Document:

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                                                                    EXHIBIT 10.4

                               ARTISTDIRECT, INC.
                         NOTICE OF GRANT OF STOCK OPTION

      Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of ARTISTdirect, Inc. (the "Corporation"):

      Optionee: Everett Wallace

      Grant Date: August 31, 2004

      Vesting Commencement Date: August 31, 2004

      Exercise Price: $0.50 per share

      Number of Option Shares: 10,000 shares

      Expiration Date: August 31, 2009

      Type of Option: [ ] Incentive Stock Option

                      [X] Non-Statutory Stock Option

      Date Exercisable: Immediately Exercisable.

      Vesting Schedule: All of the shares underlying the Option are vested and
none are subject to repurchase by the Corporation.

      Optionee and the Corporation hereby agree to be bound by all the terms and
conditions of the Option as set forth in the Stock Option Agreement and Stock
Purchase Agreement attached hereto as Exhibits A and B, respectively.

      All capitalized terms in this Notice shall have the meaning assigned to
them in this Notice or in the attached Stock Option Agreement or Stock Purchase
Agreement.

DATED: August 31, 2004

                                            ARTISTDIRECT, INC.

                                            By: /s/ Jonathan Diamond
                                                --------------------------
                                            Name: Jonathan Diamond
                                            Title: President

<PAGE>

                                            By: /s/ Everett Wallace
                                                --------------------------------
                                            Optionee:  Everett Wallace

                                            Address: ___________________________
                                                     ___________________________
                                                     ___________________________

ATTACHMENTS:
EXHIBIT A - NON-STATUTORY STOCK OPTION AGREEMENT
EXHIBIT B - STOCK PURCHASE AGREEMENT

<PAGE>

                                    EXHIBIT A

                             STOCK OPTION AGREEMENT

                               ARTISTDIRECT, INC.
                      NON-STATUTORY STOCK OPTION AGREEMENT

                                    RECITALS

      A.    The Board, including a majority of the independent directors (as
defined in Nasdaq Marketplace Rule 4200(a)(14)), of the Corporation and the
Board's Compensation Committee, comprised of a majority of independent
directors, have approved a stock option grant to Optionee in consideration of
Optionee's past services as a consultant of the Corporation.

      B.    Optionee has not previously been an Employee or director of the
Corporation, and the option evidenced by this Agreement (the "Option") is
granted to Optionee for past services in the capacity of as a consultant.

      C.    The Option is granted to Optionee in consideration of the services
Optionee has rendered to the Corporation and not for any capital-raising
purposes or in connection with any capital-raising activities.

      D.    The Option is intended to be a Non-Statutory Option which does NOT
satisfy the requirements of Section 422 of the Code.

      E.    All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.

      NOW, THEREFORE, it is hereby agreed as follows:

      1.    GRANT OF OPTION. The Corporation hereby grants to Optionee, as of
the Grant Date, an Option to purchase up to the number of Option Shares
specified in the Grant Notice attached hereto. The Option Shares shall be
purchasable at any time or from time to time during the Option term specified in
Paragraph 2 at the Exercise Price.

      2.    OPTION TERM. The Option shall have a term of five (5) years measured
from the Grant Date and shall accordingly expire at the close of business on the
Expiration Date.

      3.    LIMITED TRANSFERABILITY. The Option shall be neither transferable
nor assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee or as otherwise set forth herein. However, the Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established for the exclusive benefit of one or
more such family members. The assigned portion shall be exercisable only by the
person or persons who

<PAGE>

acquire a proprietary interest in the Option pursuant to such assignment or as
set forth herein. The terms applicable to the assigned portion shall be the same
as those in effect for the Option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Board may deem
appropriate.

      4.    DATES OF EXERCISE. The Option shall be immediately exercisable for
all of the Option Shares, and shall remain exercisable for all of the Option
Shares as to which it has not been exercised until the Expiration Date.

      5.    RESERVED

      6.    RESERVED

      7.    ADJUSTMENT IN OPTION SHARES. Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, in order to reflect such change and thereby preclude a dilution
or enlargement of benefits hereunder appropriate adjustments shall be made to
(i) the number and/or class of securities subject to the Option and (ii) the
Exercise Price, but no change shall be made in the aggregate Exercise Price.

      8.    STOCKHOLDER RIGHTS. The holder of the Option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the Option, paid the Exercise Price and become a holder of record
of the purchased shares.

      9.    MANNER OF EXERCISING OPTION.

            (a)   In order to exercise the Option with respect to all or any
part of the Option Shares for which the Option is at the time exercisable,
Optionee (or any other person or persons exercising the Option) must take the
following actions:

                  (i)   Execute and deliver to the Corporation a Notice of
Exercise for the number of Option Shares for which the Option is exercised.

                  (ii)  Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:

                        (A)   cash or check made payable to the Corporation;

                        (B)   shares of Common Stock held by Optionee (or any
                              other person or persons exercising the Option) for
                              the requisite period necessary to avoid a charge
                              to the Corporation's earnings for financial
                              reporting purposes and valued at Fair Market Value
                              on the Exercise Date; or

<PAGE>

                        (C)   through a special sale and remittance procedure
                              pursuant to which optionee (or any other person or
                              persons exercising the Option) shall concurrently
                              provide irrevocable instructions (a) to a
                              brokerage firm, not arranged by and not having any
                              pre-existing business relationship with the
                              Corporation, to effect the immediate sale of all
                              or some of the purchased shares and remit to the
                              Corporation, out of the sale proceeds available on
                              the settlement date, not later than three (3) days
                              after the Exercise Date, sufficient funds to cover
                              the aggregate Exercise Price payable for the
                              purchased shares plus all applicable federal,
                              state and local income and employment taxes
                              required to be withheld by the Corporation by
                              reason of such exercise and (b) to the Corporation
                              to deliver the certificates for the purchased
                              shares directly to such brokerage firm in order to
                              complete the sale

                        (D)   through a "cashless exercise" in which the
                              optionee may elect to receive shares equal to the
                              value (as determined below) of this option (or the
                              portion thereof being cancelled) by surrender of
                              this option at the principal office of the
                              Corporation together with the properly endorsed
                              form in which event the Corporation shall issue to
                              the holder a number of shares of Common Stock
                              computed using the following formula:

                           X= Y (A-B)
                              -------
                                 A

                  Where X=    the number of shares of Common Stock to be issued
                              to the optionee

                        Y=    the number of shares of Common Stock purchasable
                              under the option or, if only a portion of the
                              option is being exercised, the portion of the
                              option being exercised (at the date of such
                              calculation)

                        A=    the market value of one share of the Corporation's
                              Common Stock (at the date of such calculation as
                              determined by the closing price of the Common
                              Stock on the date immediately prior to the
                              Exercise Date)

                        B=    Purchase Price (as adjusted to the date of such
                              calculation)

            Except to the extent the sale and remittance procedure or the
cashless exercise procedure is utilized in connection with the Option exercise,
payment of the Exercise Price must accompany the Notice of Exercise.

                  (iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the Option (if other than Optionee) have
the right to exercise the Option.

                  (iv)  Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it to comply
with the applicable requirements of federal and state securities laws.

<PAGE>

                  (v)   Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction of
all federal, state and local income and employment tax withholding requirements
applicable to the Option exercise.

            (b)   As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising the Option) a certificate for the purchased Option Shares.

            (c)   In no event may the Option be exercised for any fractional
shares.

      10.   RESERVED

      11.   COMPLIANCE WITH LAWS AND REGULATIONS.

            (a)   The exercise of the Option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq Stock Market or
other national market, if applicable, or the Over-The-Counter Bulletin Board) on
which the Common Stock may be listed for trading at the time of such exercise
and issuance. The Corporation and Optionee shall use reasonable efforts to
comply with all such requirements of law and applicable regulations.

            (b)   The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to the Option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.

      12.   SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns and the legal representatives, heirs and legatees
of Optionee's estate.

      13.   GOVERNING LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.

      14.   NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

<PAGE>

      15.   REGISTRATION RIGHTS. The Corporation shall file a registration
statement on S-8 relating to the Option Shares and shall file any and all
amendments to such registration statement in order that the Optionee may sell or
otherwise transfer the Option Shares upon exercise to the fullest extent
permitted under applicable federal and state securities laws.

<PAGE>

                                    EXHIBIT 1

                               NOTICE OF EXERCISE

      I hereby notify ARTISTdirect, Inc. (the "Corporation") that I elect to
purchase ______________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $_____________________________ per
share (the "Exercise Price") pursuant to that certain option (the "Option")
granted to me on ________________________________, 20_____.

      Concurrently with the delivery of this Exercise Notice to the Corporation,
I shall hereby pay to the Corporation the Exercise Price for the Purchased
Shares in accordance with the provisions of my agreement with the Corporation
(or other documents) evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.
Alternatively, I may utilize the special broker-dealer sale and remittance
procedure or cashless exercise procedure specified in my agreement to effect
payment of the Exercise Price.

____________________, 20_____

Date

                                    __________________________________
                                    Optionee

                                    Address:
                                    _______________________________________
                                    _______________________________________
                                    _______________________________________

Print name in exact manner it is to
appear on the stock certificate:       ___________________________

Address to which certificate is to be
sent, if different from address above: ___________________________

                                       ___________________________

Social Security Number: _______________________

Employee Number: ______________________

<PAGE>

                                    APPENDIX

      The following definitions shall be in effect under the Agreement:

      A.    AGREEMENT shall mean this Stock Option Agreement.

      B.    BOARD shall mean the Corporation's Board of Directors.

      C.    CAUSE shall mean Optionee is terminated because Optionee shall have
(i) been convicted of, or pleaded nolo contendere to, any felony or lesser crime
involving fraud, embezzlement or misappropriation of the property of the
Corporation or any of its Subsidiaries; (ii) engaged in gross negligence or
willful misconduct in the performance of Optionee's duties hereunder that has
resulted in material injury to the Corporation; (iii) materially and willfully
breached any material provision hereof; or (iv) misappropriated for his own
purpose and benefit any material property of Corporation or any Subsidiary or
misappropriated for his own purpose and benefit, in violation of his fiduciary
obligation to the Corporation, any material opportunity of the Corporation or
any Subsidiary. Notwithstanding anything to the contrary contained herein, none
of the events or circumstances described in clauses (ii), (iii) or (iv) above
shall constitute "Cause" for purposes of this Agreement unless the Corporation
gives Optionee written notice delineating the claimed event or circumstance and
setting forth the Corporation's intention to terminate Optionee's employment if
such claimed event or circumstance is not capable of remedy or is not duly
remedied within thirty (30) days following such notice, if capable of remedy,
and Optionee fails to remedy such event or circumstance within such thirty
(30)-day period.

      D.    CODE shall mean the Internal Revenue Code of 1986, as amended.

      E.    COMMON STOCK shall mean the Corporation's common stock.

      F.    CORPORATE TRANSACTION shall mean any of the following transactions
effecting a change in control or ownership of the Corporation:

            (i)   a stockholder-approved merger or consolidation in which the
Corporation is merged into or consolidated with any other corporation or entity
and immediately following consummation of the transaction the persons who held
the Corporation's capital stock immediately prior to such transaction hold less
than an aggregate of fifty percent (50%) of the total combined voting power of
the surviving entity's outstanding securities, or

            (ii)  a stockholder-approved sale, transfer or other disposition of
all or substantially all of the Corporation's assets, or

            (iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders.

<PAGE>

      G.    CORPORATION shall mean ARTISTdirect, Inc., a Delaware corporation.

      H.    CONSULTANT shall mean the Optionee in his capacity as a consultant
of the Corporation (or any Parent or Subsidiary), subject to the control and
direction of the Corporation entity as to both the work to be performed and the
manner and method of performance.

      I.    EXERCISE DATE shall mean the date on which the Option shall have
been exercised in accordance with Paragraph 9 of the Agreement.

      J.    EXERCISE PRICE shall mean the exercise price per share as specified
in the Grant Notice.

      K.    EXPIRATION DATE shall mean the date on which the Option expires as
specified in the Grant Notice.

      L.    FAIR MARKET VALUE per share of Common Stock on any relevant date,
for purposes of Paragraph 9 only, shall be determined in accordance with the
following provisions:

            (i)   If the Common Stock is at the time traded on the Nasdaq
National or SmallCap Markets, then the Fair Market Value shall be the average of
the high and low selling prices per share of Common Stock on the date in
question, as such prices are reported by the National Association of Securities
Dealers on the Nasdaq National or SmallCap Markets (or, if not listed on such
market, any other national market) and published in The Wall Street Journal. If
there are no selling prices quoted for the Common Stock on the date in question,
then the Fair Market Value shall be the average of the high and low selling
prices on the last preceding date for which such quotations exist.

            (ii)  If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the average high and low selling
prices per share of Common Stock on the date in question on the Stock Exchange
determined by the Compensation Committee to be the primary market for the Common
Stock, as such prices are officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street Journal. If there
are no selling prices quoted for the Common Stock on the date in question, then
the Fair Market Value shall be the average of the high and low selling prices on
the last preceding date for which such quotations exist.

            (iii) If the Common Stock is at the time traded on the
over-the-counter market, then the Fair Market Value shall be the average of the
closing bid prices over the 30-day period prior to the date in question, as such
prices are reported on the Over The Counter Bulletin Board.

            (iv)  If the Common Stock is not at the time traded on the
over-the-counter market, a Stock Exchange or the Nasdaq National or SmallCap
Markets, then the Fair Market Value shall be as determined in good faith by the
Corporation's Board of Directors.

<PAGE>

      M. GOOD REASON shall mean the occurrence of any of the following: (i) a
material and substantial reduction in Optionee's title, responsibilities or
duties (including, but not limited to, any such reduction following a change in
control of the Corporation); (ii) a reassignment of Optionee to a geographic
location in excess of thirty-five (35) miles from the Corporation's current
principal offices; or (iii) a material breach by the Corporation of any of its
obligations to Optionee hereunder, including, but not limited to, the
Corporation's failure to timely make any payment due to Optionee hereunder.
Notwithstanding anything to the contrary contained herein, none of the foregoing
events or circumstances shall constitute "Good Reason" for purposes of this
Agreement unless Optionee gives the Corporation written notice delineating the
claimed event or circumstance and setting forth Optionee's intention to
terminate his employment if such claimed event or circumstance is not capable of
remedy or is not duly remedied within a reasonable period following such notice
(not to exceed thirty (30) days), if capable of remedy, and the Corporation
fails to remedy such event or circumstance within such reasonable period.

      N.    GRANT DATE shall mean the date of grant of the Option as specified
in the Grant Notice.

      O.    GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the Option evidenced hereby.

      P.    INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service by reason of:

            (i)   Optionee's involuntary dismissal or discharge by the
                  Corporation for reasons other than (X) for Cause or (Y) by
                  reason of death or Permanent Disability, or

            (ii)  Optionee's voluntary resignation for Good Reason.

      Q.    NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

      R.    NOTICE OF EXERCISE shall mean the written notice of exercise in the
form attached hereto as Exhibit 1.

      S.    OPTION SHARES shall mean the number of shares of Common Stock
subject to the Option as specified in the Grant Notice.

      T.    OPTIONEE shall mean the person to whom the Option is granted as
specified in the Grant Notice.

      U.    PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

<PAGE>

      V.    PERMANENT DISABILITY shall mean the inability of Optionee to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.

      W.    SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.

      X.    STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.

      Y.    SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

<PAGE>

                                    EXHIBIT B

                            STOCK PURCHASE AGREEMENT

                               ARTISTDIRECT, INC.

                            STOCK PURCHASE AGREEMENT

            AGREEMENT made this _____ day of ___________________, _____ by and
between ARTIST direct, Inc., a Delaware corporation, and Everett Wallace,
Optionee.

            All capitalized terms in this Agreement shall have the meaning
assigned to them in t his Agreement or in the attached Appendix.

      A.    EXERCISE OF OPTION

            1.    EXERCISE. Optionee hereby purchases from the Corporation, and
the Corporation hereby sells to Optionee ____________ shares of Common Stock
(the "Purchased Shares") pursuant to that certain option (the "Option") granted
Optionee on August 31, 2004 (the "Grant Date") to purchase up to 10,000 shares
of Common Stock (the "Option Shares") at the exercise price of $0.50 per share
(the "Exercise Price").

            2.    PAYMENT. Concurrently with the delivery of this Agreement to
the Corporation, Optionee shall pay the aggregate Exercise Price for the
Purchased Shares in accordance with the provisions of the Option Agreement and
shall deliver whatever additional documents may be required by the Option
Agreement as a condition for exercise.

            3.    STOCKHOLDER RIGHTS. Until such time as the Corporation
exercises the Repurchase Right with respect to any Purchased Shares, Optionee
(or any successor in interest) shall have all the rights of a stockholder
(including voting, dividend and liquidation rights) with respect to those
Purchased Shares, subject, however, to the transfer restrictions of Articles B
and C below.

      B.    SECURITIES LAW COMPLIANCE

            1.    RESTRICTED SECURITIES. While the Purchased Shares have been
registered under the 1933 Act, Optionee hereby confirms that Optionee has been
informed that the Purchased Shares are control securities under the 1933 Act
because Optionee is an affiliate of the Corporation and accordingly, the
Purchased Shares may not be resold or transferred except in compliance with the
federal securities laws.

            2.    RESTRICTIONS ON DISPOSITION OF PURCHASED SHARES. Optionee
shall make no disposition of the Purchased Shares (other than a Permitted
Transfer) unless and until Optionee shall have complied with all requirements of
this Agreement applicable to the disposition of the Purchased Shares.

<PAGE>

            The Corporation shall not be required (i) to transfer on its books
any Purchased Shares which have been sold or transferred in violation of the
provisions of this Agreement or (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting, dividend or liquidation rights to, any
transferee to whom the Purchased Shares have been transferred in contravention
of this Agreement.

            3.    RESTRICTIVE LEGENDS. The stock certificates for the Purchased
Shares shall be endorsed with one or more of the following restrictive legends
(to the extent applicable):

            (a)   "The shares represented by this certificate are "control"
securities under the Securities Act of 1933 because the holder is an affiliate
of the Corporation. The shares may not be sold or offered for sale in the
absence of satisfactory assurances to the Corporation that such sale or offer
complies with all applicable federal and state securities laws."

Upon request by Optionee, the Corporation agrees to remove the legends above, in
each case, when the applicable restrictions or repurchase rights have lapsed and
are no longer applicable.

      C.    TRANSFER RESTRICTIONS

            1.    RESTRICTION ON TRANSFER. Except for any Permitted Transfer,
Optionee shall not transfer, assign, encumber or otherwise dispose of any of the
Purchased Shares which are subject to the Repurchase Right.

            2.    TRANSFEREE OBLIGATIONS. Each person (other than the
Corporation) to whom the Purchased Shares are transferred by means of a
Permitted Transfer must, as a condition precedent to the validity of such
transfer, acknowledge in writing to the Corporation that such person is bound by
the provisions of this Agreement and that the transferred shares are subject to
the Repurchase Right to the same extent such shares would be so subject if
retained by Optionee.

            3.    RESERVED

      D.    GENERAL PROVISIONS

            1.    ASSIGNMENT. This Agreement may be assigned by Optionee without
the prior written consent of the Corporation.

            2.    NOTICES. Any notice required to be given under this Agreement
shall be in writing and shall be deemed effective upon personal delivery, one
business day after being delivered to a reputable overnight courier service, or
upon deposit in the U.S. mail, registered or certified, postage prepaid and
properly addressed to the party entitled to such notice at the address indicated
below such party's signature line on this Agreement or at such other address as
such party may designate by ten (10) days advance written notice under this
paragraph to all other parties to this Agreement.

            3.    NO WAIVER. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.

<PAGE>

      E.    MISCELLANEOUS PROVISIONS

            1.    OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the provisions of this Agreement.

            2.    AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof.

            3.    GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California without resort
to that State's conflict-of-laws rules.

            4.    COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

            5.    SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Optionee, Optionee's permitted assigns and the legal
representatives, heirs and legatees of Optionee's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.

<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement on the day and year first indicated above.

                                         ARTISTDIRECT, INC.

                                         By: ___________________________________
                                         Title: ________________________________

                                         Address:
                                         _______________________________________
                                         _______________________________________
                                         _______________________________________

                                         By: ___________________________________
                                         Optionee: Everett Wallace

                                         Address:
                                         _______________________________________
                                         _______________________________________
                                         _______________________________________

<PAGE>

                             SPOUSAL ACKNOWLEDGMENT

      The undersigned spouse of Optionee has read and hereby approves the
foregoing Stock Purchase Agreement. In consideration of the Corporation's
granting Optionee the right to acquire the Purchased Shares in accordance with
the terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound by all the terms of such Agreement, including (without limitation) the
right of the Corporation (or its assigns) to purchase any Purchased Shares in
which Optionee is not vested at time of his cessation of Service.

                                             OPTIONEE'S SPOUSE

                                           By: _________________________________
                                           Name:________________________________

                                                Address:
                                                ________________________________
                                                ________________________________
                                                ________________________________

<PAGE>

                                    APPENDIX

      The following definitions shall be in effect under the Agreement:

      A.    AGREEMENT shall mean this Stock Purchase Agreement.

      B.    BOARD shall mean the Corporation's Board of Directors.

      C.    CAUSE shall mean Optionee is terminated because Optionee shall have
(i) been convicted of, or pleaded nolo contendere to, any felony or lesser crime
involving fraud, embezzlement or misappropriation of the property of the
Corporation or any of its Subsidiaries; (ii) engaged in gross negligence or
willful misconduct in the performance of Optionee's duties hereunder that has
resulted in material injury to the Corporation; (iii) materially and willfully
breached any material provision hereof; or (iv) misappropriated for his own
purpose and benefit any material property of Corporation or any Subsidiary or
misappropriated for his own purpose and benefit, in violation of his fiduciary
obligation to the Corporation, any material opportunity of the Corporation or
any Subsidiary. Notwithstanding anything to the contrary contained herein, none
of the events or circumstances described in clauses (ii), (iii) or (iv) above
shall constitute "Cause" for purposes of this Agreement unless the Corporation
gives Optionee written notice delineating the claimed event or circumstance and
setting forth the Corporation's intention to terminate Optionee's employment if
such claimed event or circumstance is not capable of remedy or is not duly
remedied within thirty (30) days following such notice, if capable of remedy,
and Optionee fails to remedy such event or circumstance within such thirty
(30)-day period.

      D.    CODE shall mean the Internal Revenue Code of 1986, as amended.

      E.    COMMON STOCK shall mean the Corporation's common stock.

      F.    CORPORATE TRANSACTION shall mean any of the following transactions
effecting a change in control or ownership of the Corporation:

            (i)   a stockholder-approved merger or consolidation in which the
Corporation is merged into or consolidated with any other corporation or entity
and immediately following consummation of the transaction the persons who held
the Corporation's capital stock immediately prior to such transaction hold less
than an aggregate of fifty percent (50%) of the total combined voting power of
the surviving entity's outstanding securities, or

            (ii)  a stockholder-approved sale, transfer or other disposition of
all or substantially all of the Corporation's assets, or

            (iii) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders.

<PAGE>

      G.    CORPORATION shall mean ARTISTdirect, Inc., a Delaware corporation,
and any surviving or successor entity to all or substantially all of the assets
or voting stock of ARTISTdirect, Inc.

      H.    EMPLOYEE shall mean the Optionee in his capacity as an employee of
the Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.

      J.    EXERCISE PRICE shall have the meaning assigned to such term in
Paragraph A.1.

      K.    GOOD REASON shall mean the occurrence of any of the following: (i) a
material and substantial reduction in Optionee's title, responsibilities or
duties (including, but not limited to, any such reduction following a change in
control of the Corporation); (ii) a reassignment of Optionee to a geographic
location in excess of thirty-five (35) miles from the Corporation's current
principal offices; or (iii) a material breach by the Corporation of any of its
obligations to Optionee hereunder, including, but not limited to, the
Corporation's failure to timely make any payment due to Optionee hereunder.
Notwithstanding anything to the contrary contained herein, none of the foregoing
events or circumstances shall constitute "Good Reason" for purposes of this
Agreement unless Optionee gives the Corporation written notice delineating the
claimed event or circumstance and setting forth Optionee's intention to
terminate his employment if such claimed event or circumstance is not capable of
remedy or is not duly remedied within a reasonable period following such notice
(not to exceed thirty (30) days), if capable of remedy, and the Corporation
fails to remedy such event or circumstance within such reasonable period.

      L.    GRANT DATE shall have the meaning assigned to such term in Paragraph
A.1.

      M.    GRANT NOTICE shall mean the Notice of Grant of Stock Option pursuant
to which Optionee has been informed of the basic terms of the Option.

      N.    INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service by reason of:

            (i)   Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than (X) for Cause or (Y) by reason of death or
Permanent Disability, or

            (ii)  Optionee's voluntary resignation for Good Reason.

      O.    1933 ACT shall mean the Securities Act of 1933, as amended.

      P.    NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.

      Q.    OPTION shall have the meaning assigned to such term in Paragraph
A.1.

      R.    OPTION AGREEMENT shall mean all agreements and other documents
evidencing the Option.

<PAGE>

      S.    OPTIONEE shall mean the person to whom the Option is granted.

      T.    OWNER shall mean Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Optionee.

      U.    PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

      V.    PERMANENT DISABILITY shall mean the inability of Optionee to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.

      W.    PERMITTED TRANSFER shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Purchased
Shares effected pursuant to Optionee's will or the laws of inheritance following
Optionee's death, (iii) a transfer to the Corporation in pledge as security for
any purchase-money indebtedness incurred by Optionee in connection with the
acquisition of the Purchased Shares, or (iv) a transfer of the Purchased Shares
to a trust for the sole benefit of Optionee or his immediately family.

      X.    PRIOR PURCHASE AGREEMENT shall have the meaning assigned to such
term in Paragraph D.4.

      Y.    PURCHASED SHARES shall have the meaning assigned to such term in
Paragraph A.1.

      Z.    RECAPITALIZATION shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.

      AA.   REPURCHASE RIGHT shall mean the right granted to the Corporation in
accordance with Article D.

      BB.   SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.

      CC.   SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

<PAGE>

      DD.   VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice pursuant to which the Optionee is to vest in the Option Shares in a
series of installments over his period of Service; provided, the Option Shares
are subject to accelerated vesting pursuant to Section D.6 of the Agreement.

      EE.   UNVESTED SHARES shall have the meaning assigned to such term in
Paragraph D.1.<PAGE>

                                                                    EXHIBIT 10.5

                               ARTISTDIRECT, INC.

                           2004 CONSULTANT STOCK PLAN

                                 PURPOSE OF PLAN

      WHEREAS, the purpose of this 2004 Consultant Stock Plan is to advance the
interests of the Company by helping the Company obtain and retain the services
of persons providing consulting services upon whose judgment, initiative,
efforts and/or services the Company is substantially dependent, by offering to
or providing those persons with incentives or inducements affording such persons
an opportunity to become owners of capital stock of the Company.

                          TERMS AND CONDITIONS OF PLAN

      1.    DEFINITIONS.

            Set forth below are definitions of capitalized terms that are
generally used throughout this Plan, or references to provisions containing such
definitions (capitalized terms whose use is limited to specific provisions are
not referenced in this Section):

            (a)   AFFILIATE - The term "Affiliate" is defined as any person
controlling the Company, controlled by the Company, or under common control with
the Company.

            (b)   AWARD - The term "Award" is collectively and severally defined
as any Award Shares granted under this Plan.

            (c)   AWARD SHARES - The term "Award Shares" is defined as shares of
Common Stock granted by the Compensation Committee in accordance with Section 5
of this Plan.

            (d)   BOARD - The term "Board" is defined as the Board of Directors
of the Company, as such body may be reconstituted from time to time.

            (e)   COMMON STOCK - The term "Common Stock" is defined as the
Company's common stock, no par value.

            (f)   COMPANY - The term "Company" is defined as ARTISTdirect, Inc.,
a Delaware corporation.

            (g)   COMPENSATION COMMITTEE - The term "Compensation Committee" is
defined as that Committee appointed by the Board to administer and interpret
this Plan as more particularly described in Section 3 of the Plan; provided,
however, that the term Compensation Committee will refer to the Board during
such times as no Compensation Committee is appointed by the Board.

            (h)   DISPOSED - The term "Disposed" (or the equivalent terms
"Disposition" or "Dispose") is defined as any transfer or alienation of an Award
which would directly or indirectly change the legal or beneficial ownership
thereof, whether voluntary or by operation of law, or with

                                       1
<PAGE>

or without the payment or provision of consideration, including, by way of
example and not limitation: (i) the sale, assignment, bequest or gift of the
Award; (ii) any transaction that creates or grants a right to obtain an interest
in the Award; (iii) any transaction that creates a form of joint ownership in
the Award between the Recipient and one or more other Persons; (iv) any
Disposition of the Award to a creditor of the Recipient, including the
hypothecation, encumbrance or pledge of the Award or any interest therein, or
the attachment or imposition of a lien by a creditor of the Recipient of the
Award or any interest therein which is not released within thirty (30) days
after the imposition thereof; (v) any distribution by a Recipient which is an
entity to its stockholders, partners, co-venturers or members, as the case may
be, or (vi) any distribution by a Recipient which is a fiduciary such as a
trustee or custodian to its settlors or beneficiaries.

            (i)   ELIGIBLE PERSON - The term "Eligible Person" means any Person
who, at a particular time, is a consultant to the Company or an Affiliate who
provides bona fide consulting services to the Company or the Affiliate,
provided, however, no Award hereunder may be granted to any Person in connection
with the provision of any services incident to the raising of capital or
promotion or maintenance of a market for the Company's securities.

            (j)   FAIR MARKET VALUE - The term "Fair Market Value" means the
fair market value as of the applicable valuation date of the Award Shares, or
other shares of Common Stock, as the case may be (the "Subject Shares"), to be
valued as determined by the Compensation Committee in its good faith judgment,
but in no event shall the Fair Market Value be less than the par value of the
Subject Shares.

            (k)   PERSON - The term "Person" is defined, in its broadest sense,
as any individual, entity or fiduciary such as, by way of example and not
limitation, individual or natural persons, corporations, partnerships (limited
or general), joint-ventures, associations, limited liability
companies/partnerships, or fiduciary arrangements, such as trusts.

            (l)   PLAN - The term "Plan" is defined as this 2004 Consultant
Stock Plan.

            (m)   RECIPIENT - The term "Recipient" is defined as any Eligible
Person who, at a particular time, receives the grant of an Award.

            (n)   SECURITIES ACT - The term "Securities Act" is defined as the
Securities Act of 1933, as amended (references herein to Sections of the
Securities Act are intended to refer to Sections of the Securities Act as
enacted at the time of the adoption of this Plan by the Board and as
subsequently amended, or to any substantially similar successor provisions of
the Securities Act resulting from recodification, renumbering or otherwise).

      2.    TERM OF PLAN.

            This Plan shall be effective as of such time and date as this Plan
is adopted by the Board, and this Plan shall terminate on the first business day
prior to the ten (10) year anniversary of the date this Plan became effective.
All Awards granted pursuant to this Plan prior to the effective date of this
Plan shall not be affected by the termination of this Plan and all other
provisions of this Plan shall remain in effect until the terms of all
outstanding Awards have been satisfied or terminated in accordance with this
Plan and the terms of such Awards.

                                       2
<PAGE>

      3.    PLAN ADMINISTRATION.

            (a)   COMPENSATION COMMITTEE.

                  (i)   The Plan shall be administered and interpreted by the
Compensation Committee consisting of two (2) or more members of the Board;
provided, however, no member of the Board may serve as a member of the
Compensation Committee if such person serves or served as a member of the
Compensation Committee with respect to any plan (other than this Plan) of the
Company or its Affiliates which plan was or is established to comply with the
provisions of Rule 16b-3(c)(2)(i) to the Securities and Exchange Act of 1934, as
amended (i.e., pertaining to the establishment of so-called "Section 16b-3
Plans"), and, by reason of such person's proposed service as a member of the
Compensation Committee, such person would not be considered a "disinterested"
person within the meaning of said Rule with respect to such other plan.

                  (ii)  Members of the Compensation Committee may resign at any
time by delivering written notice to the Board. Vacancies in the Compensation
Committee shall be filled by the Board. The Compensation Committee shall act by
a majority of its members in office. The Compensation Committee may act either
by vote at a meeting or by a memorandum or other written instrument signed by a
majority of the Compensation Committee.

                  (iii) If the Board, in its discretion, does not appoint a
Compensation Committee, the Board itself will administer and interpret the Plan
and take such other actions as the Compensation Committee is authorized to take
hereunder; provided that the Board may take such actions hereunder in the same
manner as the Board may take other actions under the Certificate of
Incorporation and bylaws of the Company generally.

            (b)   ELIGIBILITY OF COMPENSATION COMMITTEE MEMBERS TO RECEIVE
AWARDS. While serving on the Compensation Committee, such members shall not be
eligible for selection as Eligible Persons to whom an Award may be granted under
the Plan.

            (c)   POWER TO MAKE AWARDS. The Compensation Committee shall have
the full and final authority in its sole discretion, at any time and from
time-to-time, subject only to the express terms, conditions and other provisions
of the Certificate of Incorporation of the Company and this Plan, and the
specific limitations on such discretion set forth herein, to:

                  (i)   Designate the Eligible Persons or classes of Eligible
      Persons eligible to receive Awards from among the Eligible Persons;

                  (ii)  Grant Awards to such selected Eligible Persons or
      classes of Eligible Persons in such form and amount (subject to the terms
      of the Plan) as the Compensation Committee shall determine;

                  (iii) Interpret the Plan, adopt, amend and rescind rules and
      regulations relating to the Plan, and make all other determinations and
      take all other action necessary or advisable for the implementation and
      administration of the Plan; and

                  (iv)  Delegate all or a portion of its authority under
      subsections (i) and (ii) of this Section 3(c) to one or more directors of
      the Company who are executive officers of the Company, subject to such
      restrictions and limitations (such as the aggregate number

                                       3
<PAGE>

      of shares of Common Stock that may be awarded) as the Compensation
      Committee may decide to impose on such delegate directors.

            In determining the recipient, form and amount of Awards, the
Compensation Committee shall consider any factors deemed relevant, including the
recipient's functions, responsibilities, value of services to the Company and
past and potential contributions to the Company's profitability and sound
growth.

            (d)   INTERPRETATION OF PLAN. The Compensation Committee shall, in
its sole and absolute discretion, interpret and determine the effect of all
matters and questions relating to this Plan. The interpretations and
determinations of the Compensation Committee under the Plan (including without
limitation determinations pertaining to the eligibility of Persons to receive
Awards, the form, amount and timing of Awards, the methods of payment for
Awards, and the other terms and provisions of Awards and the certificates or
agreements evidencing same) need not be uniform and may be made by the
Compensation Committee selectively among Persons who receive, or are eligible to
receive, Awards under the Plan, whether or not such Persons are similarly
situated. All actions taken and all interpretations and determinations made
under this Plan in good faith by the Compensation Committee shall be final and
binding upon the Recipient, the Company, and all other interested Persons. No
member of the Compensation Committee shall be personally liable for any action
taken or decision made in good faith relating to this Plan, and all members of
the Compensation Committee shall be fully protected and indemnified to the
fullest extent permitted under applicable law by the Company in respect to any
such action, determination, or interpretation.

            (e)   COMPENSATION; ADVISORS. Members of the Compensation Committee
shall receive such compensation for their services as members as may be
determined by the Board. All expenses and liabilities incurred by members of the
Compensation Committee in connection with the administration of the Plan shall
be borne by the Company. The Compensation Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers, or
other Persons, at the cost of the Company. The Compensation Committee, the
Company and its officers and directors shall be entitled to rely upon the
advice, opinions, or valuations of any such Persons.

      4.    STOCK POOL.

            (a)   MAXIMUM NUMBER OF SHARES AUTHORIZED UNDER PLAN. Shares of
stock which may be issued or granted under the Plan shall be authorized and
unissued or treasury shares of Common Stock. The aggregate maximum number of
shares of Common Stock which may be issued as a grant of Award Shares shall not
exceed 500,000 shares of Common Stock (the "Stock Pool").

            (b)   DATE OF AWARD. The date an Award is granted shall mean the
date selected by the Compensation Committee as of which the Compensation
Committee allots a specific number of shares to a Recipient with respect to such
Award pursuant to the Plan.

                                       4
<PAGE>

      5.    AWARD SHARES.

            (a)   GRANT. The Compensation Committee may from time to time, and
subject to the provisions of the Plan and such other terms and conditions as the
Compensation Committee may prescribe, grant to any Eligible Person one or more
shares of Common Stock ("Award Shares") allotted by the Compensation Committee.
The grant of Award Shares or grant of the right to receive Award Shares shall be
evidenced by either a written consulting agreement or a separate written
agreement confirming such grant, executed by the Company and the Recipient,
stating the number of Award Shares granted and stating all terms and conditions
of such grant.

            (b)   PURCHASE PRICE AND MANNER OF PAYMENT. The Compensation
Committee, in its sole discretion, may grant Award Shares in any of the
following instances:

                  (i)   as a "bonus" or "reward" for services previously
      rendered and compensated, in which case the recipient of the Award Shares
      shall not be required to pay any consideration for such Award Shares, and
      the value of such Award Shares shall be the Fair Market Value of such
      Award Shares on the date of grant; or

                  (ii)  as "compensation" for the previous performance or future
      performance of services or attainment of goals, in which case the
      recipient of the Award Shares shall not be required to pay any
      consideration for such Award Shares (other than the performance of his
      services), and the value of such Award Shares received (together with the
      value of such services or attainment of goals attained by the Recipient),
      may not be less than one hundred percent (100%) of the Fair Market Value
      of such Award Shares on the date of grant; or

      6.    ADJUSTMENTS.

            (a)   SUBDIVISION OR STOCK DIVIDEND. If (i) outstanding shares of
Common Stock shall be subdivided into a greater number of shares by reason of
recapitalization or reclassification, the number of shares of Common Stock, if
any, available for issuance in the Stock Pool shall, simultaneously with the
effectiveness of such subdivision or immediately after the record date of such
dividend, be proportionately increased, and (ii) conversely, if the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
number of shares of Common Stock, if any, available for issuance in the Stock
Pool shall, simultaneously with the effectiveness of such combination, be
proportionately increased.

            (b)   ADJUSTMENTS DETERMINED IN SOLE DISCRETION OF BOARD. To the
extent that the foregoing adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive.

            (c)   NO OTHER RIGHTS TO RECIPIENT. Except as expressly provided in
this Section 6, (i) the Recipient shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, and (ii) the dissolution, liquidation, merger, consolidation
or divisive reorganization or sale of assets or stock to another corporation, or
any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of
shares. The grant of an Award pursuant to this Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its

                                       5
<PAGE>

capital or business structure or to merge, consolidate, dissolve or liquidate,
or to sell or transfer all or any part of its business or assets.

      7.    EMPLOYMENT STATUS.

            In no event shall the granting of an Award be construed as granting
a continued right of employment to a Recipient if such Person is employed by the
Company, nor effect any right which the Company may have to terminate the
employment of such Person, at any time, with or without cause, except to the
extent that such Person and the Company have agreed otherwise in writing.

      8.    AMENDMENT AND DISCONTINUATION OF PLAN; MODIFICATION OF AWARDS.

            (b)   AMENDMENT, MODIFICATION OR TERMINATION OF PLAN. The Board may
amend the Plan or suspend or discontinue the Plan at any time or from
time-to-time; provided, however no such action may adversely alter or impair any
Award previously granted under this Plan without the consent of each Recipient
affected thereby.

            (b)   COMPLIANCE WITH LAWS. The Compensation Committee may at any
time or from time-to-time, without receiving further consideration from any
Person who may become entitled to receive or who has received the grant of an
Award hereunder, modify or amend Awards granted under this Plan as required to:
(i) comply with changes in securities, tax or other laws or rules, regulations
or regulatory interpretations thereof applicable to this Plan or Awards
thereunder or to comply with stock exchange rules or requirements.

                                     *****

                                       6

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