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                                                                   EXHIBIT 10.38


                                                                        12.10.99



                          STRATEGIC MARKETING AGREEMENT

         THIS STRATEGIC MARKETING AGREEMENT (this "Agreement"), dated as of
December 20, 1999, is being entered into by and between Warner Music Group Inc.,
a Delaware corporation ("Group") and ARTISTdirect, Inc., a Delaware corporation
("Company"), in light of the following:

         Whereas, as of the date hereof, Group (together with its Affiliates) is
a significant company in the music industry;

         Whereas, there are synergies between Group's business and that of
Company;

         Whereas, Time Warner Inc. (of which Group is an Affiliate) has become a
significant equity owner in Company, and

         Whereas, in connection with the foregoing, Group and Company deem it to
be in their respective best interests to set forth certain understandings
between them with respect to strategic marketing and other commitments which
each believes will advantage its business.

         NOW, THEREFORE, in consideration of the premises, mutual covenants and
obligations hereinafter set forth, Company and Group hereby agree as follows.

         1. Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings:

                  (a) "Affiliate" of an entity shall mean another entity
controlled by, under common control with, or controlling such entity.

                  (b) "Commencement Date" shall have the meaning set forth in
paragraph 2 below.

                  (c) "Company Contact Person" shall have the meaning set forth
in paragraph 4(c) below.

                  (d) "Group Artist" is a recording artist who is then subject
to an exclusive recording agreement with an Affiliate of Group.

                  (e) "Group Contact Person" shall have the meaning set forth in
paragraph 3(b) below.

                  (f) "Term" shall have the meaning set forth in paragraph 2
below.

         2. Term. The term of this Agreement (the "Term") shall commence on the
date of this Agreement (the "Commencement Date") and end on the earlier of (i)
the second anniversary of the Commencement Date and (ii) the termination of the
Agreement pursuant to paragraph 6 below.


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         3. Group Obligations.

                  (a) Search Engine. Commencing with Group's new web
architecture, currently expected to be launched in mid-2000, Group shall make,
and cause its US-based Affiliates to make, the UBL.com search engine the
preferred non-commerce music search engine on the web sites of such Affiliates.
Such search engine shall be incorporated so as to permit vistors to such sites
to access the UBL.com's searchable database of bands, record labels, concerts,
tour information, ticket sales and such other information as may be part of such
database, and the search results shall appear on the Company's UBL.com site as
described in paragraph 4(b) below.

                  (b) Group Contact Person. Group shall promptly after the
execution hereof appoint (and shall maintain throughout the Term) one person to
be the primary contact person on behalf of Group and its Affiliates (the "Group
Contact Person"), which person may change from time to time as designated by
Group in its sole discretion. The Group Contact Person shall coordinate with the
Company Contact Person with respect to all operational and similar purposes
under this Agreement.

         4. Company Obligations.

                  (a) Site Links. During the Term, Company agrees that, with
respect to all searches relating to Group Artists by means of UBL.com's search
engine, Group and its Affiliates' websites relating to such artists shall be
listed first and shall otherwise be highlighted for maximum impact on the user.

                  (b) Certain Elements of Search Design. Company agrees that all
searches initiated from any of Group's or its Affiliates' websites shall result
in a new window which shall: (i) contain the search results of UBL.com hosted by
Company; (ii) contain a co-branded logo of either Group or its Affiliates, as
applicable and UBL.com's logos; (iii) contain ad banner(s) which shall be solely
controlled by Group or its Affiliates, as applicable and all income from which
shall belong to Group or its Affiliates, as applicable; and (iv) contain an
easily identifiable back path to Group or its Affiliates' webpage, as
applicable, from which such search was initiated. Company hereby warrants and
represents that Group and its Affiliates, as applicable, shall be able to update
the specific ads to be included among the ad banners referred to in the previous
sentence no less frequently than [***]* and that such banners shall be able to
"rotate" no less frequently than [***]*.

                  (c) Company Contact Person. Company shall promptly after the
execution hereof appoint (and shall maintain throughout the Term) one person to
be the primary contact person on behalf of Company and its Affiliates (the
"Company Contact Person"), which person may change from time to time as
designated by Company in its sole discretion. The Company Contact Person shall
coordinate with the Group Contact Person with respect to all operational and
similar purposes under this Agreement.

                  (d) Company Meetings with Group. During each calendar quarter
of the Term, the Company shall, upon the request of the Group Contact Person,
within 10 days of receipt of such request, hold a meeting, in person or by means
of conference telephone or similar communications equipment through which all
persons participating in the meeting can hear each other, between (i) the Group
Contact Person and such other representatives of the Group and its Affiliates as
the Group Contact Person shall designate and (ii) (A) the Chief Executive
Officer of the Company or the Chief Operating Officer of the Company; (B) the
Chief Financial Officer of the Company; and (C) such other representatives of
the Company as the Company shall designate, to discuss such matters relating to
the business and affairs of the Company as the Group Contact Person shall
specify.


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* Confidential treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.



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         5. Other Cross-Marketing and Promotion. References are made to the
Internet Video License Agreement, the Webcasting Transmission License Agreement
and the Audio Sample License Agreement, each between Group and Company and of
even date herewith. At the request of either party hereto, the parties shall
discuss in good faith entering into further arrangements on a case-by-case basis
for the licensing of other material owned or controlled by Group or an Affiliate
thereof and in connection with the specific promotions of Group Artists
conducted by Company or its Affiliates on the web sites operated by Company or
an Affiliate thereof.

         6. Termination for Breach. Without waiving any right or remedy
otherwise available to a party hereunder, either party hereto may terminate the
Term due to the material breach of this Agreement by the other party or its
Affiliates, subject to notice and a reasonable period to cure (not to exceed
thirty days), or on the occurrence of an insolvency event with respect to the
other party.

         7. Miscellaneous.

                  (a) Counterparts; Facsimile Signatures. This Agreement may be
signed in multiple counterparts. Each counterpart will be considered an
original, but all of them in the aggregate shall constitute one agreement. This
Agreement and any amendments hereto, to the extent signed and delivered by means
of a facsimile machine, shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same
binding effect as if it were the original signed version thereof delivered in
person.

                  (b) Successors and Assigns. This Agreement may be assigned to
any Affiliate of the assigning party or to any person or entity who purchases
all of substantially all of the stock or assets of the assigning party, provided
that the assigning party shall remain primarily liable under this Agreement for
its obligations hereunder. In all other respects, this Agreement shall not be
assigned, in whole or in part, whether voluntarily or by operation of law,
without the consent of the other party hereto, and any such purported assignment
shall be deemed null and void and without force or effect.

                  (c) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter hereof. This Agreement
supersedes all prior letters of intent, agreements and understandings between
the parties with respect to the subject matter hereof.

                  (d) Amendments. This Agreement may be amended, modified or
supplemented only in a writing executed by each of the parties hereto.

                  (e) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first class
mail or overnight courier, shall be deemed given on the date received, if
delivered by hand or courier, and four days after deposit into the United States
mail, if mailed, and shall be delivered to the addresses for notice indicated on
the signature pages hereof, or at such other addresses as a party may hereafter
designate by notice delivered pursuant to this paragraph 7(e).

                  (f) Relationship of the Parties. Notwithstanding any other
relationship between the parties hereto, or between or among them and their
respective Affiliates, nothing herein shall be deemed to constitute the parties
a partnership or joint venture.



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                  (g) Governing Law. This Agreement and all matters or issues
related thereto or arising hereunder shall be governed by the laws of the State
of California without regard to the application of principles of conflicts of
laws.

                  (h) Headings and Examples. The headings in this Agreement are
for the convenience of reference only and shall not limit or otherwise affect
the meaning hereof. Whenever examples are used in this Agreement with the words
"including," "for example," "e.g.," "such as," "etc." or any derivation thereof,
such examples are intended to be illustrative and not in limitation thereof.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.


ARTISTdirect, INC.                           WARNER MUSIC GROUP INC.

By: /s/ MARC P. GEIGER                       By: /s/ PAUL VIDICH
   ------------------------------               ---------------------------

       Marc P. Geiger                               Paul Vidich
       ARTISTdirect, Inc.                           Warner Music Group Inc.
       17835 Ventura Boulevard                      75 Rockefeller Plaza
       Suite 310                                    30th Floor
       Encino, CA 91316                             New York, New York 10019
       Attn: Chief Executive Officer

       With a copy to:                              With a copy to:

       Lenard & Gonzalez LLP                        Warner Music Group Inc.
       25th Floor                                   75 Rockefeller Plaza
       1900 Ave. Of the Stars                       30th Floor
       Los Angeles, CA 90067                        New York, New York 10019
       Attn: Allen D. Lenard                        Attn: EVP & General Counsel







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