<PAGE>

                                                                  Exhibit 10.19

                             EMPLOYMENT AGREEMENT

   This EMPLOYMENT AGREEMENT is entered into as of March 31, 2001 by and
between Valley Media, Inc., a Delaware corporation (the "Company") and Peter
R. Berger ("Executive").

   For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

                             ARTICLE 1. EMPLOYMENT

   1.1. Employment. The Company hereby employs Executive, and Executive agrees
to be employed by the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof for an initial term of
one year, automatically extended from month to month thereafter, unless
terminated as provided in Section 1.4 ("Term" and the "Employment Period").

   1.2. Positions and Duties.

   (a) During the Employment Period, Executive shall serve as Chief Executive
Officer (CEO) at its headquarters, and under the supervision and direction of
the Company's Board of Directors (the "Board").

   (b) Executive shall carry out the customary functions of his position as
determined by the Company, and perform such normal tasks and responsibilities
customary for the CEOs of companies of similar size.

   (c) Executive shall devote his best efforts and full business time and
attention (except for permitted vacation periods and periods of illness or
other incapacity as provided for herein) to the business and affairs of the
Company and its subsidiaries. Executive shall perform the duties and
responsibilities of his position to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.

   (d) Executive will provide his services, when requested, necessary or
appropriate, to negotiate with prospective investors, vendors, employees,
strategic partners and service providers.

   1.3. Salary, Bonus, Options and Benefits.

   (a) During the Employment Period, Executive's base salary (the "Base
Salary") shall initially be $300,000.00 per annum, which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices as in place from time to time. Any adjustment in Executive's
compensation shall be determined by the Compensation Committee of the Board
(the "Compensation Committee") in its sole discretion. The Compensation
Committee shall determine an appropriate bonus for Executive's first full year
of employment based upon Company's profits in excess of approximately One
Million Dollars ($1,000,000.00) for fiscal year 2002, as detailed in Company's
annual budget. Executive's bonuses for subsequent years of employment will be
negotiated in advance of each year between the Compensation Committee and
Executive, based upon Company's profitability, industry standards, Company's
attainment of its business objectives, and amounts payable to other executive
personnel of Company.

   (b) Subject to approval of the Company's Board of Directors, Executive will
be awarded options, in a combination of Incentive Stock Options (ISOs) under
Section 422 of the Internal Revenue Code of 1986 and non-qualified stock
options, to acquire up to 400,000 shares of Company's common stock at an
option exercise price equal to the market closing price on the date of grant.
To the extent that options are available on each option vesting date for grant
under Company's ISO Plan, those options shall be granted under that Plan, and
the remaining options shall be granted on each vesting date as non-qualified
stock options.

   All non-qualified stock options shall expire if not exercised on or before
April 30, 2011, except as provided in Section 1.4(b). All stock to be issued
to Executive shall be restricted stock, salable and tradeable only in limited
circumstances as provided in Rules 144 and 701 under the Securities And
Exchange Act of 1933.

                                       1
<PAGE>

   ISOs granted hereunder shall be subject to the terms and conditions of
Company's ISO Plan, any amendments thereto, and the Company's corresponding
grant to Executive, to the extent not inconsistent herewith.

   All options granted to Executive shall vest and be granted at the following
times and in the following amounts:

     (i) Options to acquire fifty thousand (50,000) shares shall vest and be
  granted on the first day of the Employment Period; and

     (ii) Options to acquire eight thousand three hundred thirty-three
  (8,333) shares shall vest and be granted on the first day of the calendar
  month following the date that Executive shall have completed six (6) months
  of employment, and on the first day of each calendar month thereafter; and

     (iii) Notwithstanding the foregoing schedule, in the event that (x) the
  Company shall sell substantially all of its operating assets, (y) the
  Company is a party to a corporate merger or acquisition in which the
  Company is not the surviving corporation, or (z) beneficial ownership of a
  majority of Corporation's issued and outstanding stock changes in a single
  transaction or a series of related transactions, then if closing of such
  event (x), (y), or (z) occurs within one (1) year of the start of
  Executive's employment, options to acquire one hundred thousand shares of
  stock (reduced by the number of shares to be acquired upon exercise of
  previously granted options) shall vest and be granted upon such closing;
  or, if closing of such event (x), (y), or (z) occurs more than one (1) year
  after the start of Executive's employment, all options to be granted to
  Executive hereunder, if not previously vested and granted, shall vest and
  be granted upon such closing.

   (c) During the Employment Period, Executive shall be entitled to
participate in all of the Company's employee benefit programs for which senior
executive employees of the Company are generally eligible as in effect from
time to time. Executive shall be entitled to three weeks of paid vacation per
year in accordance with the Company's policies. Any payments of benefits
payable to Executive hereunder in respect of any calendar year during which
Executive is employed by the Company for less than the entire such year shall,
unless otherwise provided in the applicable plan or arrangement or required by
applicable law, be prorated in accordance with the number of days in such
calendar year during which Executive is employed.

   (d) All payments of compensation hereunder shall be subject to federal,
state and other withholding taxes as required by applicable law and the
Company's general payroll policies as in effect from time to time.

   1.4. Term.

   (a) The commitment by Executive to be employed under this Employment
Agreement and the Company's commitment to employ Executive subject to Section
1 commences with the execution of this Agreement.

   (b) The Employment Period shall end on the first anniversary of the
commencement date (the "Initial Employment Period"), subject to earlier
termination (1) by reason of Executive's death or disability (as defined
below), (2) for Cause (as defined herein), (3) without Cause, or (4) by
written resignation of the Executive. The commencement of the mutual
commitment to employ and to be employed shall be the date of the execution of
this Employment Agreement, subject to the expiration provisions stated above.

   (c) If the Employment Period is terminated by reason of Executive's
termination without Cause, and such termination occurs during the first year
of employment, Executive shall not be entitled to any compensation with
respect to such termination, except that Executive shall be entitled, for
thirty (30) days following that termination, to exercise any previously
unexercised stock options Executive shall hold in vested status as of the date
of termination. Any options not so exercised shall lapse.

   (d) Except as expressly set forth in this Section 1.4, all other
compensation and other benefits shall cease to accrue upon termination of
employment.

                                       2
<PAGE>

   1.5. Automatic Renewal; Renewal Options. Notwithstanding the expiry of the
Initial Employment Period, the employment Period shall automatically renew
from month to month unless terminated by Company or Executive upon ninety (90)
days written notice prior to such renewal period, or terminated by the Company
at any time during any renewal term with or without cause. In the event of
automatic renewal, the stock options granted to Executive shall continue to
vest in Executive for shares at the rate of 8,333 shares per month, subject to
the overall limitation of 400,000 shares, and subject to accelerated vesting
as provided in Section 1.3(b)(iii) above.

   1.6. Confidential Information; Company Property. Executive acknowledges
that the information, observations and data obtained by him while employed by
the Company and its subsidiaries concerning the product, efforts, business and
affairs of the Company, its subsidiaries and any predecessor to the business
of the Company that are not generally available to the public other than as a
result of breach of this Agreement by Executive ("Confidential Information")
are the property of the Company and its subsidiaries. Executive agrees that he
shall not disclose to any unauthorized person or use for his own account any
Confidential Information without the prior written consent of the Company
unless, and in such case only to the extent that, such matters become
generally know to and available for use by the public other than as a result
of Executive's acts or omissions to act. Notwithstanding the foregoing, in the
event Executive becomes legally compelled to disclose Confidential Information
pursuant to judicial or administrative subpoena or process or other legal
obligation, Executive may make such disclosure only to the extent required, in
the opinion of counsel for Executive, to comply with such subpoena, process or
other obligation. Executive shall, as promptly as possible and in any event
prior to the making of such disclosure, notify the Company of any such
subpoena, process or obligation and shall cooperate with the Company in
seeking a protective order or other means of protecting the confidentiality of
the Company Information. Executive shall deliver to the Company at the
termination of the Employment Period, or at any time the Company may
reasonably request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies hereof)
containing, relating to, or derived from the Confidential Information or the
business of the Company or its subsidiaries which he may then possess or have
under his control. Executive agrees that he will not retain after the
termination of the Employment Period any copies of any Confidential
Information including, without limitation, any software, documents or other
materials originating with and/or belonging to the Company or any subsidiary
of the Company.

   1.7. Non-Compete; Non-Solicitation.

   (a) Executive acknowledges that in the course of his employment with the
Company he will become familiar with the Company's trade secrets and with
other confidential information concerning the Company and its predecessors and
that his services have been and will be of special, unique and extraordinary
value to the Company. Executive agrees that, during the period in which
Executive is receiving compensation hereunder (the "Non-Compete Period"), he
shall not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any manner engage in any business in the
United States that is engaged in the sale and/or distribution of audio or
video recordings, irrespective of format. Nothing herein shall prohibit
Executive from being a passive owner of not more than 1% of the outstanding
stock of another corporation, so long as Executive has no active participation
in the management or the business of such corporation. Executive acknowledges
that the Company plans to rapidly expand its business and conduct such
business throughout the United States and ultimately throughout the world.

   (b) Executive shall not directly or indirectly (1) induce or attempt to
induce any employee of the Company or any subsidiary of the Company to leave
the employ of the Company or such subsidiary, or in any way interfere with the
relationship between the Company or any such subsidiary and any employee
thereof; (2) induce or attempt to induce any customer, supplier, licensee or
other business relationship of the Company or any subsidiary of the Company to
cease doing business with the Company or such subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee
or business relationship and the Company or any such subsidiary; or (3) make
an oral or written disparaging statement, comment or remark about the Company
or any of its subsidiaries to any employee, customer, supplier, licensee or
other business relationship of the Company or any of its subsidiaries or to or
for the intended use of any member of the press.

                                       3
<PAGE>

   1.8. Employment-At-Will. This Agreement constitutes employment-at-will and
that notwithstanding (i) any general or specific policies (whether written or
oral) of the Company relating to the employment or termination of its
employees, (ii) any statements made to Executive, whether made orally or
contained in any document, pertaining to Employee's relationship with the
Company, or (iii) assignment of Cause by the Company, the Company reserves the
right to terminate the employment of Executive by the Company in which event
Executive's sole remedy shall be to receive certain payments and other
benefits upon the terms and subject to the conditions provided for herein,
from the date of termination to the date of the end of the Employment Period,
as extended.

   1.9. Resignations upon Termination. Upon termination of the Executive,
Executive shall resign from all corporate offices and directorships, if any,
then held with the Company or any of its subsidiaries or other affiliates.

                   ARTICLE 2. REPRESENTATIONS AND WARRANTIES

   2.1. Representations and Warranties of Executive. Executive represents and
warrants to the Company that:

   (a) this Agreement constitutes the legal, valid and binding obligation of
Executive, enforceable in accordance with the terms, and the execution,
delivery and performance of this Agreement by Executive does not and will not
conflict with, violate or cause a breach of or default under any agreement,
contract or instrument, order, judgment or decree to which Executive is a
party or by which he is bound, and

   (b) Executive is not a party to or bound by any employment agreement or
non-compete agreement with any other person or entity.

   2.2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Executive that the execution, delivery and
performance of this Agreement by the Company does not and will not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Company is a party or by which
it is bound.

                            ARTICLE 3. DEFINITIONS

   As used in this Agreement, the following terms shall have the definitions
set forth below:

   (a) For purposes of the foregoing, "cause" shall mean (1) a material breach
by the Executive of the Executive's obligations of confidentiality or loyalty;
(2) the Executive's willful and repeated failure to comply with the lawful
directives of the Board of Directors of the Company; (3) negligence or willful
misconduct by the Executive in the performance of the Executive's duties to
the Company; (4) the commission by the Executive of an act (including, but not
limited to, a felony or a crime involving moral turpitude) causing material
harm to the standing and reputation of the Company, as determined in good
faith by the Board; (5) misappropriation, breach of trust or fraudulent
conduct by the Executive with respect to the assets or operations of the
Company or any of its subsidiaries; (6) the continued use by the Executive of
alcohol or drugs to an extent that, in the good faith determination of the
Board, materially interferes with the performance by the Executive of the
Executive employment responsibilities; (7) the repeated threat by the
Executive to cause, or the actual occurrence of, damage to the relations of
the Company or any of its subsidiaries with customers, suppliers, lenders,
advisors or employees which damage is materially adverse to the business or
operations of the Company or any of its subsidiaries; or (8) continued
unauthorized absence from work. Termination without cause shall not include
termination by voluntary resignation, death or disability, and no severance
amounts shall be payable upon the occurrence of any of the foregoing.

                                       4
<PAGE>

   (b) "Disability" shall mean Executive's inability by reason of physical or
mental condition, to substantially perform his normal duties hereunder for one
(1) month or more during any twelve (12) month period determined in good faith
by the Board.

   (c) "Subsidiary" of an entity shall mean any corporation or other business
organization of which the securities having majority of the normal voting
power in electing the board of directors or similar governing body entity are,
at the time of determination, owned by such entity directly or indirectly
through one or more subsidiaries.

                         ARTICLE 4. GENERAL PROVISIONS

   4.1. Enforcement. It is the express intention of the parties that this
Agreement be enforced to the fullest extent permitted by applicable law in
order to give full effect to the agreements reached herein. Accordingly, if at
the time of enforcement of Sections 1.6 or 1.7, a court holds that the
restrictions stated herein are unreasonable under the circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area. Because Executive's services are unique and
because Executive has access to Confidential Information, the parties hereto
agree that money damages would be an inadequate remedy for any breach of this
Agreement. In the event of a breach or threatened breach of this Agreement,
the Company, its subsidiaries and their respective successors or assigns may,
in addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violation of, the provisions
hereof (without posting a bond or other security).

   4.2. Survival. Sections 1.6 and 1.7 and this Article 4 shall survive and
continue in full force and effect in accordance with their terms
notwithstanding any termination of employment.

   4.3. Notices. All notices or other communication to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and
will be deemed to have been given when delivered personally, one (1) business
day following when sent via a nationally recognized overnight courier, or when
sent via facsimile confirmed in writing to the recipient. such notices and
other communications will be sent to the addresses indicated below:

   To the Company:

    Valley Media, Inc.
    1280 Santa Anita Court
    Woodland, California 95776

   To Executive:

    Peter R. Berger
    1543 Portola Rd.
    Woodside, California 94062

   4.4. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

   4.5. Entire Agreement. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.

                                       5
<PAGE>

   4.6. Amendments and Waivers. Any provision of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive.

   4.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

   4.8. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument.

   4.9. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or of any term or provision hereof.

   4.10. Conflict. In the event of any conflict between the provisions of this
Agreement and the policies and practices of the Company, the provisions of
this Agreement shall govern.

   4.11. Negotiation of Agreement. Each of the parties acknowledge that it has
been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it
has executed the same with consent and upon the advice of said independent
counsel. Each party of its counsel cooperated in the drafting and preparation
of this Agreement and the documents referred to herein, and any and all drafts
relating thereto shall be deemed the work product of the parties and may not
be construed against any party by reason of its preparation. Accordingly, any
rule of law, or any legal decision that would require interpretation of any
ambiguities in this Agreement against the part that drafted it, is of no
application and is hereby expressly waived.

   4.12. Parties in Interest; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted successors, assigns, heirs, and/or personal representatives, except
that neither this Agreement nor any interest herein shall be assigned or
assignable by operation of law or otherwise, by Executive without the prior
written consent of the Company, which such consent the Company may grant or
withhold in its sole discretion. The Company may, without the consent of
Executive, assign this Agreement or any interest herein, by operation of law
or otherwise, to (i) any successor to all or substantially all of its stock,
assets or business by dissolution, merger, consolidation, transfer or assets,
or otherwise, or (ii) any direct or indirect subsidiary, affiliate or division
of the Company or of any such successor referred in (a) hereof. Nothing in
this Agreement, expressed or implied, is intended to confer on any person
other than the parties and their respective successors and permitted assigns
any rights or remedies under or by reason of this Agreement.

   4.13. Dispute Resolution Process. The parties hereby agree that, in order
to obtain prompt and expeditious resolution of any disputes under this
Agreement, each claim, dispute or controversy of whatever nature, arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement (or any other agreement contemplated by or related to
this Agreement or any other agreement between the Company and Executive),
including without limitation, any claim based on contract, tort or statute, or
the arbitrability of any claim hereunder (a "Claim"), (but excluding actions
for injunctive relief for violations of Section 1.6 or 1.7 which may be
brought in any court having jurisdiction), shall be settled at the request of
any part of this Agreement, by final and binding arbitration conducted in
Sacramento, California.

   4.14. Full Understanding. Executive represents and agrees that he fully
understands his right to discuss all aspects of this Agreement with his
private attorney, and that to the extent, if any, that he desired, he availed
himself of such right. Executive further represents that he has carefully read
and fully understands all of the provisions of this Agreement (including the
non-compete provisions of Section 1.7), that he is competent to execute this
Agreement, that his agreement to execute this Agreement has not been obtained
by any duress and that he freely and voluntarily enters into it, and that he
has read this document in its entirety and fully understands the meaning,
intent and consequences of this document.

                                       6
<PAGE>

   IN WITNESS WHEREOF, this Agreement has been signed and sealed the day first
above written.

COMPANY:

Valley Media, Inc.


By: _________________________________
         /s/ Barnet J. Cohen              Date: March 31, 2001
           Barnet J. Cohen

        Chairman of the Board

                                          Date: March 31, 2001
EXECUTIVE:

By: _________________________________
         /s/ Peter R. Berger
           Peter R. Berger
              Executive


                                       7