EXHIBIT
10.39



















May 13,
2008





Joan
Walsh


124
Romain Street


San
Francisco, CA 94114





Re:  Employment
Agreement


Dear
Joan:





This
letter agreement  (this “Agreement”) sets out the terms of your
continuing employment as Editor-in-Chief with Salon Media Group, Inc. (the
“Company”).





You will
be paid a Base Salary, effective June 1, 2008, of $9,583.33 semi-monthly
($230,000 on an annualized basis), less applicable tax and other withholdings in
accordance with the Company’s normal payroll procedures.  You are also
eligible to participate to participate in various Company fringe benefit plans,
including group health insurance, 401(k), and vacation programs.





You will
be entitled to a Bonus Plan for Fiscal Year 2009 (April 1, 2008 through March
31, 2009) based on a target of $150,000, per the attached schedule. This Plan
has been approved by the Compensation Committee of the Board of Directors.
Amounts earned under the plan are payable in cash or stock, at the sole
discretion of the Company.  Amounts paid in stock will be 125% of the
cash value.





You will
be granted 125,000 stock options to be issued and priced on the date approved at
the next scheduled Board meeting in June, 2008, provided there are sufficient
shares remaining in the option pool under the current plan. If not, the Board
will consider revising the pool, subject to shareholder approval, to allow for
this award. These options will vest as follows: 25% on the first anniversary of
the grant date; 1/36 of the remaining options monthly over the remaining 36
months, and will otherwise be subject to the terms of the Company’s option plan
then in effect.





Your
employment with the Company is “at will”; it is for no specified term, and may
be terminated by you or the Company at any time, with or without cause, upon 30
days advance notice.  In the event  of a termination of your
employment by the Company for a reason other than “Cause” (as defined below),
your death or your “Disability” (as defined below), or a termination of your
employment by you for a “Good Reason” (as defined below), provided that you
execute and deliver a full general release of all known and unknown claims that
you may then have against the Company arising out of or any way related to your
employment or termination of employment with the Company, you will be entitled
to receive the following: (i) a “Severance Payment” in an amount equal to twelve
months of your then current Base Salary, less applicable withholdings, payable
in accordance with the Company’s regular payroll cycle and in equal installments
over a twelve month period (the “Severance Period”) commencing either
immediately following the date of such termination of employment or a later date
as you and the Company may agree is necessary or desirable; (ii) if you are
covered under the Company’s group health plan as of the date of termination of
your employment and as a result you suffer a loss of benefits under such group
plan, and you timely elect to continue group health benefits under applicable
law (COBRA), the Company will reimburse you for any COBRA premiums you pay for
COBRA coverage for the period from the date of termination of employment until
the earlier of (A) the date on which you first become covered under another
employer’s group plan, or (B) the date that is twelve months after the date of
termination of your employment (the COBRA Payments); (iii) an amount equal to
one half of the bonus that you would have earned  for the then current
fiscal year under your then applicable bonus plan if the Company’s then current
fiscal year were deemed ended (and you were deemed employed on but not after)
the date of such termination and (iv) if such a termination of employment
occurs, 100% of the then outstanding stock options held by you shall be fully
vested and exercisable as of the date of termination of your
employment.








For the
purposes of this Agreement, “Cause” shall mean the occurrence of one or more of
the following: (1) your theft, dishonesty, willful misconduct, breach of
fiduciary duty for personal profit, or falsification of any Company documents or
records; (2) your material failure to abide by the Company’s code of conduct or
other policies (including, without limitation, policies relating to
confidentiality and reasonable workplace conduct); (3) your unauthorized use,
misappropriation, destruction or diversion of any tangible or intangible asset
or corporate opportunity of the Company (including, without limitation, your
willful improper use or disclosure of the Company’s confidential or proprietary
information); (4) any intentional act by you which  has a material
detrimental effect on the Company’s reputation or business; (5) your repeated
failure or inability to perform any reasonable assigned duties after written
notice from the Company of, and a reasonable opportunity to cure, such failure
or inability; or (6) your conviction (including any plea of guilty or nolo
contendere) of any criminal act involving fraud, dishonesty, misappropriation or
moral turpitude, or which impairs your ability to perform your duties with the
Company.





For the
purposes of this Agreement, “Good Reason” shall mean the occurrence of one or
more of the following without your consent:





(a)
            A
      material and adverse change in your duties or
      responsibilities;


(b)
            The
      Company’s failure to pay your Base Salary or bonus when
    due;


(c)
            The
      Company’s failure to grant you the stock options described
      above;


(d)
            A
      relocation of your principal place of employment by more than 50 miles
      from your principal place of employment; or(e)
            The
      willful violation by the Company of any of its material obligations
      hereunder,







provided,
that in each case Good Reason shall only exist if you have provided the Company
with prompt written notice of your view that a Good Reason has occurred and your
intention to resign for Good Reason, and the Company does not within 30 days
following receipt of such notice cure the adverse effect of the event that you
have asserted to be Good Reason for termination.





For
purposes of this Agreement, “Disability” shall mean an illness, injury or other
incapacitating condition as a result of which you are substantially unable to
perform the services required to be performed under this letter agreement, with
or without reasonable accommodation, for (i) one hundred twenty-five (125)
consecutive days (or longer if such period is then required by law); or (ii) a
period or periods aggregating more than one hundred eighty (180) days (or longer
if such period is then required by law) in any period of twelve (12) consecutive
months.





In the
event of a “Change in Control” (as defined below) all the shares subject to then
outstanding options held by you shall be fully vested and
exercisable.








For the
purposes of this Agreement, “Change of Control” is defined as any one of the
following occurrences:





a)
            Any
      “person” as such term is used in Sections 13(d) and 14(d) of the
      Securities Exchange Act of 1934 (the “Act”)), other than a trustee or
      other fiduciary holding securities of the Company under an employee
      benefit plan of the Company, becomes the “beneficial owner” (as defined in
      Rule 13d-3 promulgated under the Act), directly or indirectly, of the
      securities of Company representing more than 50% of (A) the outstanding
      shares of common stock of Company or (B) the combined voting power of the
      Company’s then-outstanding securities;
or


b)
            The
      sale or disposition of all or substantially all of Company’s assets (or
      any transaction having similar effect is consummated);
  or


c)
            Company
      is party to a merger or consolidation that results in the holders of
      voting securities of Company outstanding immediately prior thereto failing
      to continue to represent (either by remaining outstanding or by being
      converted into voting securities of the surviving entity) more than 50% of
      the combined voting power of the voting securities of Company or such
      surviving entity outstanding immediately after such merger or
      consolidation; or


d)
            The
      dissolution or liquidation of
Company.





The
Company and you hereby agree that all controversies, claims or disputes arising
out of or relating to this Agreement, your employment and/or the termination of
your employment shall be settled by binding arbitration.  The costs of
the arbitration shall be borne by the losing party.





This
Agreement and the non-disclosure and stock option agreements referred to above
constitute the entire agreement between you and the Company regarding the terms
and conditions of your employment with the Company, and they supersede all
prior  negotiations, representations or agreements between you and the
Company.  The provisions of the Agreement regarding “at will”
employment may only be modified by a document signed by you and an authorized
representative of the Company.





Joan, we
look forward to continuing to work with you at the Company.  Please
sign and date this Agreement on the spaces provided below to acknowledge your
acceptance of its terms.





Sincerely,





Salon
Media Group, Inc.





/s/
Norman Blashka


By Norman
Blashka, EVP and CFO





Agreed
and Accepted:




/s/ Joan Walsh

              Joan
      Walsh
            May 13, 2008

              Date