full, immediately prior to the
                  consummation of such Corporate Transaction.

      E. SPECIAL TAX ELECTION

            The acquisition of the Purchased Shares may result in adverse tax
consequences which may be avoided or mitigated by filing an election under Code
Section 83(b). Such election must be filed within thirty (30) days after the
date of this Agreement. A description of the tax consequences applicable to the
acquisition of the Purchased Shares and the form for making the Code Section
83(b) election are set forth in Exhibit I. OPTIONEE SHOULD CONSULT WITH HIS TAX
ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND
THE ADVANTAGES AND DISADVANTAGES OF FILING THE CODE SECTION 83(b) ELECTION.
OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S SOLE RESPONSIBILITY, AND NOT THE
CORPORATION'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF
OPTIONEE REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
HIS BEHALF.



                                       4
<PAGE>

      F. GENERAL PROVISIONS

            1. ASSIGNMENT. The Corporation may assign the Repurchase Right
(subject to its terms) to any person or entity selected by the Board, including
(without limitation) one or more stockholders of the Corporation.

            2. NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery, one
business day after being delivered to a reputable overnight courier service, or
upon deposit in the U.S. mail, registered or certified, postage prepaid and
properly addressed to the party entitled to such notice at the address indicated
below such party's signature line on this Agreement or at such other address as
such party may designate by ten (10) days advance written notice under this
paragraph to all other parties to this Agreement.

            3. NO WAIVER. The failure of the Corporation in any instance to
exercise the Repurchase Right shall not constitute a waiver of any other
repurchase rights that may subsequently arise under the provisions of this
Agreement or any other agreement between the Corporation and Optionee. No waiver
of any breach or condition of this Agreement shall be deemed to be a waiver of
any other or subsequent breach or condition, whether of like or different
nature.

            4. CANCELLATION OF SHARES. If the Corporation shall make available,
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Purchased Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such shares shall be deemed
purchased in accordance with the applicable provisions hereof, and the
Corporation shall be deemed the owner and holder of such shares, whether or not
the certificates therefor have been delivered as required by this Agreement.

      G. MISCELLANEOUS PROVISIONS

            1. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.

            2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof.

            3. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.



                                       5
<PAGE>

            4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

            5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.

            IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.


                                        ARTISTDIRECT, INC.

                                        By:
                                           -------------------------------------

                                        Title:
                                              ----------------------------------

                                        Address:
                                                --------------------------------


                                        By:
                                           -------------------------------------
                                                  OPTIONEE:  JON DIAMOND

                                        Address:
                                                --------------------------------


                                                --------------------------------




                                       6
<PAGE>

                             SPOUSAL ACKNOWLEDGMENT

            The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Corporation's
granting Optionee the right to acquire the Purchased Shares in accordance with
the terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound by all the terms of such Agreement, including (without limitation) the
right of the Corporation (or its assigns) to purchase any Purchased Shares in
which Optionee is not vested at time of his cessation of Service.

                                        By:
                                           -------------------------------------
                                                    OPTIONEE'S SPOUSE

                                        Address:
                                                --------------------------------


                                                --------------------------------



<PAGE>

                                   EXHIBIT I

                      FEDERAL INCOME TAX CONSEQUENCES AND
                           SECTION 83(b) TAX ELECTION

            FEDERAL INCOME TAX CONSEQUENCES AND SECTION 83(b) ELECTION FOR
EXERCISE OF NON-STATUTORY OPTION. If the Purchased Shares are acquired pursuant
to the exercise of a Non-Statutory Option, as specified in the Grant Notice,
then under Code Section 83, the excess of the fair market value of the Purchased
Shares on the date any forfeiture restrictions applicable to such shares lapse
over the Exercise Price paid for those shares will be reportable as ordinary
income on the lapse date. For this purpose, the term "forfeiture restrictions"
includes the right of the Corporation to repurchase the Purchased Shares
pursuant to the Repurchase Right. However, Optionee may elect under Code Section
83(b) to be taxed at the time the Purchased Shares are acquired, rather than
when and as such Purchased Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of the Agreement. Even if the fair market
value of the Purchased Shares on the date of the Agreement equals the Exercise
Price paid (and thus no tax is payable), the election must be made to avoid
adverse tax consequences in the future. The form for making this election is
attached as part of this exhibit. FAILURE TO MAKE THIS FILING WITHIN THE
APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY
INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS LAPSE.



                                      II-1
<PAGE>

                             SECTION 83(b) ELECTION

            This statement is being made under Section 83(b) of the Internal
Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

      The taxpayer who performed the services is:

      Name:
      Address:
      Taxpayer Ident. No.:

      The property with respect to which the election is being made is
_____________ shares of the common stock of ARTISTdirect, Inc.

      The property was issued on ______________, _____.

      The taxable year in which the election is being made is the calendar
          year _____.

      The property is subject to a repurchase right pursuant to which the issuer
          has the right to acquire the property at the original purchase price
          if for any reason taxpayer's service with the issuer terminates. The
          issuer's repurchase right will lapse in a series of annual
          installments over a three (3)-year period ending on ___________,
          200__.

      The fair market value at the time of transfer (determined without regard
          to any restriction other than a restriction which by its terms will
          never lapse) is $__________per share.

      The amount paid for such property is $___________ per share.

      A copy of this statement was furnished to ARTISTdirect, Inc. for whom
          taxpayer rendered the services underlying the transfer of property.

      This statement is executed on _________________, ______.




_____________________________________    _______________________________________
Spouse (if any)                          Taxpayer

This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Optionee must retain two (2) copies of the completed form for filing with his or
her federal and state tax returns for the current tax year and an additional
copy for his or her records.



<PAGE>

                                    APPENDIX

      The following definitions shall be in effect under the Agreement:

      A. AGREEMENT shall mean this Stock Purchase Agreement.

      B. BOARD shall mean the Corporation's Board of Directors.

      C. CAUSE shall have the meaning given such term in the Employment
Agreement.

      D. CODE shall mean the Internal Revenue Code of 1986, as amended.

      E. COMMON STOCK shall mean the Corporation's common stock.

      F. CORPORATE TRANSACTION shall mean any of the following transactions
effecting a change in control or ownership of the Corporation:

            (i) a stockholder-approved merger or consolidation in which the
      Corporation is merged into or consolidated with any other corporation or
      entity and immediately following consummation of the transaction the
      persons who held the Corporation's capital stock immediately prior to such
      transaction hold less than an aggregate of fifty percent (50%) of the
      total combined voting power of the surviving entity's outstanding
      securities, or

            (ii) a stockholder-approved sale, transfer or other disposition of
      all or substantially all of the Corporation's assets, or

            (iii) the acquisition, directly or indirectly, by any person or
      related group of persons (other than the Corporation or a person that
      directly or indirectly controls, is controlled by, or is under common
      control with, the Corporation), of beneficial ownership (within the
      meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
      of securities possessing more than fifty percent (50%) of the total
      combined voting power of the Corporation's outstanding securities pursuant
      to a tender or exchange offer made directly to the Corporation's
      stockholders.

      G. CORPORATION shall mean ARTISTdirect, Inc., a Delaware corporation, and
any surviving or successor entity to all or substantially all of the assets or
voting stock of ARTISTdirect, Inc.

      H. EMPLOYEE shall mean the Optionee in his capacity as an employee of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

      I. EMPLOYMENT AGREEMENT shall mean that certain Employment Agreement dated
as of September 29, 2003, between Optionee and the Corporation.



                                      A-1
<PAGE>

      J. EXERCISE PRICE shall have the meaning assigned to such term in
Paragraph A.1.

      K. GOOD REASON shall have the meaning given such term in the Employment
Agreement.

      L. GRANT DATE shall have the meaning assigned to such term in Paragraph
A.1.

      M. GRANT NOTICE shall mean the Notice of Grant of Stock Option pursuant to
which Optionee has been informed of the basic terms of the Option.

      N. INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service by reason of:

            (i) Optionee's involuntary dismissal or discharge by the Corporation
      for reasons other than (X) for Cause or (Y) by reason of death or
      Permanent Disability, or

            (ii) Optionee's voluntary resignation for Good Reason.

      O. 1933 ACT shall mean the Securities Act of 1933, as amended.

      P. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.

      Q. OPTION shall have the meaning assigned to such term in Paragraph A.1.

      R. OPTION AGREEMENT shall mean all agreements and other documents
evidencing the Option.

      S. OPTIONEE shall mean the person to whom the Option is granted.

      T. OWNER shall mean Optionee and all subsequent holders of the Purchased
Shares who derive their chain of ownership through a Permitted Transfer from
Optionee.

      U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

      V. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.

      W. PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer,



                                      A-2
<PAGE>

(ii) a transfer of title to the Purchased Shares effected pursuant to Optionee's
will or the laws of inheritance following Optionee's death, (iii) a transfer to
the Corporation in pledge as security for any purchase-money indebtedness
incurred by Optionee in connection with the acquisition of the Purchased Shares,
or (iv) a transfer of the Purchased Shares to a trust for the sole benefit of
Optionee or his immediately family.

      X. PRIOR PURCHASE AGREEMENT shall have the meaning assigned to such term
in Paragraph D.4.

      Y. PURCHASED SHARES shall have the meaning assigned to such term in
Paragraph A.1.

      Z. RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.

      AA. REPURCHASE RIGHT shall mean the right granted to the Corporation in
accordance with Article D.

      BB. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.

      CC. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

      DD. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his period of Service; provided, the Option Shares
are subject to accelerated vesting pursuant to Section D.6 of the Agreement.

      EE. UNVESTED SHARES shall have the meaning assigned to such term in
Paragraph D.1.



                                      A-3
<PAGE>
                                    EXHIBIT C

                        PROSPECTUS FOR STOCK OPTION GRANT