<PAGE>   1
                                                                   EXHIBIT 10.27


                                    [* * *] -- TEXT OMITTED AND FILED SEPARATELY
                                          CONFIDENTIAL TREATMENT REQUESTED UNDER
                           17 C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 240.24b-2


                              SETTLEMENT AGREEMENT


        This Settlement Agreement and Mutual Release (hereinafter "Settlement
Agreement") is entered into effective as of June 8, 2000 by and between MP3.COM,
INC. ("MP3" herein) on the one hand, and Warner Music Group Inc. ("Company"), on
the other hand, all of which are sometimes collectively referred to as the
"Parties" and is made with reference to the following:

1.      RECITALS:

        a)      Company's affiliates, Warner Bros. Records Inc., Atlantic
                Recording Corporation, Sire Records Group Inc. (now known as
                London-Sire Records Inc.) and Elektra Entertainment Group Inc.,
                are Plaintiffs (the "Company Plaintiffs") and MP3 is the
                defendant in the following litigation (the "Litigation"): UMG
                RECORDINGS, INC., SONY MUSIC ENTERTAINMENT INC., WARNER BROS.
                RECORDS INC., ARISTA RECORDS INC., ATLANTIC RECORDING
                CORPORATION, BMG MUSIC D/B/A THE RCA RECORDS LABEL, CAPITOL
                RECORDS, INC., ELEKTRA ENTERTAINMENT GROUP, INC., INTERSCOPE
                RECORDS, AND SIRE RECORDS GROUP INC., Plaintiffs, vs. MP3.COM,
                INC., Defendant.

        b)      Each of the Parties to this Settlement Agreement desire to
                permanently settle and resolve any and all claims, disputes,
                issues or matters that exist between them raised by or related
                to the Litigation as of the date of this Settlement Agreement
                and to dismiss the Litigation with prejudice .

        c)      NOW, THEREFORE, in consideration of the mutual promises,
                covenants and agreements set forth herein, and subject to the
                terms and conditions set forth below, the Parties desire to, and
                hereby do, resolve their differences and agree as follows:

2.      SETTLEMENT TERMS:

        a)      In consideration hereof, promptly upon execution hereof and the
                filing of the Dismissal With Prejudice of the Litigation as
                described hereinbelow MP3 will pay Company the sum of [* * *].

        b)      As further consideration, promptly upon execution hereof and the
                filing of the Dismissal With Prejudice of the Litigation as
                described hereinbelow, MP3 will [* * *]



                                       1
<PAGE>   2

                [* * *].

        c)      [* * *]

                i)      [* * *]

                ii)     [* * *]

                        a)      Sony Music Entertainment, Inc., - [* * *];

                        b)      BMG Entertainment - [* * *];

                        c)      UMG Recordings, Inc. - [* * *]; and

                        d)      EMI Records Group - [* * *].

                iii)    [* * *]



                                        2

<PAGE>   3

                        [* * *].

        d)      Intentionally deleted.

        e)      Concurrently herewith, Company and MP3 are entering into a
                License Agreement in the form annexed hereto as Exhibit A. As
                soon as reasonably possible (but in no event more than ninety
                (90) days following the date hereof), MP3 shall provide Company
                detailed information on a confidential basis setting forth [* *
                *]. MP3 shall not be in breach of this Agreement by reason of
                any inadvertent failure resulting in a deficiency with respect
                to the foregoing [* * *] provided such failure promptly is cured
                by MP3 following its receipt of written notice thereof from
                Company.

        f)      The parties agree that a press release with respect to this
                Settlement Agreement shall be issued within a reasonable period
                after execution hereof, the text of which shall be approved in
                writing by each party.

3.      RELEASES

        a)      Company Release. Company, on behalf of Company and entities
                controlled by Company and each of their heirs, agents,
                employees, representatives, attorneys, transferees,
                predecessors, successors and assigns (the "Company Releasors")
                does hereby irrevocably release, acquit and forever discharge
                MP3 and each of its respective heirs, agents, employees,
                representatives, partners, parents, subsidiaries, divisions,
                affiliates, officers, directors, attorneys, transferees,
                predecessors, successors, and assigns, jointly and severally
                (the "MP3 Releasees"), of and from any and all debts, suits,
                claims, actions, causes of action, controversies, demands,
                rights, damages, losses, expenses, costs, attorneys' fees,
                compensation, liabilities and obligations whatsoever, suspected
                or unsuspected, known or unknown, foreseen or unforeseen,
                arising at any time up to and including the date of this
                Settlement Agreement, (i) which Company Releasors have asserted
                or at any time



                                       3
<PAGE>   4

                heretofore could have asserted against the MP3 Releasees with
                respect to the subject matter of the Litigation  [* * *]
                (hereinafter "Claims"). "Claims" shall not include any claims
                with respect to which a Company Releasor, [* * *] is party to a
                written contract which requires that it secure the consent of an
                unrelated third party prior to its settlement; provided, the
                Company Releasors, Warner/Chappell Music, Inc. and the
                Warner/Chappell Affiliates hereby waive their separate right to
                retain their share of any compensation payable as a result of
                any such excluded claims and/or shall repay such share to MP3
                promptly upon receipt thereof. Company shall not include labels
                owned, distributed or controlled [* * *].

        b)      Statutory Waiver. With respect to the Claims, all rights under
                California Civil Code Section 1542 (and any other law of similar
                effect), are hereby expressly waived by the Parties, and each of
                them, notwithstanding any provision to the contrary. Section
                1542 provides as follows:

                        "A general release does not extend
                        to claims which the creditor does
                        not know or suspect to exist in his
                        favor at the time of executing the
                        Release, which if known by him must
                        have materially affected his
                        settlement with the debtor."

                The Parties, and each of them, and their representatives, heirs
                and assigns expressly waive and release any right or benefit
                which they have or may have under Section 1542 of the Civil Code
                of the State of California, to the fullest extent that they may
                waive all such rights and benefits pertaining to the matters
                released herein. It is the intention of the Parties, and each of
                them, through this Settlement Agreement, and with the advice of
                counsel, to fully, finally and forever settle and release all
                such matters, and all claims relative thereto, in furtherance of
                such intention.

        c)      Dismissal With Prejudice. Company concurrently shall execute and
                deliver to MP3 a Dismissal With Prejudice of the Litigation, in
                the form annexed hereto as Exhibit B.




                                       4
<PAGE>   5

4.      NOTICES

        a)      Any notice, demand, request, consent, approval, or communication
                that either Party desires or is required to give to the other
                Party is ordered to be addressed and served on or delivered to
                the other Party at the address set forth below. Any Party may
                change his/his/its address by notifying the other Parties of
                their change of address(es) in writing.

                i)      The addresses for MP3 are as follows:

                        MP3.com, Inc.
                        4790 Eastgate Mall
                        San Diego, CA 92121
                        Attn: General Counsel

                        With simultaneous copies to:

                        Gary Stiffelman, Esq.
                        Ziffren, Brittenham, Branca & Fischer
                        1801 Century Park West
                        Los Angeles, CA 90067

                ii)     The address for Company is as follows:

                                  Warner Music Group Inc.
                                  75 Rockefeller Plaza
                                  New York, NY 10019
                                  Attn:  General Counsel

5.      MISCELLANEOUS PROVISIONS

        a)      In order to carry out the terms and conditions of this
                Settlement Agreement, the Parties agree to promptly execute upon
                reasonable request any and all documents and instruments
                consistent herewith necessary to effectuate the terms of this
                Settlement Agreement.

        b)      By entering into this Settlement Agreement, no Party admits or
                acknowledges that they committed any wrongdoing on their part.


        c)      This Agreement shall be governed and construed in accordance
                with the laws of the State of New York applicable to agreements
                made and to be performed



                                       5
<PAGE>   6

                entirely within such State. The New York courts (State and
                Federal), will have exclusive jurisdiction over any
                controversies regarding this agreement; any action or other
                proceeding which involves such a controversy will be brought in
                those courts and not elsewhere. Nothing in this Agreement is
                intended to confer on any person not a party hereto any rights
                or remedies under this Agreement.

        d)      This Settlement Agreement is the entire agreement between the
                Parties with respect to the Claims or subject matter of this
                Settlement Agreement and supersedes all prior and
                contemporaneous oral and written agreements and discussions
                pertaining to the Claims or subject matter of this Settlement
                Agreement. This Settlement Agreement may be amended only by a
                written agreement executed by each of the Parties hereto.

        e)      No breach of any provision hereof can be waived unless in
                writing. Waiver of any one breach of any provision hereof shall
                not be deemed to be a waiver of any other breach of the same or
                any other provision hereof.

        f)      This Settlement Agreement shall be binding upon and inure to the
                benefit of the Parties hereto and his/his/its respective heirs,
                agents, employees, representatives, partners, parents,
                subsidiaries, divisions, affiliates, officers, directors,
                shareholders, investors, attorneys, transferors, transferees,
                predecessors, successors, trustees in bankruptcy, and assigns
                and each and every entity which now or ever was a division,
                parent, successor, predecessor, division, affiliate, officer,
                director, shareholder, investor, employee, attorney, transferor,
                transferee, or subsidiary for each Party and its respective
                legal successors and assigns.

        g)      The Parties represent and warrant that each of them have not
                assigned all or any portion of any claim pertaining to the
                Claims to any person or entity. In the event any claims are made
                by any third persons or entities based upon any purported
                assignment or any such liens or claims are asserted in
                connection with the Claims or proceeds of the Settlement
                Agreement, then the Party who has breached his representation or
                warranty contained herein agrees to indemnify and hold harmless
                the other Party from any said claims being made. [* * *]

        h)      In the event that any covenant, condition or other provision
                herein contained is held to be invalid, void or illegal by any
                court of competent jurisdiction, the same shall be deemed
                severable from the remainder of this Settlement Agreement and
                shall in no way affect, impair or invalidate any other



                                       6
<PAGE>   7

                covenant, condition or other provision herein contained. If such
                condition, covenant or other provisions shall be deemed invalid
                due to its scope or breadth, such covenant, condition or other
                provision shall be deemed valid to the extent of the scope or
                breadth permitted by law.

        i)      The Parties hereto, and each of them, represent and declare that
                in executing this Settlement Agreement, they rely solely upon
                their own judgment, belief and knowledge, and on the advice and
                recommendations of their own independently selected counsel,
                concerning the nature, extent and duration of their rights and
                claims and that they have not been influenced to any extent
                whatsoever in executing the same by any representations or
                statements covering any matters made by any of the Parties
                hereto or by any person representing them or any of them. The
                Parties acknowledge that no Party hereto nor any of their
                representatives have made any promise, representation or
                warranty whatsoever, written or oral, as any inducement to enter
                into this Settlement Agreement, except as expressly set forth in
                this Settlement Agreement.

        j)      The Parties hereto or responsible officer or representative
                thereof, and each of them, further represent and warrant that
                they have carefully read this Settlement Agreement and know and
                understand the contents hereof, and that they signed this
                Settlement Agreement freely and voluntarily. Each of the
                representatives executing this Settlement Agreement on behalf of
                their respective corporations or partnerships is empowered to do
                so and thereby binds his respective corporation or partnership.
                The Parties hereto acknowledge and agree that this Settlement
                Agreement shall be deemed to have been drafted jointly by all
                Parties hereto.

        k)      This Settlement Agreement may be executed in counterparts and
                when each Party has signed and delivered at least one such
                counterpart to each of the other Parties, each counterpart shall
                be deemed an original, and all counterparts taken together shall
                constitute one and the same agreement, which shall be binding
                and effective as to all Parties. This Settlement Agreement may
                be executed via facsimile signatures, which shall have the same
                force and effect as if they were original signatures to be
                followed by executed originals.


IN WITNESS WHEREOF, the Parties hereto have executed this Settlement Agreement
on the date(s) written beside his/his/its name, respectively.



                                          Warner Music Group Inc.




                                       7
<PAGE>   8





Dated:                                        By:   //signed//
       -------------------------                 -------------------------

                                             Its:
                                                 -------------------------


Dated:                                       MP3.com, Inc.
      -------------------------


                                             By:   //signed//
                                                 -------------------------
                                             Its:
                                                 -------------------------




                                       8
<PAGE>   9


              EXHIBIT A TO SETTLEMENT AGREEMENT - LICENSE AGREEMENT



                                  MP3.com, Inc.
                               4790 Eastgate Mall
                               San Diego, CA 92121

                                  June 8, 2000

Warner Music Group Inc.
75 Rockefeller Plaza
New York, NY 10019
Gentlepersons:

This letter, when and if fully executed, will set forth the basic terms of the
license agreement between ("Company" or "you", which terms are deemed to include
all of Company's Affiliates) and MP3.com, Inc. ("MP3", "us" or "we"), with
respect to your licensing certain rights to us on the following terms:

1.      DEFINITIONS:

        a)      [* * *]

        b)      "Affiliate": Any corporation or other person or entity
                controlled by a party or Person, as the case may be. Affiliates
                shall not include [* * *].

        c)      "Artist": A recording artist, record producer, or other third
                party entitled to a royalty or other participation in revenues
                derived from Company or its



<PAGE>   10

                Affiliate's exploitation of Company Recordings ("Record Revenue
                Participation"). [* * *].

        d)      "Beam It": [* * *].

        e)      "Company Album": [* * *].

        f)      "Company Master": [* * *].

        g)      "Company Recordings": [* * *].

        h)      "Company Shelf": [* * *].




                                      -2-
<PAGE>   11

                [* * *].

        i)      "Download" or "Downloading": [* * *].

        j)      [* * *]

        k)      "Instant Listen": [* * *].

        l)      "Internet": A medium consisting of wired or wireless electronic
                or electromagnetic networks (including without limitation, fiber
                optic, microwave, twisted-pair copper wires, coaxial cable,
                satellite, wireless transmission, cellular networks, and
                combinations thereof) and collections thereof now or hereafter
                existing, wherever, located, for the transmission from a distant
                location of digital data (e.g., text, information, graphics,
                audio, video, or combination of the foregoing), through the use
                of any protocols or standards now known or hereafter devised
                (including without limitation, Transmission Control
                Protocol/Internet Protocol ["TCP/IP"] and subsequent extensions
                or modifications thereof) from or to electronic devices (e.g.,
                computers [mainframe, desktop, laptop, handheld, etc.], set-top
                boxes, cable modems, handheld devices, cell phones, televisions,
                etc.) capable of transmitting or receiving digital data or
                digital information, irrespective of whether such networks are
                open or proprietary, public or private, or whether a fee is
                charged or a subscription or membership is required in order to
                access



                                      -3-
<PAGE>   12

                such networks. "Internet" also includes the computer network
                comprising inter-connected networks commonly referred to as the
                "Internet" and the "World Wide Web." [* * *].

        m)      "Locker": [* * *].

        n)      "Locker Owner": The Person who shall have established a
                particular Locker. A Locker Owner shall not be authorized to
                transfer, sell or otherwise assign ownership of such Person's
                Locker without Company's consent.

        o)      "MyMP3": [* * *].

        p)      "Person": Any individual, corporation, partnership or other
                legal entity.

        q)      "Record": Any and all forms of reproductions of audio-only
                recordings (e.g., Albums, singles, etc.), now or hereafter
                known, manufactured or distributed primarily for non-public use,
                including, without limitation, home use, school use, juke box
                use, or use in means of transportation including both physical
                and digitized reproductions. A DVD-audio is not included in the
                definition of a Record hereunder.

        r)      "Recording": every audio recording of an individual performance
                or medley, by any method and on any substance or material,
                whether now or hereafter known, which is used or useful in the
                recording, production and/or manufacture of Records.

        s)      "Stream": [* * *].

        t)      "Title List(s)": The unique set of Recordings, including Albums
                and individual master recordings or other copyrightable
                recordings, accessible from within an individual Locker.



                                      -4-
<PAGE>   13

2.      LICENSE:

        a)      Company hereby irrevocably licenses to MP3 the right to make any
                and all Company Recordings available for inclusion on Title
                Lists and to do only the following:

                i)      The right to make only that number of copies of Company
                        Recordings employing any compression technologies
                        selected by MP3 as may reasonably be needed in order to
                        create a database of recorded music which Locker Owners
                        can access only via the methods described herein.

                ii)     The right to use the names and tradenames of Company and
                        its Affiliates (as same appear on Company Recordings),
                        the titles of Company Albums and Company Masters, the
                        names and approved likenesses of any Artists or other
                        Persons rendering services or granting rights to Company
                        with respect to Company Recordings (it being understood
                        that any Album cover artwork utilized by Company and its
                        Affiliates in connection with Company Recordings other
                        than soundtrack album cover artwork shall be deemed
                        approved for purposes hereof), and any Album cover
                        artwork utilized by Company and its Affiliates in
                        connection with Company Recordings other than soundtrack
                        album cover artwork, all of the foregoing for
                        informational purposes as part of MyMP3, in any and all
                        Title Lists and Lockers. MP3 shall not have the right to
                        use any of said materials, without Company's reasonable
                        approval, in the promotion, marketing and advertising of
                        MyMP3 or MP3.

        b)      MP3 covenants and agrees that Company Recordings can be added to
                or inserted in an individual Locker only as follows:

                i)      Via MP3's "Instant Listen" system (or any equivalent
                        system established by MP3), or

                ii)     Via MP3's "Beam-it" system (or any equivalent system
                        established by MP3).

                iii)    [* * *]

        c)      [* * *]



                                      -5-
<PAGE>   14

        d)      [* * *]

        e)      It is agreed that if any Person can enhance that Person's speed
                and method of access to Recordings using any consumer
                electronics device, MP3 shall have the right to provide such
                enhancement through any means on a basis which [* * *].

        f)      It is agreed that no rights whatsoever to musical compositions
                are being conveyed herein and that MP3 separately shall secure
                any rights required in connection with the use of musical
                compositions in connection with MyMP3.

3.      EXCLUSIVITY: The rights granted to MP3 hereunder shall be non-exclusive.

4.      TERM AND TERRITORY:

        a)      The Territory shall be  [* * *]

        b)      The term of this license shall commence forthwith and shall
                continue until [* * *].

5.      CONSIDERATION: In consideration of this license, Company shall receive
        the following:

        a)      [* * *]






                                      -6-
<PAGE>   15

                [* * *].

        b)      [* * *].

        c)      It is agreed that revenues associated with a Company-owned or
                controlled Locker(s) shall be excluded in computing MP3's
                payment obligations hereunder.

        d)      [* * *]

6.      COMPANY SHELF:[* * *]




                                      -7-
<PAGE>   16


        [* * *].

7.      ACCOUNTINGS:

        a)      MP3 will compute the sums due Company under paragraphs 5(a),
                5(b) and 5(d) as of each March 31, June 30, September 30 and
                December 31 after the date hereof. Within forty-five (45) days
                after each calendar quarterly period, MP3 will send Company a
                statement covering sums due hereunder and shall concurrently pay
                Company any sums shown due thereunder.

        b)      MP3 will maintain books and records with respect to sums payable
                to Company hereunder. Company may, at its own expense no more
                than once per calendar year, examine and copy those books and
                records, as provided in this paragraph. Company may make such an
                examination for a particular statement within two (2) years
                after the date when Company receives the statement concerned.
                Company shall only have the right to institute suit with respect
                to a particular statement within three (3) years after Company's
                receipt thereof. Company shall be deemed to have received each
                statement hereunder when due unless MP3 receives notice of
                non-receipt from Company within 120 days thereafter. Company's
                failure to send such notice shall not affect its right to
                receive such statement (and, if applicable, payments due
                thereunder) after such 120-day period. Company may make those
                examinations only during MP3's usual business hours, and at the
                place where it keeps the books and records. Such books and
                records shall be kept at the MP3 office in San Diego,
                California, unless otherwise notified. Company will be required
                to notify MP3 at least ten (10) days before the date of



                                      -8-
<PAGE>   17
                planned examination. No audit shall exceed 30 consecutive days.
                If an audit reveals an underpayment which the parties agree or
                which is determined by a court of competent jurisdiction to be
                greater than 10% of the total amount payable throughout the
                applicable period of the audit, MP3 shall reimburse Company for
                its reasonable audit costs.

        c)      The statements referred to in paragraph 7(a) above shall provide
                Company information setting forth [* * *]. MP3 will work in good
                faith with Company to develop formats for MP3's accounting
                statements, including computer-sensible formats, which will
                assist Company in accounting to Artists with respect to the
                exploitation by MP3 of Company Recordings and incorporating the
                information directly into Company's royalty accounting systems.

8.      AUTHORITY TO CONTRACT: Each party represents and warrants to the other
        party that such party has the full legal right, power and all authority
        and approval required to enter into, execute and deliver this Agreement,
        to grant the rights and licenses herein granted and fully to perform its
        obligations hereunder. Company represents that no third party consent is
        required to grant to MP3 the rights and licenses herein granted by
        Company to MP3. Company will be responsible for payment of any sums due
        [* * *]. This Agreement has been duly authorized, executed and delivered
        by such party and constitutes the valid and binding obligation of such
        party enforceable in accordance with its terms, subject, as to
        enforcement, to applicable bankruptcy, insolvency, reorganization,
        moratorium or other similar laws affecting creditors' rights generally.

9.      INDEMNITY: Each party hereby agrees to hold harmless and indemnify the
        other party from any and all damages, liabilities, costs, losses and
        expenses (including costs and reasonable attorneys' fees) arising out of
        or connected with any claim, demand or action (collectively referred to
        as a "Claim") which:

        a)      If proven, would constitute a breach of any of the warranties,
                representations or covenants made by the indemnifying party in
                this Agreement, and

        b)      is reduced to a final, adverse judgment or settled with the
                indemnified party's consent, which consent shall not
                unreasonably be withheld. The indemnifying party agrees to
                reimburse the indemnified party, on demand, for any payment made
                by the indemnified party at any time with respect to any such
                damage, liability, cost, loss or expense to which the foregoing
                indemnity applies.

10.     NOTICES: All notices to be given hereunder shall be sent to the
        applicable address set forth on page 1 hereof or at such other address
        as shall be designated in



                                      -9-
<PAGE>   18

        writing from time to time by the party receiving notice. Company shall
        send a copy of each such notice to MP3 to Ziffren, Brittenham, Branca &
        Fischer, LLP., 1801 Century Park West, Los Angeles, California 90067,
        Attn: Gary Stiffelman, Esq. MP3 shall send a copy of each notice to
        Company to the attention of its General Counsel at the address set forth
        above. All notices shall be in writing and shall either be served by
        personal delivery, mail or telefax, all charges prepaid. Except as
        otherwise provided herein, such notices shall be deemed given when
        personally delivered, mailed or telefaxed, all charges prepaid, except
        that notices of change of address shall be effective only after the
        actual receipt thereof.

11.     MISCELLANEOUS:

        a)      This Agreement sets forth the entire understanding of the
                parties hereto relating to the subject matter hereof and
                supersedes all prior and contemporaneous agreements and
                understandings, whether oral or written. This Agreement may be
                amended, modified, superseded, canceled, renewed or extended,
                and the terms hereof may be waived, only by a written instrument
                signed by the parties hereto or, in the case of a waiver, by the
                party waiving compliance.

        b)      Each party shall have the right to assign this Agreement and any
                or all of its rights and obligations hereunder only to a Person
                owning or acquiring all or substantially all of its stock or
                assets. No such assignments shall relieve the assignor of any of
                its obligations hereunder.

        c)      This Agreement shall be binding upon and inure to the benefit of
                the parties, their permitted assigns and the respective
                successors and legal representatives of the foregoing.

        d)      This Agreement shall be governed and construed in accordance
                with the laws of the State of New York applicable to agreements
                made and to be performed entirely within such State. Subject to
                paragraph 12(a) and (b), the New York courts (State and
                Federal), will have exclusive jurisdiction over any
                controversies regarding this Agreement; any action or other
                proceeding which involves such a controversy will be brought in
                those courts and not elsewhere. Except as is specifically
                provided herein, nothing in this Agreement is intended to confer
                on any person not a party hereto any rights or remedies under
                this Agreement.

        e)      Neither party shall be deemed to be in breach of any of its
                obligations hereunder unless and until the other party shall
                have given specific written notice by certified or registered
                mail, return receipt requested, describing in detail the breach
                and the allegedly breaching party shall have failed to cure that
                breach within thirty (30) days (ten (10) days with respect to
                payment of monies) after its receipt of that written notice. If
                MP3 fails to tender payment of a specific sum which MP3
                acknowledges in writing is due and payable to Company (it being
                acknowledged that an accounting statement prepared and


                                      -10-
<PAGE>   19

                sent to Company shall constitute such an acknowledgment in
                writing) within ten (10) business days after written demand
                therefor from Company, Company shall have the right to terminate
                the term hereof by written notice at any time prior to the date
                payment of such sum is tendered.

12.     [* * *]


13.     PRESS RELEASE:The parties agree that a press release with respect to
        this Agreement shall be issued within a reasonable period after
        execution hereof, the text of which shall be approved in writing by each
        party.

        Please indicate your acceptance of the above terms by signing in the
space indicated below.



                                           Very truly yours,

                                           MP3.COM, INC.




                                      -11-
<PAGE>   20


                                              By:  //signed//
                                                 -------------------------

AGREED AND ACCEPTED:

Warner Music Group Inc.


By:  //signed//
   -------------------------



                                      -12-
<PAGE>   21

                         EXHIBIT A TO LICENSE AGREEMENT

                                     [* * *]



<PAGE>   22

                         EXHIBIT B TO LICENSE AGREEMENT

                                     [* * *]


<PAGE>   23

          EXHIBIT B TO SETTTLEMENT AGREEMENT - DISMISSAL WITH PREJUDICE






<PAGE>   24

                                   EXHIBIT B


UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

__________________________________


UMG RECORDINGS, INC., SONY
MUSIC ENTERTAINMENT INC.,
WARNER BROS. RECORDS INC.,
ARISTA RECORDS INC., ATLANTIC
RECORDING CORPORATION, BMG                      STIPULATION AND ORDER
MUSIC d/b/a THE RCA RECORDS                     OF DISCONTINUANCE
LABEL, CAPITOL RECORDS, INC.,                   WITH PREJUDICE
ELEKTRA ENTERTAINMENT
GROUP, INC., INTERSCOPE
RECORDS, and SIRE RECORDS                       00 Civ. 0472 (JSR)
GROUP INC.,


             Plaintiffs,

    vs.

MP3.COM, INC.,


             Defendant.

__________________________________






                                       1.
<PAGE>   25
     IT IS HEREBY STIPULATED AND AGREED, by and among the undersigned counsel
for Plaintiffs Warner Bros. Records Inc., Atlantic Recording Corporation,
Elektra Entertainment Group, Inc., and London-Sire Records Inc. (formerly Sire
Records Group Inc.) only (the "Settling Plaintiffs"), and Defendant MP3.com,
Inc. that, pursuant to said parties' settlement agreement, the Complaint in the
above-captioned action is hereby dismissed with prejudice pursuant to Fed. R.
Civ. P. 41(a)(1)(ii) as to the claims of the Settling Plaintiffs.

June __, 2000                           CRAVATH, SWAINE & MOORE


                                        ----------------------------------------
                                        KATHERINE B. FORREST (KF 1979)
                                        Worldwide Plaza
                                        825 Eighth Avenue
                                        New York, New York 10019
                                        (212) 715-1000

                                        Attorneys for Plaintiffs
                                        Warner Bros. Records Inc.,
                                        Atlantic Recording Corporation,
                                        Elektra Entertainment Group, Inc., and
                                        Sire Records Group, Inc.

                                        COOLEY GODWARD LLP


                                        ----------------------------------------
                                        MICHAEL G. RHODES (MR 0426)
                                        4365 Executive Drive, Suite 1100
                                        San Diego, California 92121
                                        (858) 550-6000

                                        Attorneys for Defendant MP3.com, Inc.

IT IS SO ORDERED.

Dated: June __, 2000


-------------------------------------
           Hon. Jed Rakoff
               U.S.D.J.


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