Document:

<PAGE>

                                                                   Exhibit 10.23

Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
treatment request, and have been omitted from this exhibit. Complete, unredacted
copies of this exhibit have been filed with the Securities and Exchange
Commission as part of this company's confidential treatment request.

                              SERVICES AGREEMENT

             This Services Agreement (this "Agreement") is executed as of this
17th day of December, 1999 (the "Effective Date") by and between encoding.com,
Inc., a Delaware corporation ("Encoding"), and Valley Media, Inc., a Delaware
corporation ("Valley").

                                    RECITALS

             A. Encoding offers services and applications for encoding,
optimizing and delivering audio and video content on the Internet.

             B. Valley is a distributor of music and video entertainment
products.

             C. Valley desires to obtain certain services from Encoding that
will allow Valley to include a digital music sampling service as part of the
consumer database it offers to its retail customers.

                                   AGREEMENT

             In consideration of the foregoing and the mutual promises and
covenants contained herein, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Valley and Encoding
hereby agree as follows:

1.   Definitions.  For purposes of this Agreement, the following definitions
will apply:

     1.1.    The term "Confidential Information" means any information that one
             party (the "Disclosing Party") furnishes or makes available to the
             other party (the "Receiving Party") and all information related to
             the business of one party (the "Disclosing Party") which the other
             party (the "Receiving Party") acquires in the course of performing
             its obligations under this Agreement; provided, however, that the
             term "Confidential Information" does not include any information
             that the Receiving Party can prove (a) is generally available to or
             known by the public, (b) was available to or known by the Receiving
             Party on a non-confidential basis prior to disclosure by the
             Disclosing Party, (c) was independently developed for the Receiving
             Party by persons who were not given access to the information
             disclosed by the Disclosing Party, or (d) becomes generally known
             to the public after the Effective Date through no act or omission
             of the Receiving Party.

     1.2.    The term "Major Labels" means, collectively, [*], and (f) any
             affiliate, division or subsidiary of any of the entities described
             in parts (a) through (e) of this Section 1.2.

2.   Inventory Loan.  Valley maintains an inventory of compact discs containing
     prerecorded music (each, a "CD" and, collectively, the "CDs"). Valley will
     [*], one copy of each stock-keeping unit maintained by Valley among its
     inventory of CDs during the term of this Agreement, including the original
     artwork and packaging for each such CD (each, a "Loaned CD" and,
     collectively, the "Loaned CDs"). Valley will deliver the Loaned CDs to
     Encoding. Encoding will [*] in delivering the Loaned CDs. In addition,
     Encoding will pay Valley a handling charge of [*] per Loaned CD delivered
     to Encoding by Valley.

[*] Confidential Treatment Request

                                       1
<PAGE>

3.   Product Information File.  Valley maintains an electronic data file
     containing [*] for each recording contained in a CD in its inventory (the
     "Product Information File"). Valley will deliver to Encoding, at [*]
     charge, one electronic copy of the Product Information File. In addition,
     during the term of this Agreement, Valley will deliver to Encoding daily
     updates of the Product Information File ("PIF Updates") containing artist
     and UPC information for recordings contained in CDs that have been added to
     Valley's inventory since the original Product Information File or the last
     PIF Update was delivered to Encoding by Valley, whichever was later. For
     purposes of this Agreement, the term "Product Information File" means the
     Product Information File as updated and/or amended by Encoding to
     incorporate any and all PIF Updates. Valley will not be required to deliver
     updates of the Product Information File to Encoding following the
     termination or expiration of this Agreement unless the parties agree
     otherwise.

4.  Encoding of Loaned CDs.

    4.1.     For each recording contained in a Loaned CD (each, a "Recording"
             and, collectively, the "Recordings"), Encoding will create a
             storable electronic file containing a copy of that Recording in
             digital form (each, a "Song File" and, collectively, the "Song
             Files"). Encoding will create each Song File in a manner that will
             allow that Song File to be encoded into each of the streaming and
             downloading formats and at each of the data rates described in
             Exhibit A hereto, which is incorporated herein by this reference.
             Valley may amend Exhibit A from time to time to include additional
             streaming and/or downloading formats and/or additional data rates,
             and Encoding will create Song Files and Song Clips (as defined
             below) for each Recording in such additional formats and/or at such
             additional data rates in accordance with a schedule agreed upon by
             both parties. Valley will [*] by Encoding in encoding the Loaned
             CDs into such additional formats and/or at such additional data
             rates pursuant to this Section 4.1.

     4.2.    From each Song File, Encoding will create a sound clip (each, a
             "Song Clip" and, collectively, the "Song Clips") of a length, in
             each of the formats and at each of the data rates described in
             Exhibit B hereto, which is incorporated herein by this reference.

     4.3.    Encoding will link each Song Clip to that portion of the Product
             Information File containing product information for the Recording
             underlying the Song Clip, so that users of the Product Information
             File [*] for a particular Recording will be able to [*].

     4.4.    Encoding will create a storable electronic file containing a copy
             of the cover art of each Loaned CD in digital form (each, a "Cover
             Art File" and, collectively, the "Cover Art Files". Encoding will
             incorporate the Cover Art Files into the Product Information File
             so that a digital image of the cover art for a Loaned CD will
             appear on each screen viewed by a user of the Product Information
             File that contains information regarding a Recording contained in
             that Loaned CD.

[*] Confidential Treatment Request

                                       2
<PAGE>

     4.5.    After Encoding has created Song Files and Song Clips for each
             Recording contained in a Loaned CD, and created a Cover Art File
             for that Loaned CD, Encoding will promptly return the Loaned CD to
             Valley. Valley will [*] in delivering the returned Loaned CDs.
             Encoding may return Loaned CDs without shrink-wrap, and Encoding
             will use [*] efforts to have each returned Loaned CD in a condition
             that would allow Valley to return the Loaned CD to the vendor from
             which it was purchased without any refurbishment on Valley's part;
             provided, however, if Encoding is not able to return a Loaned CDs
             in such returnable condition, Encoding will pay [*] of Valley's
             wholesale cost for any such Loaned CD.

     4.6.    Encoding will update and/or amend the Product Information File on a
             daily basis to incorporate the information contained in any and all
             PIF Updates.

     4.7.    If, in carrying out its responsibilities under this Agreement, but
             without any separate obligation to do so, Encoding becomes aware of
             a Recording that is contained in a Loaned CD [*].

     4.8.    Encoding will attempt to create a customized clip service that will
             allow an artist or label to select the portion of a Recording by
             that artist or label that is used to create a Song Clip for that
             Recording. The artist or label would be required to bear the cost
             related to the creation of any such customized Song Clip.

5.   Music Sampling Service.  Valley and Encoding will use the Product
     Information File and the Song Clips to create a music sampling service (the
     "Sampling Service") that will be sold or licensed to third parties.
     Encoding and Valley each will have the right to sell or license the
     Sampling Service to third parties; provided, however, that neither Encoding
     nor Valley may sell, license or otherwise transfer the Sampling Service or
     any portion thereof to [*]. Encoding and Valley will each be responsible
     for collecting sales revenue and/or license fees from their respective
     customers and/or licensees. During the term of this Agreement, Encoding and
     Valley will each be entitled to [*] of any license fees received by the
     other party for selling or licensing the Sampling Service, but only to the
     extent [*]. Encoding will perform the following services to support the
     Sampling Service:

     5.1.    Encoding will store the Song Clips on its business systems and use
             those systems to stream the Song Clips to consumers using the
             Sampling Service. In hosting and streaming the Sampling Service,
             Encoding will maintain interface capabilities that are consistent
             with industry standards. Encoding's right to host and stream the
             Sampling Service on behalf of Valley under this Section 5.1. is not
             exclusive, and Valley may retain other persons or entities to
             perform such services in accordance with the following conditions.
             Valley will notify Encoding in writing if it wishes to have hosting
             and streaming services for the Sampling Service performed by a
             person or entity other than Encoding (the "Third Party Service
             Provider"). For a period of sixty (60) days following Encoding's
             receipt of such notice, Valley and Encoding will negotiate in good
             faith regarding Encoding's provision of such services instead of
             the Third Party Service Provider. If, at the conclusion of such
             sixty (60) day period, Valley and Encoding have not reached an
             agreement for Encoding to perform such services after negotiating
             in good faith, Valley will be permitted to retain the Third Party
             Service Provider to perform such services.

[*] Confidential Treatment Request

                                       3
<PAGE>

     5.2.    Encoding will collect the data described in Exhibit D hereto (the
             "Consumer Data"), which is incorporated herein by this reference,
             regarding the usage and purchasing habits of consumers that use the
             Sampling Service.

6.   Minimum Service Levels.  In consideration of the capital expenditures that
     will be incurred by Encoding in connection with this Agreement, which are
     described in Section 7.1. below, Valley [*] that Encoding will receive
     revenues from the Sampling Service of at least [*] during each three month
     period (an "Installment Period") during the first twelve (12) months after
     the Sampling Service becomes operational (the "Guaranteed Period") for a
     total guaranteed payment of at least [*]. If Encoding does not receive
     revenues from the Sampling Service of at least [*] during each Installment
     Period during the Guaranteed Period, Valley will make a payment to Encoding
     (each, a "Guaranteed Payment") within thirty (30) Days of the conclusion of
     applicable Installment Period equal to the difference between [*] and the
     amount of revenues actually received by Encoding from the Sampling Service
     during the applicable Installment Period (the "Sampling Service Revenue");
     provided, however, that Encoding will not be entitled to receive the
     Guaranteed Payment if (a) the Sampling Service is not operational on or
     before [*] if Valley has provided the Priority CDs (as defined below)
     within 30 days of the Effective Date,or [*], which is incorporated herein
     by this reference; provided, further, that Valley shall not be obligated to
     make a Guaranteed Payment for a particular Installment Period if Encoding
     has received an average of [*] from Guaranteed Payments and Sampling
     Service Revenue and all Guaranteed Payments for the Installment Period in
     question and each preceding Installment Period. For purposes of this
     Section 6, the Sampling Service will become "operational" when Encoding has
     created Song Files and Song Clips for the [*] Loaned CDs designated as
     "Priority CDs" within 30 days of the Effective Date. For the purposes of
     this Section 6, all references to "revenue" shall be revenue calculated in
     accordance with U.S. GAAP.

7.   Service Fees.

     7.1.    Capital Expenses.  Encoding will pay all the necessary upfront
             capital equipment charges necessary for the creation of the
             Sampling Service which are estimated to total [*] and to include:

             7.1.1.     Facilities
             7.1.2.     Ripping Stations
             7.1.3.     Encoding Stations
             7.1.4.     Raid Online Storage
             7.1.5.     Nearline Storage System
             7.1.6.     Computer servers and Equipment

     7.2.    Shared Costs.  In consideration of the services performed by
             Encoding under this Agreement, Encoding and Valley will [*] the
             costs of creating the Song Files and Song Clips. The costs will
             include [*]. Encoding estimates these direct costs to total [*].
             Therefore, Valley will pay Encoding a total of [*] on [*] for the
             non-refundable expenses for setting up the Sampling Service. The
             above estimates are fixed and in the event the actual costs for
             this service increase or decrease, Valley will [*].

[*] Confidential Treatment Request

                                       4
<PAGE>

     7.3.    Maintenance Costs.  For the ongoing maintenance encoding of new
             inventory for the Sampling Service, Valley and Encoding will [*]
             the actual direct ongoing encoding costs estimated at the rate of
             [*] per CD used in the Sampling Service. Therefore, Valley would
             pay Encoding a service fee of [*] per such CD. These costs are
             fixed through September 2000. In the event, the costs for
             maintenance are determined to increase or decrease by [*] or
             higher, the parties agree to renegotiate this clause and its fee
             schedule in good faith. Encoding will invoice Valley on a monthly
             basis that reflects the actual number of files added to the
             Sampling Service inventory. Valley and Encoding will each pay [*]
             of all shipping and handling charges to and from the Valley and
             Encoding.com facilities.

     7.4.    Streaming Costs.  Encoding will charge Valley [*] for the ongoing
             streaming and hosting costs. [*] is defined as the [*] plus [*] of
             the [*] plus [*].

8.   Ownership and Rights upon Termination.

     8.1.    Loaned CDs.

             8.1.1.  The Loaned CDs are, and will at all times remain, Valley's
                  sole and exclusive property, and Valley will have the right to
                  demand the return of any or all of the Loaned CDs, with
                  Encoding and Valley to each pay [*] of the cost of such
                  return, including the original artwork and packaging for each
                  Loaned CD, at any time; provided, however, that, if at any
                  time any or all of the Loaned CDs (other than any Loaned CDs
                  purchased by Encoding pursuant to Section 9.2 of this
                  Agreement) are determined to be Encoding's property, Encoding
                  hereby grants Valley a security interest in such Loaned CDs.

             8.1.2.  Upon the expiration or termination of this Agreement,
                  Encoding will promptly return all of the Loaned CDs, including
                  the original artwork and packaging for each Loaned CD, with
                  Encoding and Valley to each pay [*] of the cost of such
                  return, to Valley (other than any Loaned CDs Encoding has
                  already returned to, or purchased from, Valley pursuant to
                  Section 9.2 of this Agreement).

     8.2.    Files and Clips.

             8.2.1.  The Song Clips, the Song Files and the Cover Art Files will
                  be, and will at all times remain, the sole and exclusive
                  property of Valley; provided, however, that, if at any time
                  any or all of the Song Files and/or the Song Clips and/or the
                  Cover Art Files are determined to be Encoding's property,
                  Encoding hereby grants Valley a security interest in such Song
                  Files and/or Song Clips and/or Cover Art Files .

             8.2.2.  The Product Information File and any and all PIF Updates
                  will be, and will at all times remain, the sole and exclusive
                  property of Valley; provided, however, that, if at any time
                  the Product Information File, any portion thereof, or any or
                  all of the PIF Updates are determined to be Encoding's
                  property, Encoding hereby grants Valley a security interest in
                  the Product Information File and/or such PIF Updates.

[*] Confidential Treatment Request

                                       5
<PAGE>

             8.2.3.  Valley hereby grants Encoding a worldwide, perpetual,
                  irrevocable, nonexclusive license to use, store, modify, copy
                  and distribute the Product Information File, the PIF Updates,
                  the Song Clips, the Song Files and the cover Art Files. This
                  license will survive any termination or expiration of this
                  Agreement. Encoding will have the right to sublicense the
                  Product Information File, the PIF Updates, the Song Files, the
                  Song Clips and the Cover Art Files to any entity other than
                  [*].

             8.2.4.  Upon the expiration or termination of this Agreement, or at
                  any earlier time, upon demand by Valley, Encoding will
                  promptly deliver to Valley, [*], copies of all of the Song
                  Files, Song Clips and Cover Art Files in the formats
                  maintained hereunder; provided, however, if Valley terminates
                  this Agreement as a result of a breach of this Agreement by
                  Encoding pursuant to Section 18.2, Encoding shall [*].

     8.3.    Consumer Data. All of the Consumer Data will be, and will at all
             times remain, the sole and exclusive property of Valley; provided,
             however, that Valley will pay Encoding [*] all revenues received by
             Valley through the sale, licensing or other commercial exploitation
             of all or any portion of the Consumer Data during the term of this
             Agreement.

9.   Audiofile License and Deleted Product.

     9.1.    At the same time the parties enter into this Agreement, they will
             enter into an Audiofile License Agreement substantially in the form
             attached hereto as Exhibit F (the "Audiofile License"), which is
             incorporated herein by this reference, pursuant to which Valley
             will license its audiofile database ("Audiofile") to Encoding on a
             royalty free basis during the term of this Agreement. If Valley is
             notified by any of its suppliers that the supplier is deleting one
             of the Loaned CDs from its catalog, Valley will post a deletion
             notice regarding the Loaned CD on Audiofile, and Encoding will
             return its copy of the Loaned CD to Valley on or before the Last
             Customer Return Date stated in the deletion notice, with Encoding
             and Valley to [*] of the cost of such return.

     9.2.    If Valley posts a deletion notice regarding a Loaned CD on
             Audiofile and Audiofile is fully operational and accessible by
             Encoding, and Encoding fails to return its copy of the Loaned CD to
             Valley prior to the Last Customer Return Date stated in the
             deletion notice, Encoding will purchase the Loaned CD from Valley
             at Valley's wholesale price for the Loaned CD.

10.  Initial Warrant Grant.  Encoding will issue warrants for 325,000 shares of
     Encoding common stock with a strike price of $10 per share and an exercise
     period of 1 year (the "Initial Warrants"). The Initial Warrants will be
     granted upon commencement of this agreement.

11.  Rights Acquisition.  Encoding will grant Valley an additional 325,000 on
     the same terms and conditions as the Initial Warrants in consideration of
     Valley's certification attached hereto as Exhibit G (the "Certificate"),
     which is incorporated herein by this reference, regarding Valley's attempts
     to [*]. The statements contained in the Certificate will constitute
     representations and warranties of Valley under this Agreement. If Valley
     enters into a definitive written agreement with [*] regarding the matters
     set forth in the Certificate, Valley will provide a copy of such agreement
     to Encoding.

12.  Future Endeavors.

[*] Confidential Treatment Request

                                       6
<PAGE>

     12.1.   Valley and Encoding will explore the possibility of a variety of
             new offerings leveraging either the existing assets such as the
             Song Files, Song Clips and/or the PIF for additional Internet Music
             services including digital downloading services for Valley's
             customers, Internet radio broadcasts, Internet or digital juke
             boxes, "just-in-time" compact disc manufacturing; or offerings
             leveraging other assets of Valley and Encoding.

     12.2.   Valley and Encoding agree that both parties will mutually agree
             upon the appropriate business model for all new jointly created new
             ventures. In such ventures as may occur, Encoding and Valley will
             [*] but will attempt to structure the ventures so [*].

13.  Representations and Warranties of Encoding. To induce Valley to enter into
     this Agreement and to perform the transactions contemplated hereunder,
     Encoding represents and warrants as follows:

     13.1.   Organization.  Encoding is a corporation duly organized, validly
             existing and in good standing under the laws of the state of
             Delaware.

     13.2.   Authority; Consents and Approvals; No Violations. Encoding has
             the full corporate power and authority and legal right to execute
             and deliver this Agreement, and otherwise to perform its
             obligations hereunder. This Agreement has been validly executed and
             delivered by Encoding and will constitute a valid and binding
             obligation of Encoding enforceable in accordance with its terms,
             except to the extent such enforceability may be limited by the
             effects of bankruptcy, insolvency, reorganization, moratorium or
             other similar laws affecting creditors' rights generally, and by
             the effect of general principles of equitable law, regardless of
             whether such enforceability is considered in a proceeding in equity
             or at law. The execution and delivery of this Agreement and the
             consummation of the transactions contemplated hereby do not and
             will not violate any provision of Encoding's Certificate of
             Incorporation or Bylaws, or violate, conflict with, result in a
             breach of or constitute (with or without due notice, lapse of time
             or both) a default under any agreement, license, contract,
             franchise, permit, indenture, lease, or other instrument to which
             Encoding is a party, or by which it or any of its assets are bound.

     13.3.   Performance Standards.  Encoding will perform the services
             described in Sections 4 and 5 of this Agreement in a professional
             and workmanlike manner that is consistent with the highest
             industry standards.

14.  Representations and Warranties of Valley.  To induce Encoding to enter
     into this Agreement and to perform the transactions contemplated hereunder,
     Valley represents and warrants as follows:

     14.1.   Organization.  Valley is a corporation duly organized, validly
             existing and in good standing under the laws of the state of
             Delaware.

     14.2.   Authority; Consents and Approvals; No Violations. Valley has the
             full corporate power and authority and legal right to execute and
             deliver this Agreement, and otherwise to perform its obligations
             hereunder. This Agreement has been validly executed and delivered
             by Valley and will constitute a valid and binding obligation of
             Valley enforceable in accordance with its terms, except to the
             extent such enforceability may be limited by the effects of
             bankruptcy, insolvency,

[*] Confidential Treatment Request

                                       7
<PAGE>

             reorganization, moratorium or other similar laws affecting
             creditors' rights generally, and by the effect of general
             principles of equitable law, regardless of whether such
             enforceability is considered in a proceeding in equity or at law.
             The execution and delivery of this Agreement and the consummation
             of the transactions contemplated hereby do not and will not violate
             any provision of Valley's Certificate of Incorporation or Bylaws or
             violate, conflict with, result in a breach of or constitute (with
             or without due notice, lapse of time or both) a default under any
             agreement, license, contract, franchise, permit, indenture, lease,
             or other instrument to which Valley is a party, or by which it or
             any of its assets are bound.

15.  Indemnification.  Each party will, at all times, indemnify, defend and
     hold the other party harmless from and against any and all third-party
     claims, damages, liabilities, costs and expenses (including reasonable
     attorney's fees) arising out of any breach or alleged breach by the
     indemnifying party of any representation, warranty or obligation of such
     party under this Agreement. In addition, each party will, at all times,
     indemnify, defend and hold the other party harmless from and against any
     and all third-party claims, damages, liabilities, costs and expenses
     (including reasonable attorney's fees) arising out of any infringement or
     alleged infringement of the patents, copyrights, trademarks or other
     intellectual property rights of any third party that results from the
     commercial use of the Sampling Service by the indemnifying party, any of
     the indemnifying party's licensees, or any person or entity that has
     purchased the Sampling Service, or any portion thereof, from the
     indemnifying party.

16.  Limitation on Damages.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
     OTHER FOR INDIRECT OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT SUCH PARTY HAS
     BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE FORM
     OF ACTION.

17.  Confidential Information.  Neither Encoding nor Valley may use any
     Confidential Information of the other except as permitted under this
     Agreement. In addition, neither Encoding nor Valley may disclose any
     Confidential Information of the other unless (a) such disclosure is made to
     the Disclosing Party's employees or agents on a "need to know" basis or (b)
     such disclosure is required by law or legal process and the party from whom
     such disclosure is required has given the other party prior notice of such
     requirement and has cooperated with the non-Disclosing Party to oppose
     disclosure. For purposes of this Agreement, any unauthorized use or
     disclosure of Confidential Information by an employee or agent of either
     party will be treated as an unauthorized disclosure by such party.

18.  Term and Termination.

     18.1.   This Agreement will terminate on the third anniversary of the
             Effective Date (the "Initial Termination Date"), unless both
             parties provide a written amendment at least ninety (90) days prior
             to the Initial Termination Date, in which case this Agreement will
             be extended for an additional two years and will terminate upon the
             fifth anniversary of the Effective Date.

     18.2.   Either party may terminate this Agreement if (i) the other party
             materially breaches any of its obligations under this Agreement,
             (ii) the non-breaching party sends written notice to the breaching
             party describing the breach in reasonable detail, and (iii) the
             breaching party does not cure the breach within thirty (30) days
             following its receipt of such notice.

[*] Confidential Treatment Request

                                       8
<PAGE>

     18.3.   Either party may terminate this Agreement if (i) the other party
             becomes insolvent, or (ii) a petition is filed by or against the
             other party under any bankruptcy or insolvency laws and, in the
             event of any involuntary petition, the petition is not dismissed
             within forty-five (45) days of the filing date.

     18.4.   The parties may terminate this Agreement by mutual consent through
             a signed writing.

19.  Press Release.  Upon execution of this Agreement, Encoding and Valley
     will issue a joint press release (the "Press Release") announcing the
     execution of this Agreement and briefly describing the transactions
     contemplated hereby. Neither party will issue the Press Release, nor any
     other release concerning this Agreement or the transactions contemplated
     hereby, without the other party's prior consent.

20.  Miscellaneous

     20.1.   Assignment. Neither party may assign any of its rights under this
             Agreement without the other party's prior written consent;
             provided, however, that either party may assign its rights under
             this Agreement to any affiliate of such party, any entity into
             which such party is merged or any entity that purchases
             substantially all of the assets of such party.

     20.2.   Further Assurances.  In addition to the obligations required to be
             performed by the parties hereto under the other provisions of this
             Agreement, the parties agree to perform, without further
             consideration, such other acts and to execute, file, acknowledge
             and deliver such other instruments and documents, including without
             limitation UCC-1 financing statements covering the Loaned CDs, the
             Song Files, the Song Clips, the Product Information File and the
             PIF Updates, as may be reasonably required to carry out the
             provisions and purposes of this Agreement and to fully and properly
             consummate the transactions contemplated hereby.

     20.3.   Amendment and Waiver. No amendment or modification of this
             Agreement will be effective unless set forth in a writing signed by
             an authorized representative of the party against which enforcement
             of such amendment is sought. No waiver by a party of the other
             party's obligation to comply with any provision of this Agreement
             will be deemed or will constitute a waiver of the nonwaiving
             party's obligation to comply with any other provision of this
             Agreement or with the nonwaiving party's obligation to comply with
             the waived provision on a subsequent occasion.

     20.4.   Arbitration. Any dispute or controversy arising between Encoding
             and Valley regarding this Agreement will be submitted to
             arbitration in the state of the defending party in accordance with
             the rules then in effect of the American Arbitration Association.
             Any award made by an arbitrator pursuant to this Section 20.4 will
             be binding upon both parties in the absence of fraud and may be
             entered in any court of competent jurisdiction.

     20.5.   Notices. Any notice to a party pursuant to this Agreement shall be
             given by one of the following means: (a) certified or registered
             United States mail, postage prepaid, (b) private courier or express
             service requesting evidence of receipt as a part of its service, or
             (c) by telecopy, with a copy also to

[*] Confidential Treatment Request

                                       9
<PAGE>

             be given by first class United States mail, postage prepaid, or by
             any means permitted under parts (a) or (b) of this Section 20.5.
             Notices shall be given to the parties at the following addressees:

               If to Valley:   Valley Media, Inc.
                               1280 Santa Anita Court
                               Woodland, California  95776
                               Attention:  Sachin Adarkar
                               Fax Number:  (530) 406-5231

               If to Encoding: encoding.com, Inc.
                               414 Olive Way, 3rd Floor
                               Seattle, Washington  98101
                               Attention:  CFO
                               Fax Number:  206-832-4001

               with a mandatory copy to:  Venture Law Group
                               4750 Carillon Point
                               Kirkland, WA 98033
                               Attention:  John W. Robertson
                               Fax Number:  (425) 739-8750

     20.6.   Binding Effect.  Upon execution of this Agreement by all parties
             hereto, this Agreement shall inure to the benefit of, and be
             binding on and enforceable against, the parties and their
             respective heirs, legal representatives, successors and permitted
             assigns.

     20.7.   Entire Agreement. This Agreement, including the exhibits and
             schedules hereto, together with the Audiofile License and the
             Warrant, constitute the entire agreement and understanding between
             the parties with respect to the subject matter hereof, and
             supersede any prior or contemporaneous agreements or understandings
             relating to the subject matter hereof, whether written or oral.

     20.8.   Counterparts.  This Agreement may be executed in two or more
             counterparts, each of which shall be deemed an original and all of
             which, taken together, will constitute one and the same instrument.

     20.9.   Attorneys' Fees. If any arbitration, legal action or other
             proceeding is brought for the enforcement of this Agreement, or
             because of an alleged dispute, breach, default or misrepresentation
             in connection with any of the provisions of this Agreement, the
             successful or prevailing party will be entitled to recover
             reasonable attorneys' fees and other costs incurred in such action
             or proceeding, in addition to any other relief to which it may be
             entitled.

     20.10.  Survival. The provisions of Sections 1, 8.3, 15, 16, 17, and 20
             will survive any termination or expiration of this Agreement.

     20.11.  Headings. The headings of the paragraphs and sections of this
             Agreement are included for purposes of convenience only and shall
             not affect the construction or interpretation of any provisions
             hereunder.

[*] Confidential Treatment Request

                                       10
<PAGE>

     20.12.  Partial Invalidity. The invalidity of any part or provision of this
             Agreement will not affect the enforceability of the remainder of
             this Agreement.

     20.13.  Governing Law. This Agreement will be governed by and construed in
             accordance with the substantive laws of the State of California
             applicable to contracts entered into and performed entirely within
             that state.

[*] Confidential Treatment Request

                                       11
<PAGE>

             In witness whereof, the parties have executed this Services
Agreement as of the Effective Date.

Valley Media, Inc.                     encoding.com, Inc.

/s/ Sachin Adarkar                     /s/ David C. Bullis
____________________________           __________________________
By:                                    By:
Its:                                   Its:

[*] Confidential Treatment Request

                                       12
<PAGE>

                                                                   EXHIBIT 10.23

                                   Exhibit A
                                   ---------
                          Song File Streaming Formats
                          ---------------------------

The parties agree to support the following Digital Audio formats per the terms
in Section 4.1.

     1.   Real Networks System 5.0
     2.   Real Networks System G2
     3.   Windows Media Audio 4.0
     4.   MPEG-1, Audio Layer 3

                                       13
<PAGE>

                                   Exhibit B
                                   ---------
                      Song Clip Streaming and Data Formats
                      ------------------------------------

The parties agree to support the following Data Rates and Samples lengths per
the terms in Section 4.2.

Formats and Data Rates:

[* * * * *]

Clips Lengths:

1.  Pop/Rock/Non-Jazz and Classical - 30 seconds
2.  Jazz/Classical - 60 seconds

  The clips lengths are intended to meet contemporary commercial standards and
  are subject to change.

[*] Confidential Treatment Request

                                       14
<PAGE>
<TABLE>

                                   Exhibit C
                                   ---------
                       Product Information File Schedule
                       ---------------------------------

Product Information File Specification

     Valley will provide encoding.com the following minimum data in a
commercially acceptable manner:
<S>                                     <C>                                                 <C>
----------------------------------------------------------------------------------------------------------------------------------
(A)      POPULAR MUSIC DATA ENTRY
----------------------------------------------------------------------------------------------------------------------------------
(B)      CD LEVEL
----------------------------------------------------------------------------------------------------------------------------------
(C)      FIELD                          (D)      RULES                                       (E)      EXAMPLES
----------------------------------------------------------------------------------------------------------------------------------
UPC                                     .        Scanned into database from barcode on CD.   .        093624729426
----------------------------------------------------------------------------------------------------------------------------------
CD Title                                .        As Written on CD cover or spine.            .        Echo
                                        .        Standard title capitalization applied
                                                 for English language CDs.
                                        .        Languages other than English will be
                                                 entered with capitalization used on CD.
----------------------------------------------------------------------------------------------------------------------------------
CD Artist                               .        As Written on CD.                           .        Tom Petty And The
                                        .        Standard title capitalization applied                Heartbreakers
                                                 for English language CDs.
                                        .        Languages other than English will be
                                                 entered with capitalization used on CD.
                                        .        Various Artists will be entered for
                                                 compilations
----------------------------------------------------------------------------------------------------------------------------------
CD Volume Number                        .        Volume number of multi CD sets.             .        1
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
(A)      POPULAR MUSIC DATA ENTRY
----------------------------------------------------------------------------------------------------------------------------------
(B)      TRACK LEVEL
----------------------------------------------------------------------------------------------------------------------------------
(C)      FIELD                          (D)      RULES                                       (E)      EXAMPLES
----------------------------------------------------------------------------------------------------------------------------------
(F)      Track Number                   .        Sequential number that track appears on CD  .        12
----------------------------------------------------------------------------------------------------------------------------------
(G)      Track Title                    .        As Written on CD.                           .        No More
                                        .        Standard title capitalization applied for
                                                 English language CDs.
                                        .        Languages other than English will be
                                                 entered with capitalization used on CD.
                                        .        Medleys: Only the Medley title will be
                                                 entered, NOT individual songs that make
                                                 up medley.
----------------------------------------------------------------------------------------------------------------------------------
(H)      Track Artist                   .        As Written on CD.                           .        Tom Petty And The
                                        .        Standard title capitalization applied for            Heartbreakers
                                                 English language CDs.
                                        .        Languages other than English will be
                                                 entered with capitalization used on CD.
----------------------------------------------------------------------------------------------------------------------------------
(I)      Standard Metadata for Popular Music
 .        Title: Track Title
 .        Author: Track Artist (multiple artists will be separated by a dash. Example: Track Artist 1 - Track
         Artist 2 - Track Artist 3)
 .        Copyright: CD Copyright
(J)
(K)      Example
 .        Title: No More
 .        Author: Tom Petty And The Heartbreakers
 .        Copyright: 1999 Warner Bros. Records Inc. for the U.S and WEA International Inc. for the world outside the U.S.

(A)
----------------------------------------------------------------------------------------------------------------------------------
CLASSICAL MUSIC DATA ENTRY (to be available in, or before, the third quarter of 2000)
----------------------------------------------------------------------------------------------------------------------------------
(B)      CD LEVEL
----------------------------------------------------------------------------------------------------------------------------------
(C)      FIELD                          (D)      RULES                                       (E)      EXAMPLES
----------------------------------------------------------------------------------------------------------------------------------
UPC                                     .        Scanned into database from barcode on CD.   .        077776349824
----------------------------------------------------------------------------------------------------------------------------------
CD Title                                .        As Written on CD on SPINE ONLY.             .        Dvorak/Elgar: Cello
                                        .        Standard title capitalization applied for            Concertos/Cellokonzerte
                                                 English language CDs.                                Bruch:-Kol Nidrei - Casals
                                        .        Languages other than English will be
                                                 entered with capitalization used on CD.
----------------------------------------------------------------------------------------------------------------------------------
Composer                                .        All Composers listed on CD cover or spine   .        Dvorak
                                                 will be entered.                            .        Elgar
                                        .        As written on CD Cover                      .        Bruch
----------------------------------------------------------------------------------------------------------------------------------
Work Associated with Composer           .        The Work will be associated with the        .        Dvorak Cello Concerto in
                                                 Composer entered in the Composer Field               B minor, Op. 104
                                        .        Multiple Works can be associated with       .        Elgar Cello Concerto in
                                                 each Composer.                                       E minor, Op. 85
                                        .        As written on CD Cover                      .        Bruch Kol Nidrei, Op. 47
                                        .        If more than 1 translation of Work is
                                                 listed, 1st language listed will
                                                 be emtered.
----------------------------------------------------------------------------------------------------------------------------------
Performer                               .        All featured soloist or performers that     .        Pablo Casals
                                                 are listed on the CD Cover will be entered
                                        .        All performers listed on CD cover or
                                                 spine will be entered
                                        .        As written on CD Cover
----------------------------------------------------------------------------------------------------------------------------------
Conductor                               .        All Conductors listed on CD Cover will be   .        George Szell,
                                                 entered into the Conductor field.           .        Adrian Boult
                                        .        All Conductors listed on CD cover or        .        Landon Ronald
                                                 spine will be entered.
                                        .        As written on CD Cover
----------------------------------------------------------------------------------------------------------------------------------

(A)
----------------------------------------------------------------------------------------------------------------------------------
CLASSICAL MUSIC DATA ENTRY
----------------------------------------------------------------------------------------------------------------------------------
(B)      CD LEVEL (Cont.)
----------------------------------------------------------------------------------------------------------------------------------
(C)      FIELD                              (D)      RULES                                       (E)      EXAMPLES
----------------------------------------------------------------------------------------------------------------------------------
Ensemble/Orchestra                          .        All Ensembles/Orchestras listed on CD       .        Czech Phiharmonic
                                                     cover or spine will be entered.]                     Orchestra
                                            .        As Written on CD Cover                      .        BBC Symphony
                                                                                                 .        London Symphony Orchestra
----------------------------------------------------------------------------------------------------------------------------------
CD Volume                                   .        Volume number of multi CD sets.             .        1
----------------------------------------------------------------------------------------------------------------------------------
(A)      CLASSICAL MUSIC DATA ENTRY
----------------------------------------------------------------------------------------------------------------------------------
(B)      TRACK LEVEL
----------------------------------------------------------------------------------------------------------------------------------
(C)      FIELD                              (D)      RULES                                       (E)      EXAMPLES
----------------------------------------------------------------------------------------------------------------------------------
(F)      Track #                            .        Sequential number that track appears on CD  .        5
----------------------------------------------------------------------------------------------------------------------------------
Track Title                                 .        As Written on CD.                           .        III. Adagio
                                            .        Standard title capitalization applied for
                                                     English language CDs.
                                            .        Languages other than English will be
                                                     entered with capitalization used on CD.
----------------------------------------------------------------------------------------------------------------------------------
Track Composer                              .        All Composers  per track will be entered.   .        Elgar
                                            .        As written on CD.
----------------------------------------------------------------------------------------------------------------------------------
Track Work Associated with Composer         .        The Work for per track will be Associated   .        Elgar Concerto in E minor,
                                                     with the Composer entered in the Composer            Op. 85
                                                     Field.
                                            .        Composer and Associated Work entered at
                                                     CD level can be chosen from drop down menu by
                                                     data entry person for each track.
                                            .        As written on CD Cover
----------------------------------------------------------------------------------------------------------------------------------
Track Performer                             .        All featured soloist or performers per      .        Pablo Casals
                                                     track will be entered.
                                            .        As written on CD
----------------------------------------------------------------------------------------------------------------------------------
Track Conductor                             .        All Conductors listed per track will be     .        Sir Adrian Boult
                                                     entered into the Conductor field.
                                            .        As written on CD Cover
----------------------------------------------------------------------------------------------------------------------------------
Track Ensemble/Orchestra                    .        All Ensembles/Orchestras per track will     .        BBC Symphony Orchestra
                                                     be entered.
                                            .        As Written on CD Cover
----------------------------------------------------------------------------------------------------------------------------------
(G)      Standard Metadata for Classical Music
 .        Title: Track Composer -Track Work  -Track Title
 .        Author: Track Performer -Track Ensemble/Orchestra -Track Conductor (multiple performers, Ensembles/Orchestras or
         Conductors will be separated by a dash. Example: Track Performer 1 - Track Performer 2 - Track Performer 3 - Track
         Ensemble/Orchestra - Track Conductor)
 .        Copyright: Cd Copyright
(H)
(I)      Example
 .        Title: Elgar - Cello Concerto in E minor, Op. 85 - III. Adagio
 .        Author: Pablo Casals - BBC Symphony Orchestra  - Sir Adrian Boult
 .        Copyright: EMI Records Ltd.
</TABLE>
                                       15
<PAGE>

                                   Exhibit D
                                   ---------
                                 Consumer Data
                                 -------------

Encoding will track and provide a data file that includes the following
information reports:

[* * * *]

The specifics of these reports will vary and can be modified for particular
customer requests related to the Music sampling Service.

[*] Confidential Treatment Request

                                       16
<PAGE>

                                   Exhibit E
                                   ---------
                           Minimum Service Standards
                           -------------------------

The following represents Encoding's standard Service Level Agreement for
Streaming. The parties agree that the Music Sampling Service will need to meet
commercial and competitive standards and might differ from these terms. The
parties agree to modify the Service Level Agreement as necessary to meet
commercially acceptable standards.

                           Service Level Guidelines
(A)
1.   Bandwidth and Processor Capacity.  Streaming Site Storage capacity,
Internet Bandwidth and Processor capacity will be maintained to provide a mean
response to industry standards for reasonable stream response times less any
latency caused by internet bandwidth constraints outside of our primary service
providers.

2.   Backup.  In the case of server crashes and/or corrupt data, Encoding.com
shall provide a full daily backup of the Streaming Site and files. Full week of
daily backups will be stored off-site. The Streaming Site will remain accessible
during backups. The Encoding hosting facility will be configured to provide
redundant power for continual operation.

3.   Security.  Encoding will take all reasonable means to ensure security.
Encoding will report any recognized security breaches to the Streaming Site.
Security includes but is not limited intrusion at the physical, network/IP, and
protocol layers.

4.   Administration.  Encoding will provide services in connection with the
operation and maintenance of Streaming Site and the Hosting Hardware and
Facilities (excluding any Provider Hardware) in accordance with Encoding's own
hosting operating procedures, including Service updates, 7/24 response, and
database administration. The Streaming Site will be monitored on a 7/24 basis.

5.   Maintenance.  Maintenance shall mean the temporary suspension of the
operation of the Streaming Site, for the purpose of repair, maintenance or
improvement of the Streaming Site or any related computer systems. Maintenance
on all servers and hardware will be the responsibility of Encoding. Within the
scheduled maintenance window set forth below, Encoding may perform scheduled
maintenance. Provider will be given notice prior to any scheduled maintenance
that will cause known downtime in excess of 30 minutes for Streaming Site
customers. Scheduled maintenance includes but is not limited to Service updates,
fixes, patches that have been identified to enhance the system or performance.
For scheduled maintenance that will cause known downtime in excess of 30
minutes, Encoding will undertake reasonable efforts to provide 72 hours advance
warning before scheduled maintenance for normal work and 28 days advance warning
before scheduled maintenance for major planned work. Scheduled maintenance
window: 9PM to 4AM Pacific time.

                                      17
<PAGE>

6.   Support Guidelines.  Encoding will provide support as set out below in
Table 1, (phone and/or email) directly to Provider for connectivity problems,
Merchant user problems, end user problems and hosting problems associated with
merchants accessing the Encoding server.

     6.1  Encoding will provide to Provider the telephone numbers and URLs to
     which Provider will refer its technical support designates for Streaming
     Site support questions. Encoding's technical support staff will be
     available to Provider for immediate consultation regarding the Encoding
     services during the hours provided below in Table 1.

     6.2  If Encoding detects, or Provider reports in writing any material
     defects, non-conformity to specifications or compatibility problems
     directly related to the Encoding service to Encoding, Encoding shall use
     best efforts to correct such defects, non-conformity or compatibility
     problems as set forth in Table 2.

     6.3  At Providers request, Encoding will give access to appropriate areas
     of Encoding to allow Provider to provide 1st line support to end users.

     6.4  Encoding will offer initial training to designated Provider support
     personnel for Provider's initial launch. This will include training to
     allow Provider to manage a read only remote administration service. Ongoing
     training will be offered to Provider support personnel, on Provider's
     request, at Encoding's standard commercial rates.

     6.5  Encoding will maintain and offer Provider Knowledge Base Documents for
     tips and techniques on the most common development/integration issues as
     well as Frequently Asked Questions (FAQ's) and other online help
     information as appropriate for end users' use.

     6.6  Encoding Holidays are celebrated on the day on which it falls during a
     normal workweek, or the Monday or Friday closest to the Holiday when it
     falls on a weekend. Holidays are: New Years Day, President's Day (third
     Monday in Feb), Memorial Day (May 31), Independence Day (July 4th), Labor
     Day (first Monday in September), Thanksgiving Day and day following (fourth
     Thursday in November), Christmas Eve and Christmas Day (Dec 24-25). The
     clock will stop at 6PM PT on the last normal working day and restart at 6AM
     PT the next working day.

     6.7  Encoding will provide Provider with a minimum of 30 working days
     written notice of any proposed enhancements to the service including any
     new releases.

<TABLE>
<S>                         <C>                        <C>                        <C>
(B)  Table 1
---------------------------- -------------------------- -------------------------- --------------------------
Description                  Web Support                Email Support              Phone Support
---------------------------- -------------------------- -------------------------- --------------------------
Hours                        7/24 hrs                   6AM to 6PM, M/F, Pacific   7/24hrs (direct or call
                                                        Time                       back)
---------------------------- -------------------------- -------------------------- --------------------------
Contact info                 www site                   support@encoding.com       (206) 832-4000
---------------------------- -------------------------- -------------------------- --------------------------
Support Services Rep.                 --                Yes                        Yes
---------------------------- -------------------------- -------------------------- --------------------------
Return Response              See Table 2                See Table 2                See Table 2
---------------------------- -------------------------- -------------------------- --------------------------
Voicemail Msg.                        --                      --                   Yes
Capabilities
---------------------------- -------------------------- -------------------------- --------------------------

Table 2
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
Call Priority        Response Time   Response Time     Resolution Times   (C)  Priority Definition
                     24/7
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
1. Critical          1 Hour          1 Hour            (D) 12 hours       Site or Network down. Unable to access
                                                                          database.  Essential facilities/tools that do
                                                                          not work. Database corruption causing
                                                                          inconsistent data.
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
2. Urgent            N/A             4 Hours           End of next        Facilities not essential to the operational
                                                       Encoding working   process that do not function correctly.
                                                       day from receipt   Housekeeping jobs, which do not work as
                                                       of escalation.     expected, which could weaken system integrity
                                                                          over a period of time. Problems that can be
                                                                          'worked' around in the short term but cause
                                                                          significant operational disruption the long
                                                                          term.
                                                                          Intermittent problems which result in loss of
                                                                          access, systems downtime or loss of data when
                                                                          they occur.
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
3. Important         N/A             24 Hours          72 Hours           Assistance required for technical or
                                                                          functional features of Encoding. Problems
                                                                          which exist, which cause minor operational
                                                                          difficulties.
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
4. Monitor           N/A             72 Hours          As mutually        General queries on Encoding. Undefined
                                                       agreed             problems that may cause minor operational
                                                                          difficulties. Problems that require
                                                                          additional research and monitoring on the
                                                                          part of the customer and Encoding to define
                                                                          and resolve
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
5. Information       N/A             72 Hours          N/A                Comments or suggestions on services,
                                                                          technical features, design or other topics.
                                                                          Normally will not require resolution.
-------------------- --------------- ----------------- ------------------ -----------------------------------------------
</TABLE>

                                       18
<PAGE>

7.   Access Warranty.  In the event Provider or Merchants experience the
inability to access the Streaming Site in such situations as described in
subsection (i) below and Encoding determines in its reasonable judgment that
such inability was caused by Encoding's failure to provide the access for
reasons within Encoding's reasonable control and not as a result of any actions
or inactions of Provider or any third parties (including events caused by
Provider's equipment and third party equipment), Encoding will, upon Provider's
request in accordance with paragraph (iii) below, credit Provider's account as
described below:

(i)    Inability to Access the Streaming Site (Downtime).  If Provider is unable
       to transmit and receive information from the Streaming Site to other
       portions of the Internet because Encoding failed to provide access to the
       Streaming Site for more than [*], then Encoding will [*]. For purposes of
       the foregoing, "unable to transmit and receive" shall mean sustained
       packet loss in excess of 50% based on Encoding's measurements and
       excludes periods of unavailability or outages resulting from (a)
       negligence or other conduct of Provider or its agents, including a
       failure or malfunction resulting from hardware, network connections,
       applications or services provided by Provider or its agents, (b) failure
       or malfunction of any equipment or services not provided by Encoding, (c)
       circumstances beyond the control of Encoding, such as failure of
       electrical or telecommunications systems for reasons beyond Encoding's
       control, and (d) interruption due to scheduled maintenance, alteration or
       implementation.

(ii)   Provider Must Request Credit:  To receive any of the credits described in
       this section, Provider must notify Encoding within [*] from the time
       Provider becomes eligible to receive a credit. Failure to comply with
       this requirement will forfeit Provider's right to receive a credit.

(iii)  Maximum Credit:  In no event will Encoding be required to credit Provider
       [*]. A credit shall be applied only to the month in which there was the
       incident that resulted in the credit. Provider shall not be eligible to
       receive any credits for periods in which Provider received any Services
       free of charge.

8.   Year 2000 Compliance.  Subject to the limitations set forth below, Encoding
represents and warrants to Provider that the Encoding software used in
connection with the provision of the Encoding Streamig Services, when used
properly and in conformity with the product information provided by Encoding,
will accurately store, display, process, provide, and/or receive date data from,
into, and between 1999 and 2000, and the twentieth and twenty-first centuries,
including leap year calculations, provided that all other technology used in
combination with the such software properly exchanges date data with such
software. Encoding makes no representation about individual components within
such software should they be used independently from the product as a whole.
This limited warranty is in lieu of all other warranties, whether express,
implied, or statutory, including, but not limited to, any warranty of
merchantability, fitness for a particular purpose, or any warranty arising out
of any proposal, specification, or sample. Encoding's sole obligation with
respect to this limited warranty, including its total liability for all claims
hereunder, is governed by Section 19 of this Agreement. These limitations on
potential liability were an essential element in setting the price for the
services to be provided by Encoding hereunder.

                                       19
<PAGE>

     claims hereunder, is governed by Section 19 of this Agreement. These
     limitations on potential liability were an essential element in setting the
     price for the services to be provided by Encoding hereunder.

                                       20
<PAGE>

                                   Exhibit F
                                   ---------
                               Audiofile License
                               -----------------

This audiofile License Agreement (this "License"), dated December 17, 1999 (the
"Effective Date"), is entered into by and between Valley Media, Inc., a Delaware
corporation ("Licensor"), and encoding.com, Inc., a Delaware corporation
("Licensee").

1. License Grant

(a)  Licensor hereby grants Licensee a non-exclusive and non-transferable
     license to:

      (i)   Load, transmit, execute, store and/or display the proprietary
            audiofile database created and developed by Licensor (the
            "Database") for Licensee's internal use;

      (ii)  Modify the Database for internal use by Licensee; and

      (iii) Incorporate the Database or portions thereof into Licensee's own
            database for use by Licensee; provided, however, that the Database
            portion of the resulting conjoined work may only be used in
            accordance with this License and will still be subject to all the
            provisions hereof.

(b)  Licensor will provide Licensee with periodic updates of the information
     contained in the Database (each such update, a "Database Update").  For
     purposes of this License, the term "Database" includes any and all Database
     Updates.

(c)  Licensor will provide Licensee with reasonable telephone support for the
     Database at no additional charge.

2.   Restrictions on Transfer

(a)  Licensee may not, without Licensor's prior written consent or as set forth
     in that certain Services Agreement (the "Services Agreement") between
     Licensor and Licensee dated as of the Effective Date (collectively, a
     "Consent to Transfer"), sublicense, sell, lend, rent or otherwise transfer
     the Database or any portion thereof, or assign any of its rights or
     obligations under this License, to any other person or entity, including,
     without limitation, any of Licensee's wholly or partially owned
     subsidiaries or affiliates; provided, however, that Licensee may make
     copies of the Database sufficient for its own back-up, development and
     production purposes.

(b)  If Licensee obtains a Consent to Transfer from Licensor, Licensee will
     obtain a written undertaking from the intended transferee (the "Permitted
     Transferee") prior to effecting such transfer acknowledging and agreeing to
     the following:

     (i)    That the Database is the valuable, sole and exclusive intellectual
            property of Licensor;

     (ii)   That the Permitted Transferee will only use the Database in the
            manner expressly permitted under the Consent to Transfer, and that
            the Permitted Transferee will be liable for any use of the Database
            by Permitted Transferee, its agents, employees, assigns or
            transferees that is not expressly permitted under the Consent to
            Transfer;

     (iii)  That the Permitted Transferee has read and agrees to be bound by
            Sections 4, 6, 7, 8 and 9 of this License with respect to its use of
            the Database; and

     (iv)   That the Permitted Transferee will place appropriate copyright
            notices on all materials created by or for the Permitted Transferee
            that contain all or any portion of the information contained in the
            Database, regardless of whether such materials are in printed,
            video, audio, electronic or any other form.

3.   Fees

Licensee will not be required to pay Licensor any fees under this License.

4.   Rights in Tangible and Intellectual Property

(a)  Except as set forth in the Services Agreement, as between Licensor and
     Licensee, Licensor is the sole and exclusive owner of the Database, any
     supporting materials provided therewith, and any and all patents,
     trademarks, servicemarks, copyrights, trade names, service names, trade
     secrets and other proprietary and/or intellectual property rights
     associated with the Database or such supporting materials. Licensee agrees
     to treat the Database, the information it contains and any such supporting
     materials as the Licensor's confidential trade secrets.

                                       21
<PAGE>

(b)  Except as set forth in the Services Agreement, if any materials created by
     or for Licensee for publication or display or distribution to the public
     contain all or any portion of the information contained in the Database,
     regardless of whether such materials are in printed, video, audio,
     electronic or any other form, Licensee will ensure that such materials
     contain appropriate copyright notices identifying Licensor as the copyright
     holder with respect to such information.

5.   Term:  Termination

The term of this License will commence as of the Effective Date and will
continue until the expiration or termination of the Services Agreement.

6. Warranty

(a)  Licensor warrants that the media on which or by which the Database and the
     Database Updates are delivered and transmitted will be free from defects.
     If any such media are defective, Licensee's sole and exclusive remedy will
     be to elect one of the following:

     (i)    Require that Licensor replace or repair the defective media; or

     (ii)   Require that Licensor retransmit or redeliver the Database or
            Database Update.

(b)  EXCEPT AS SET FORTH IN SECTION 6(a) ABOVE:

     (i)    THE DATABASE IS PROVIDED "AS IS," AND LICENSOR MAKES NO
            REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE CONTENT,
            SUFFICIENCY, ACCURACY, COMPLETENESS OR CURRENCY THEREOF; AND

     (ii)   LICENSOR EXPRESSLY DISCLAIMS ANY EXPRESS, IMPLIED OR STATUTORY
            WARRANTIES WITH RESPECT TO THE DATABASE, INCLUDING, WITHOUT
            LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
            PARTICULAR PURPOSE.

7. Limitations of Liability

(a)  IN NO EVENT WILL LICENSOR BE LIABLE TO LICENSEE FOR ANY SPECIAL, INDIRECT
     OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT LICENSOR HAS BEEN ADVISED OF THE
     POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE FORM OF ACTION.

(b)  IN NO EVENT WILL LICENSOR'S LIABILITY TO LICENSEE FOR ANY CLAIMS, LOSSES OR
     DAMAGES ARISING UNDER THIS LICENSE, WHETHER IN CONTRACT, TORT OR OTHERWISE,
     EXCEED THE TOTAL AMOUNT OF FEES RECEIVED BY LICENSOR HEREUNDER.

8.   Indemnification

Subject to the limitations on liability set forth in Section 7, each party will,
at all times, indemnify, defend and hold the other party harmless from and
against any and all third-party claims, damages, liabilities, costs and expenses
(including reasonable attorney's fees) arising out of any breach or alleged
breach by the indemnifying party of any representation, warranty or covenant
made by such party under this License.

9. Injunctive Relief

The parties agree that Licensor may suffer irreparable harm in the event
Licensee fails to comply with any of the provisions of Sections 2 or 3 of this
License, and that monetary damages and other remedies available at law would, in
themselves, be insufficient to compensate Licensor for such harm.  Therefore, if
Licensee breaches or threatens to breach any of its obligations under Sections 2
or 3 of this License, Licensor will be entitled to obtain injunctive relief from
any court of competent jurisdiction to cure such breach or prevent such
threatened breach, as the case may be, and such injunctive relief shall be in
addition to, and not in lieu of, any other remedies available to Licensor at law
or in equity.

10. Miscellaneous

(a)  Assignment. This License may not be assigned by either party without the
     other party's prior written consent; provided, however, that Licensor may,
     without Licensee's prior written consent, assign its right to receive fees
     hereunder and may assign this License to any of its affiliates or
     subsidiaries.

(b)  Survival.  The provisions of Sections 6, 7 and 8 will survive the
     termination or expiration of this License.

(c)  Amendment and Termination.  No amendment, modification, termination or
     cancellation of this License will be effective unless set forth in a
     writing signed by an authorized representative of the party against which
     enforcement of such amendment is

                                       22
<PAGE>

     sought. No waiver of any provision of this License will be deemed or will
     constitute a waiver of any other provision of this License or a subsequent
     or continuing waiver of the same provision.

(d)  Notices.  Any notice to a party pursuant to this License shall be given by
     one of the following means: (a) certified or registered United States mail,
     postage prepaid, (b) private courier or express service requesting evidence
     of receipt as a part of its service, or (c) by telecopy, with a copy also
     to be given by first class United States mail, postage prepaid, or by any
     means permitted under subparagraphs (a) or (b) of this section. Notices
     shall be given to the parties at the following addressees:

           If to Licensor:  Valley Media, Inc.
                            1280 Santa Anita Court
                            Woodland, California  95776
                            Attention:  Sachin Adarkar, General Counsel
                            Fax Number:  (530) 406-5231

           If to Licensee:  encoding.com, Inc.
                            414 Olive Way, 3rd Floor
                            Seattle, Washington  98101
                            Attn: CFO
                            Fax Number: (206) 832-4001

           with a copy to:  Venture Law Group
                            4750 Carillon Point
                            Kirkland, WA  98033
                            Attn: John W. Robertson
                            Fax Number: (425) 739-8750

(e)  Headings.  The headings of the sections and paragraphs of this License are
     included for purposes of convenience only and shall not affect the
     construction or interpretation of any provisions hereunder.

(f)  Partial Invalidity.  The invalidity of any part or provision of this
     License will not affect the enforceability of the remainder of the License.

(g)  Governing Law.  This License will be governed by and construed in
     accordance with the substantive laws of the State of California applicable
     to contracts entered into and performed entirely within that state.

In witness whereof, the parties have executed this License as of the Effective
Date.

LICENSOR:                              LICENSEE:

Valley Media, Inc.                     encoding.com, inc.

/s/ Sachin Adarkar                     /s/ David C. Bullis
-----------------------------          -----------------------------
By:                                    By:
   --------------------------             --------------------------
Its:                                   Its:
    -------------------------              -------------------------

                                       23
<PAGE>

                                   Exhibit G
                                   ---------
                             Rights Certification
                             --------------------

                             OFFICER'S CERTIFICATE

     The undersigned, on behalf of Valley Media, Inc., a Delaware corporation
("Valley"), hereby certifies as follows:

1.   The undersigned is Valley's duly appointed President and Chief Executive
     Officer.

2.   Valley has been given oral permission by [****].

3.   Valley has been given oral permission by [****].

4.   Valley has been given oral permission by [****].

5.   Valley has been given oral permission by [****].

6.   All capitalized terms not defined in this Certificate will have the
     respective meanings ascribed to such terms in the Agreement.

     In witness whereof, the undersigned has executed this Officer's Certificate
as of December 16, 1999.

/s/ Robert R. Cain
-----------------------
ROBERT R. CAIN

[*] Confidential Treatment Request<PAGE>

                                                                   EXHIBIT 10.32

Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
      treatment request, and have been omitted from this exhibit. Complete,
      unredacted copies of this exhibit have been filed with the Securities and
      Exchange Commission as part of the Company's confidential treatment
      request.

                  NETWORK CREDITS PROGRAM SERVICES AGREEMENT

This Network Credits Program Services Agreement (the "Agreement") is entered
into and effective as of June 22, 1998 (the "Effective Date") by and between
Microsoft Corporation, a Washington corporation located at One Microsoft Way,
Redmond, WA 98052 ("Microsoft") and ISP, as described immediately below:
<TABLE>
<S>                              <C>
------------------------------------------------------------------------
          ISP Name & Address:    Encoding.com, Inc.
                                 1725 Westlake Ave. N.
                                 Suite 102
                                 Seattle, WA  98109
------------------------------------------------------------------------
              Attention:         Contact/Title:  Martin Tobias
                                 Phone: (206) 285-7205
                                 Fax: (206) 285-1128
                                 Email: martin@encoding.com

------------------------------------------------------------------------
         State of Incorp.:       Delaware
------------------------------------------------------------------------
        ISP Services Credit      $250,000
------------------------------------------------------------------------
</TABLE>

                                   Recitals

ISP is an Internet service provider capable of delivering Internet
infrastructure services for Internet Content Providers and corporate customers,
including the encoding, production, hosting and serving of live or on-demand ICP
content.

Microsoft is a developer of operating system technologies and tools for the
development and serving of high-performance, high-fidelity web and intranet
content, including interactive media content.

Microsoft is establishing a "Network Credits Program" whereby ICP's may utilize
Microsoft operating system technologies and ISP services to deliver ICP Content
to the ICP's users.

Microsoft wishes to engage ISP as, and ISP wishes to become, a supplier of
services to the Network Credits Program.

                                   Agreement
1.   Definitions

1    "ASF" means the proposed industry standard format referred to as the
     "Advanced Streaming Format," which as of the Effective Date is in
     comment/revision processes within industry standards bodies, and also any
     successors or replacements for such format that may be designated by such
     industry standards bodies.

2    "Confidential Information" means: (i) any source code of software provided
     by either party upon written request of the other party; (ii) any trade
     secrets and/or other proprietary information not generally known relating
     to either party's product plans, designs, costs, prices and names,
     finances, marketing plans, business opportunities, personnel, research,
     development, hardware configurations, customers or know-how; and (iii) the
     terms and conditions of this Agreement. "Confidential Information" shall
     not include information that: (i) is or becomes generally known or
     available by
<PAGE>

     publication, commercial use or otherwise through no fault of the receiving
     party; (ii) is known and has been reduced to tangible form by the receiving
     party at the time of disclosure and is not subject to restriction; (iii) is
     independently developed by the receiving party without any use of the
     Confidential Information of the disclosing party; (iv) is lawfully obtained
     from a third party that has the right to make such disclosure without
     breach of this Agreement by the receiving party; or (v) is made generally
     available by the disclosing party without restriction on disclosure.

3    "Content" means data, text, audio, video, graphics, photographs, artwork
     and other technology and materials.

4    "ICP Content" means the Streaming Media Content ICP and Microsoft wish to
     make available through the ISP Services.

5    "ICP Site" means the URL and/or intranet site from which ICP wishes to
     redirect its users to take advantage of the ISP Services.

6    "ICP" means a Microsoft-designated Network Credits Program participant,
     including Internet Content Providers and corporate/large entity customers
     using intranets.

7    "ISP Site" means ISP's main website located at www.encoding.com.

8    "ISP Services Credit" means the amount set forth in the table on page 1 of
     this Agreement.

9    "ISP Services Guidelines" means the guidelines and procedures by which ISP
     will engage an ICP, deliver ISP Services to the ICP, and charge/bill the
     ICP for services additional to the portion of the ISP Services Credit
     assigned to the ICP by Microsoft, as more fully described in Exhibit B.

10   "ISP Services" means the provision of development, production, encoding,
     hosting, serving and delivery of "live," "on-demand" and archived ICP
     Content, as more fully described in Exhibit A.

11   "Microsoft Media Player" means the version released in June 1998 of the
     upgrade to the Windows 95 and Windows 98 Microsoft Media Player client
     technology, including all Updates thereof during the Term, that displays
     ASF, other formats of Streaming Media, and other multimedia data-types.

12   "Microsoft Technologies" means NetShow and the Microsoft Media Player.

13   "NetShow" means Microsoft's Streaming Media server technology and services
     for Microsoft Windows NT, including all Updates during the Term, regardless
     of whether marketed by Microsoft under the name "NetShow."

14   "Streaming Media" means audio, video and other media Content that is
     transmitted and played or displayed incrementally, or in semi-real time,
     such that it can be heard, viewed or received by an end user without
     substantial download delays.

15   "Term" means the period commencing on the Effective Date and ending on June
     24, 1999; unless this Agreement is earlier terminated in accordance with
     Section

16   "Updates" means all public releases of Microsoft Technologies during the
     Term, including public maintenance releases, error corrections, upgrades,
     enhancements, additions, improvements, extensions, modifications and
     successor versions.

All other initially capitalized terms shall have the meanings assigned to them
in this Agreement.

2.   Microsoft Obligations.

2.1  Software.
     --------
<PAGE>

   (a)  Microsoft Technologies. Microsoft hereby grants to ISP a worldwide, non-
        exclusive, non-transferable, royalty-free license for the Term, to
        reproduce and use copies of Microsoft Technologies solely for purposes
        of (i) providing the ISP Services and (ii) developing and supporting
        Microsoft Technologies usage as part of ISP's business.

   (b)  Other Microsoft Software. Microsoft shall provide ISP with the Microsoft
        software ("Microsoft Software") set forth in Exhibit C.

   (c)  EULA. Except and solely to the extent otherwise provided in this Section
        2.1, all use of the Microsoft Technologies and Microsoft Software shall
        be in accordance with the end user license agreement ("EULA")
        accompanying such Microsoft Technologies.

   (d)  No Other Rights/Ownership. Except as expressly licensed in this Section
        2.1, ISP shall have no other rights in the Microsoft Technologies and
        Microsoft Software. Microsoft retains all right, title and interest in
        and to the Microsoft Technologies and Microsoft Software. Nothing in
        this Agreement shall be construed, by implication, estoppel or
        otherwise, as granting ISP any rights to any Microsoft software,
        technology or other intellectual property rights other than the express
        rights granted hereunder with respect to the Microsoft Technologies and
        Microsoft Software.

2.2  Early Releases.  During the Term, Microsoft will provide to ISP, at no
     --------------
     charge, an object code copy of each successive commercial release (and, at
     Microsoft's sole discretion, beta and pre-beta releases) of Microsoft
     Technologies. Any pre-release Microsoft Technologies may only be used by
     ISP in accordance with the license grant in Section 2.1. ISP understands
     that pre-release software is not intended for commercial use.

2.3  Consideration.  In consideration of ISP's obligations under this Agreement,
     -------------
     Microsoft will pay ISP (i) the ISP Services Credit upon execution of this
     Agreement and (ii) the monetary consideration, including the ISP
     Development/Infrastructure payment, specified in Exhibit C.

2.4  Promotional Efforts.  Microsoft will use reasonable commercial efforts to
     -------------------
     promote ISP and the ISP Services to top ICPs and to the public at large as
     detailed in Exhibit C, Section IV.

3.   ISP Obligations

3.1  ISP Services.
     ------------

     (a)  Development/Infrastructure Build Out Work.  ISP shall complete the
          development and infrastructure build out work outlined in Exhibit A.

     (b)  Services. ISP shall provide the ISP Services to ICPs in accordance
          with the ISP Services Guidelines and up to the ISP Services Credit.
          ISP shall deliver a description of all available ISP Services,
          including a schedule of fees for such services, so that Microsoft and
          any ICP may track usage of the ISP Services Credit when using ISP
          Services. Microsoft may reallocate the ISP Services Credit among ICPs
          in Microsoft's sole discretion upon reasonable notice to ISP.
          Microsoft may also use ISP Services for its own Streaming Media
          Content.
<PAGE>

          Any ISP Services Credit not allocated by Microsoft by the end of the
          Term may be used by Microsoft as mutually agreed upon with the ISP for
          non-streaming related services during the following six (6) month
          period. Any ISP Service Credit not allocated by Microsoft by the end
          of such six (6) month period shall be forfeit by Microsoft and
          Microsoft shall not be entitled to a refund for such unused ISP
          Service Credit.

     (c)  Other Services. Pursuant to a separate agreement between ISP and ICP,
          ISP may provide to the ICP services in addition to the ISP Services,
          or additional ISP Services beyond the amount of ISP Services Credit
          assigned to an ICP by Microsoft.

     (d)  Reporting. On a monthly basis or as otherwise mutually agreed upon,
          ISP shall report ISP services performed and ISP service credits
          actually used in relation to program.

3.2  Technology Adoption and Promotion.  During the Term, ISP shall use and
     ---------------------------------
     promote Microsoft Technologies as follows:

     (a) ISP shall complete the promotional obligations set forth in Exhibit C.

     (b) ISP shall make reasonable commercial efforts to place a "Powered by
         NetShow" logo on those ICP pages that contain Microsoft-funded ICP
         Content to the extent ISP designs, influences the design, or hosts such
         ICP pages on any ISP website which provides ISP Services. Such logo
         shall be used by ISP in accordance with Microsoft's logo guidelines in
         Exhibit D.

     (c) Microsoft shall be entitled to substitute a different sponsorship
         notice (and corresponding guidelines) in place of the "Powered by
         NetShow" notice for purposes of this Agreement upon reasonable advance
         written notice to ISP.

4.   Non-Exclusive

For purposes of clarification, nothing in this Agreement shall be deemed to
restrict either party's ability to license, develop, sub-license, manufacture,
deploy, support, promote, or distribute software, Content, Streaming Media or
any other technology.

5. Confidentiality.

5.1  Confidentiality Obligations.  Each party shall protect the other's
     ---------------------------
     Confidential Information disclosed hereunder from unauthorized
     dissemination and use with the same degree of care that such party uses to
     protect its own like information. Neither party will use the other's
     Confidential Information for purposes other than those necessary to
     directly further the purposes of this Agreement. Neither party will
     disclose to third parties the other's Confidential Information without the
     prior written consent of the other party. Except as expressly provided in
     this Agreement, no ownership or license rights are granted in any
     Confidential Information. The other provisions of this Agreement
     notwithstanding, either party will be permitted to disclose the
     Confidential Information to its outside legal and financial advisors; and
     to the extent required by applicable law, provided however that before
     making any such required filing or disclosure, the disclosing party shall
     first give written notice of the intended disclosure to the other party,
     within a reasonable time prior to the time when disclosure is to be made,
     and the disclosing party will exercise best efforts, in cooperation with
     and at the expense of the other party, consistent with reasonable time
     constraints, to obtain confidential treatment for all non-public and
     sensitive provisions of this Agreement, including without limitation dollar
     amounts and other numerical information. Each party agrees to notify the
     other in writing of any actual or suspected misuse, misappropriation or
     unauthorized disclosure of Confidential Information of the disclosing party
     which may come to the receiving party's attention.
<PAGE>

5.2  Limitations.  The parties' obligations of confidentiality under this
     -----------
     Agreement shall not be construed to limit either party's right to
     independently develop or acquire products without use of the other party's
     Confidential Information. Further, either party shall be free to use for
     any purpose the residuals resulting from access to or work with such
     Confidential Information, provided that such party shall maintain the
     confidentiality of the Confidential Information as provided herein. The
     term "residuals" means information in non-tangible form, which may be
     retained by persons who have had rightful and good faith access to the
     Confidential Information, including ideas, concepts, know-how or techniques
     contained therein. Neither party shall have any obligation to limit or
     restrict the assignment of such persons or to pay royalties for any work
     resulting from the use of residuals. However, the foregoing shall not be
     deemed to grant to either party a license under the other party's
     copyrights or patents.

6.   Warranties

6.1  ISP.  ISP warrants and covenants that: (i) it has the full power to enter
     ---
     into and perform according to the terms of this Agreement; and (ii) the ISP
     Services will be of high quality and performed in a manner commensurate
     with industry standards and practices.

6.2  Microsoft.  Microsoft warrants and covenants that it has the full power to
     ---------
     enter into and perform according to the terms of this Agreement.

6.3  Continuous Nature.  The representations and warranties contained in this
     -----------------
     Section 6 are continuous in nature and shall be deemed to have been given
     by the warrantor at execution of this Agreement and at each stage of
     performance hereunder.

7.   Disclaimer Of Further Warranties

EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6, ANY AND ALL SOFTWARE, CONTENT, OR
CONFIDENTIAL INFORMATION PROVIDED BY EITHER PARTY TO THE OTHER HEREUNDER IS
PROVIDED "AS IS," WITHOUT WARRANTY OF ANY KIND.  EACH PARTY DISCLAIMS ALL
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND
NONINFRINGEMENT, WITH RESPECT TO ANY MATERIALS OR INFORMATION PROVIDED
HEREUNDER.

8.   Termination

8.1  Termination By Either Party.  Either party may suspend performance and/or
     ---------------------------
     terminate this Agreement:

     (a) Immediately upon written notice at any time, if the other party is in
         material breach of any material warranty, term, condition or covenant
         of this Agreement, other than those contained in Section 5, and fails
         to cure that breach within forty-five (45) days after written notice
         thereof; and

     (b) Immediately upon written notice at any time, if the other party is in
         material breach of Section 5.

8.2  Effect of Termination.
     ---------------------
<PAGE>

     (a)  Neither party shall be liable to the other for damages of any sort
          resulting solely from terminating this Agreement in accordance with
          its terms.

     (b)  Termination of this Agreement shall not affect any other agreement
          between the parties.

8.3  Survival.  In the event of termination or expiration of this Agreement
     --------
     for any reason: (i) Sections 1, 2.1(d), 3.1(b), 4, 5, 6, 7, 8, 9 and 10
     shall survive. Except for Microsoft's termination of this Agreement for
     ISP's material breach, licenses granted to ISP under Sections 2.1(a) and
     (b) shall survive any termination or expiration of the Term of this
     Agreement solely as set forth in the applicable EULA and solely with
     respect to the then current version of the Microsoft Technologies and
     Microsoft Software licensed to ISP.

9.   Limitation Of Liabilities

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
INCIDENTAL, PUNITIVE OR SPECIAL DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF DATA OR
BUSINESS INFORMATION, AND THE LIKE, ARISING OUT OF THIS AGREEMENT OR THE USE OF
OR INABILITY TO USE ANY MICROSOFT TECHNOLOGIES, MICROSOFT SOFTWARE OR EITHER
PARTY'S CONFIDENTIAL INFORMATION OR CONTENT, EVEN IF A PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.

THIS SECTION SHALL NOT APPLY TO SECTION 5.

10.  General Provisions

10.1 Notices.  All notices and requests in connection with this Agreement shall
     -------
     be deemed given as of the day they are received either by messenger,
     delivery service, or in the United States of America mails, postage
     prepaid, certified or registered, return receipt requested, and addressed
     as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
To ISP:  see box on page 1
--------------------------------------------------------------------------------------------------------
To Microsoft:                                           Copy to:
--------------------------------------------------------------------------------------------------------
<S>                                                     <C>
Microsoft Corporation                                   Microsoft Corporation
One Microsoft Way                                       One Microsoft Way
 Redmond, WA  98052-6399                                Redmond, WA  98052-6399
Attention: Director of Business Development, Personal   Attention:  Law & Corporate Affairs
 and Business Systems Division
--------------------------------------------------------------------------------------------------------
Phone:  (425) 882-8080                                  Phone:  (425) 882-8080
--------------------------------------------------------------------------------------------------------
Fax:  (425) 936-7329                                    Fax:  (425) 936-7409
--------------------------------------------------------------------------------------------------------
</TABLE>

or to such other address as a party may designate pursuant to this notice
provision.

10.2  Independent Parties.  Nothing in this Agreement shall be construed as
      -------------------
      creating an employer-employee relationship, a partnership, or a joint
      venture between the parties.

10.3  Governing Law.  This Agreement shall be governed by the laws of the State
      -------------
      of Washington. Any action or litigation concerning this Agreement shall
      take place in the federal or state courts in King County, Washington.
<PAGE>

10.4  Attorneys' Fees.  In any action or suit to enforce any right or remedy
      ---------------
      under this Agreement or to interpret any provision of this Agreement, the
      prevailing party shall be entitled to recover its costs, including
      reasonable attorneys' fees.

10.5  Assignment.  This Agreement shall be binding upon and inure to the benefit
      ----------
      of each party's respective successors and lawful assigns; provided,
      however, that neither party may assign its rights or delegate its duties
      under this Agreement, in whole or in part, to any third party without the
      prior written approval of the other party.

10.6  Force Majeure.  Neither party shall be liable to the other under this
      -------------
      Agreement for any delay or failure to perform its obligations under this
      Agreement if such delay or failure arises from any cause(s) beyond such
      party's reasonable control, including by way of example labor disputes,
      strikes, floods, fire, lightning, utility or communications failures,
      earthquakes, vandalism, war, acts of terrorism, riots, insurrections,
      embargoes, or laws, regulations or orders of any governmental entity.

10.7  Construction.  If for any reason a court of competent jurisdiction finds
      ------------
      any provision of this Agreement, or portion thereof, to be unenforceable,
      that provision of the Agreement will be enforced to the maximum extent
      permissible so as to effect the intent of the parties, and the remainder
      of this Agreement will continue in full force and effect. Failure by
      either party to enforce any provision of this Agreement will not be deemed
      a waiver of future enforcement of that or any other provision. This
      Agreement has been negotiated by the parties and their respective counsel
      and will be interpreted fairly in accordance with its terms and without
      any strict construction in favor of or against either party.

10.8  Entire Agreement.  This Agreement does not constitute an offer by
      ----------------
      Microsoft and it shall not be effective until signed by both parties. This
      Agreement constitutes the entire agreement between the parties with
      respect to the subject matter hereof and merges all prior and
      contemporaneous communications. It shall not be modified except by a
      written agreement dated subsequent to the date of this Agreement and
      signed on behalf of ISP and Microsoft by their respective duly authorized
      representatives.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
MICROSOFT                              ISP

-------------------------------------------------------------------------------
<S>                                    <C>

By: /s/ William Poole                  By: /s/ Martin Tobias

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

Name (print): William Poole            Name (print): Martin Tobias

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

Title: Sr. Director Bus. Dev.          Title: Minister of Reason
-------------------------------------------------------------------------------

Date: 6/25/98                          Date: June 22, 1998

-------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                   Exhibit A

                                  ISP Services

I.   Development/Infrastructure Build Out

     [* * *]

II.  ISP Services

     [* * *]

Definitions and Explanation

     [* * *]

[*] Confidential Treatment Request
<PAGE>

                                   Exhibit B

                            ISP Services Guidelines

Microsoft  shall have sole  discretion  regarding what ICPs, ISP Services,
and allocation of ISP Services Credits shall be used under this Agreement.
Microsoft shall make reasonable efforts to accommodate ICPs that ISP recommends
for this program. Microsoft shall use its best efforts to ensure that each
project for an ICP is at least $10,000 of ISP Services Credits. Microsoft shall
notify ISP of approved ICPs, ISP Services to be used, and allocation of ISP
Services Credits.

Notwithstanding the foregoing, the relationship between ISP and ICP shall be
separate from ISP's relationship with Microsoft. ICP shall be solely responsible
for the services acquired from ISP. ISP shall enter into a separate agreement
with participating ICPs, and such separate agreement shall be entered into in a
timely manner, ISP shall use its best efforts to enter into such agreement
within two weeks following Microsoft written notification to ISP of ICP
participation. At Microsoft's sole discretion, the ISP Services may be performed
for Microsoft acting on behalf of the ICP and under the terms of this Agreement.

ISP shall use reasonable commercial efforts to perform hosting and other
services as ICP shall reasonably request in manner ICP deems reasonably fitting,
including but not limited to "private labeling" of the site (that is, making the
site appear seamlessly a part of the existing ICP sites).

<PAGE>

                                   Exhibit C

                                 Consideration

I.    Software Licenses Provided.

[*]

II.   Development/Infrastructure Consideration.

[*] shall pay [*] [*] to assist [*] with its development/infrastructure build
out as described in Exhibit A. The foregoing shall be paid to ISP within thirty
(30) days of the Effective Date.

III.  ISP Services Credit

[*]

IV.   Promotion.

ISP shall complete the following promotional efforts:
 .  ISP shall establish a public web page with a list of NetShow services
   available from ISP.
 .  ISP shall use appropriate "Powered by NetShow" and other Microsoft technology
   logos in conjunction with content hosted in this program.
 .  ISP shall allow Microsoft to reference ISPs participation in the program in
   sales and marketing materials, including but not limited to presentations and
   press releases.

Microsoft shall complete the following promotional efforts:
 .  Microsoft will promote ISP services on appropriate NetShow sites
 .  Microsoft will promote and evangelize the Network Credits Program to ICPs
 .  To the extent that there are public relations activities planned and executed
   involving the program activities, Microsoft shall include ISP
 .  Microsoft allows ISP to reference ISPs participation in the Microsoft program
   in conjunction with sales and marketing materials (excluding a press release,
   which should be coordinated by Microsoft's program announcements).

[*] Confidential Treatment Request
<PAGE>

                                   Exhibit D

         Logo Program

1.     Except as Microsoft may authorize elsewhere, non-Microsoft Web sites may
       use only the logo provided herein ("Logo"). By downloading or otherwise
       using the Logo, you agree to be bound by these Policies.

2.     You may only use the Logo on your Web site, and not in any other manner.
       It must always be an active link to the Microsoft NetShow Player Download
       page at http://www.microsoft.com/ntserver/netshow/download/player.htm.
       HTML code for the link is shown below.

3.     The Logo gif includes the words "Powered by Microsoft NetShow, Get
       NetShow," describing the significance of the Logo on your site (i.e., the
       Logo is a link to Microsoft, not an endorsement of your site). You may
       not remove or alter this or any other element of the Logo.

4.     The Logo may be used only on Web pages that make accurate references to
       Microsoft or its products or services. Your Web page title and your
       company's other trademarks and logos must appear at least as prominently
       as the Logo. You may not display the Logo in any manner that implies
       sponsorship, endorsement, or license by Microsoft.

5.     The Logo must appear by itself, with a minimum spacing (the height of
       the Logo) between each side of the Logo and other graphic or textual
       elements on your page. The Logo may not be used as a feature or design
       element of any other logo.

6.     You may not alter the Logo in any manner, including size, proportions,
       colors, elements, and so on, or animate, morph or otherwise distort its
       perspective or two-dimensional appearance, except with the authorization
       of Microsoft.

7.     You may not use the Logo on any site that, to your knowledge,
       (i) disparages Microsoft or its products or services, (ii) infringes upon
       any Microsoft intellectual property or other rights, or (iii) violates
       any state, federal, or international law.

8.     These Policies do not grant a license or any other right in Microsoft's
       logos or trademarks. Microsoft reserves the right in its sole discretion
       to terminate or modify permission to use the Logo at any time. Microsoft
       reserves the right to take action against any use that does not conform
       to these Policies, infringes upon any Microsoft intellectual property or
       other rights, or violates other applicable laws.

9.     MICROSOFT DISCLAIMS ANY WARRANTIES THAT MAY BE EXPRESS OR IMPLIED BY
       LAW REGARDING THE LOGO, INCLUDING WARRANTIES AGAINST INFRINGEMENT.

[*]

[*] Confidential Treatment Request

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}]]