Document:

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                                                                   EXHIBIT 10.42

                          STRATEGIC MARKETING AGREEMENT

         THIS STRATEGIC MARKETING AGREEMENT (this "Agreement"), dated as of
December 20, 1999, is being entered into by and between BMG Music d/b/a BMG
Entertainment, a New York general partnership ("Group") and ARTISTdirect, Inc.,
a Delaware corporation ("Company"):

         WHEREAS, as of the date hereof, Group together with its Affiliates (as
defined below) is an active participant in the music industry;

         WHEREAS, Group and Company believe there are synergies between Group's
business and Company's business;

         WHEREAS, Group (or one of its Affiliates) has become a significant
equity owner in Company; and

         WHEREAS, Group and Company desire to set forth certain understandings
between them with respect to strategic marketing and other commitments which
each believes will advantage its business.

         NOW, THEREFORE, in consideration of the premises, covenants, agreements
and obligations hereinafter set forth and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound hereby, Company and Group hereby agree as follows.

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

         (a) "Action" means any claim, action, suit, arbitration, inquiry,
proceeding, notice of violation, or investigation by or before any Governmental
Authority.

         (b) "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. Affiliates also include, with respect to Company, any other person in
which the Company or one of its Affiliates serves as a general partner or as a
trustee (or similar capacity). For purposes of this definition, "control"
(including "controlled by" and "under common control with") means, with respect
to the relationship between or among two or more Persons, the possession,
directly or indirectly, or as trustee, personal representative, or executor, of
the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee, personal
representative, or executor, by contract or otherwise, including, the ownership,
directly or indirectly, of securities having the power to elect a majority of
the board of directors or similar body governing the affairs of such Person.

         (c) "Business Days" means any day except a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in the City of
New York.

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

         (e) "Company" shall have the meaning set forth in the preamble.

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

         (g) "Content" means music and music related content related to a Group
Artist (i) made available by Group or its Affiliates for marketing and
promotional purposes to non-Affiliated Persons (e.g., materials related to new
artists and new releases, electronic press kits, music audio samples, music
digital downloads, cybercasts, photographs, album covers, concert film clips,
biographical information, promotional merchandise and similar materials), or
(ii) designated by Group, in its sole discretion, as "Content" for the purposes
of this Agreement.

         (h) "Controlled Affiliates", means any separately-branded or -imprinted
music label in which Group owns or holds, directly or indirectly, a fifty
percent or greater equity interest; provided, however, that a "50/50" joint
venture music label shall only be deemed a Controlled Affiliate if the
day-to-day management of such Controlled Affiliate is actually controlled,
directly or indirectly, by Group.

         (i) "Derived Analyses" means analyses created by or for Company or an
Affiliate thereof during the Term and (A) created primarily through the analysis
of Other Data and provided by Company or an Affiliate thereof to any
non-Affiliated Person (other than a Person who is featured on a web site
operated by Company or an Affiliate thereof and Company or an Affiliate thereof
is contractually prohibited from disclosing such Derived Analysis), or (B)
related solely to Group Data. Derived Analyses shall not include any individual
level data (i.e. data which would permit an entity to identify a single consumer
by his or her name or email address).

         (j) "Exclusive Content" means Content related to a Group Artist that
Group or its Affiliates makes available to Company or an Affiliate thereof
during the Term and with respect to which at least one of the following is true:
(i) such Content has not been and is not available (whether for online or
off-line use) and remains unavailable to any Person other than Company and/or
its Affiliates; (ii) such Content has not been and is not available (whether for
online or off-line use) and remains unavailable to any Person other than Company
and/or its Affiliates for a period of time to be agreed on a case-by-case basis
by, on the one hand, Company and/or its Affiliates and, on the other hand, Group
or its Affiliate providing such Content; or (iii) such Content has not been and
is not available and remains unavailable to any Person other than Company and/or
its Affiliates for online use, although it is made available to other Persons
solely for off-line use.

         (k) "Generally Available Content" means Content related to a Group
Artist that Group or a Controlled Affiliate thereof makes generally available
during the Term to Online Music Companies for use on web sites.

         (l) "Governmental Authority" means any national, federal, state,
municipal, local, or other government, governmental, regulatory, or
administrative authority, agency, or commission, or any court, tribunal, or
judicial or arbitral body.

         (m) "Group" shall have the meaning set forth in the preamble.

         (n) "Group Artist" means a recording artist who is, as of any date of
determination, subject to (i) an exclusive recording agreement (with customary
industry carve outs) with Group or an Affiliate of Group; (ii) an exclusive
license agreement (with customary

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industry carve outs) with Group or an Affiliate of Group; or (iii) an
arrangement wherein Group or an Affiliate thereof exclusively distributes
product of such artist.

         (o) "Group Artist Site" means any web site (whether or not located on
the World Wide Web) owned or operated by Company or an Affiliate thereof that
(i) uses the name of, or predominantly features, a Group Artist, and (ii) is
owned or operated by Company or an Affiliate thereof as a result of the
substantial efforts during the Term of Group or an Affiliate thereof. For
purposes of clarity, any web site owned or operated by Company or an Affiliate
thereof pursuant to a written agreement or arrangement entered into by Company
or an Affiliate thereof prior to the Commencement Date shall not be a "Group
Artist Site"; provided, however, that if the Group Artist who is featured on
such web site (or an entity furnishing such Group Artist's services) agrees, as
a result of Group's or an Affiliate's thereof substantial efforts during the
Term, to extend such agreement or arrangement beyond the term thereof (as such
term exists as of the Commencement Date), then such web site shall be deemed a
"Group Artist Site" during such extension. Notwithstanding the foregoing, any
"Group Artist Site" shall cease to be a "Group Artist Site" upon the date the
applicable artist is no longer a Group Artist and has executed an exclusive
recording agreement (subject to customary carve outs in the recording industry)
with a Third Party.

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

         (q) "Group Data" means any and all data collected by Company or an
Affiliate thereof (i) with respect to a consumer that registers with Company or
an Affiliate of Company through a Group Artist Site, (ii) with respect to any
transaction by a consumer related to a Group Artist Site or any transaction with
respect to product distributed by Group or an Affiliate thereof, and (iii) with
respect to any transaction by a consumer related to (A) a former Group Artist
Site, and (B) product distributed by the Group or Affiliate thereof.
Notwithstanding the foregoing, Group Data shall not include any data that
Company or an Affiliate thereof is prohibited from providing to Group or an
Affiliate thereof without such artist's consent (unless such consent has been
obtained) or a consumer's consent.

         (r) "Indemnitee" shall have the meaning specified in paragraph 9(a).

         (s) "Indemnitor" shall have meaning specified in paragraph 9(a).

         (t) "Law" means any international, national, federal, state,
provincial, municipal, local, or other statute, law, ordinance, regulation,
rule, code, order, or other requirement or rule of law.

         (u) "Licensed Content" shall have the meaning set forth in paragraph
7(a).

         (v) `Licensor Marks" shall have the meaning set forth in paragraph
7(c).

         (w) "Losses" means, with respect to any specified Person, all debts,
liabilities, obligations, losses, damages, claims, costs, expenses, amounts paid
in settlement, interest, awards, judgments, penalties, or fines of any kind,
nature, or description whatsoever (including all reasonable fees and
disbursements of counsel, accountants, experts, and consultants) suffered,
incurred, or sustained by such Person or to which such Person becomes subject
(including in connection with any Action brought or otherwise initiated by or on
behalf of such

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Person, whether against an Indemnitor hereunder or any other Person), based
upon, resulting from, arising out of, or relating to any specified facts or
circumstances.

         (x) "Marketing Support" shall mean the following: (i) advertising
space, (ii) marketing services, (iii) promotional products or services, (iv)
Other Data, (v) Derived Analyses, and (vi) other marketing or promotional
products or services.

         (y) "Online Music Company" means any Person who engages, as more than
an incidental portion of its commercial activities, in the online sale of music
or music/artist-related merchandise or the online publication of music-related
content online.

         (z) "Other Data" means any and all data owned or controlled by Company
or an Affiliate thereof and made available by Company or an Affiliate thereof to
any Person, non-Affiliated to Company and shall specifically exclude (i) Group
Data, (ii) data owned by a Person non-Affiliated to Company, and (iii) data as
to a particular web site made available solely to the Person controlling the
rights to substantially all the content on such web site for example, an artist,
such artist's record label or a branding entity (e.g., "Dick Clark Presents").
Further, Other Data shall not include any data that Company or an Affiliate
thereof is prohibited from providing to Group or an Affiliate thereof without
such artist's or branding entity's consent (unless such consent has been
obtained) or a consumer's consent (unless such consent has been obtained).

         (aa) "Permitted Web Sites" shall have the meaning set forth in
paragraph 7(a) below.

         (bb) "Person" means any individual, partnership, firm, corporation,
limited liability company, joint venture, association, trust, unincorporated
organization, or other entity.

         (cc) "Representative" means, with respect to any specified Person, any
Affiliate, manager, director, officer, employee, agent, accountant, or counsel
of, or other Person empowered to act for, such Person.

         (dd) "Special Content" means Content related to a Group Artist (other
than Exclusive Content) that Group or its Affiliates makes available during the
Term and with respect to which at least one of the following is true: (i) such
Content has not been and is not available (whether for online or off-line use)
and remains unavailable except that it is made available to (A) Company and/or
its Affiliates and (B) a limited number of Online Music Companies (which may
include Affiliates of Group); (ii) such Content has not been and is not
available (whether for online or off-line use) and remains unavailable except
that it is made available to (A) Company and/or its Affiliates and (B) a limited
number of Online Music Companies (which may include Affiliates of Group) for a
period of time to be agreed on a case-by-case basis by, on the one hand, the
recipient of such Content and, on the other hand, Group or its Affiliate
providing such Content; or (iii) such Content has not been and is not available
and remains unavailable except that it is made available to (A) Company and/or
its Affiliates and (B) a limited number of Online Music Companies (which may
include Affiliates of Group) for online use, although it is made available to
other Persons for off-line use.

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

         (ff) "Third Party" shall mean any Person anywhere in the universe who
is not, as of any date of determination, then an Affiliate of Group or Company.

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         (gg) "Third-Party Claims" shall have meaning specified in paragraph
9(b).

         (hh) "Third Party Payments" shall mean any payments required by
contract or law to a Person other than Group or one of its Affiliates. For
purposes of clarity, a payment made to Group or one of its Affiliates in its
capacity as an agent of a third party shall be a Third Party Payment (e.g., a
payment made to a Group Affiliate which is a music publishing company for the
benefit of an artist shall be a Third Party Payment hereunder).

         2. Term. The term of this Agreement (the "Term") shall commence on the
date of this Agreement (the "Commencement Date") and end on the earlier of (a)
the third anniversary of the Commencement Date and (b) the termination of the
Agreement pursuant to paragraph 8 below.

         3. Group Obligations.

         (a) Generally Available Content. During the Term, Group shall, and
shall cause its Affiliates to, regularly make available and grant the right to
use, Generally Available Content to Company and its Affiliates in the same
manner that Group or the applicable Group Affiliate allows Online Music
Companies to use the applicable Generally Available Content (it being understood
and agreed that, unless Group or an Affiliate thereof specifically grants such
rights to Company or an Affiliate thereof, Company shall not acquire any rights
in Generally Available Content greater than those rights generally granted by
Group or an Affiliate thereof to other Online Music Companies). [***]*. Group
shall use commercially reasonable efforts to make available, or cause to be made
available, to Company all Generally Available Content of a general promotional
nature no later than such content is generally made available to Online Music
Companies; provided that Group shall have no liability whatsoever for its
failure to comply with the requirements of this sentence. Notwithstanding the
foregoing, Group shall not be deemed to be in breach of this paragraph 3(a) for
any purpose hereunder if such breach is caused by the failure of any Group
Affiliate (other than Controlled Affiliates) to comply with this paragraph 3(a).

         (b) Special Content and Exclusive Content. (i) Group shall, and shall
cause its Controlled Affiliates to, from time to time provide the opportunity
for Company and its Affiliates to obtain the right to use Special Content or
Exclusive Content. All terms and conditions applicable to Company's or its
Affiliates' use of any particular Special Content or Exclusive Content shall be
negotiated in good faith by the parties. The parties acknowledge and agree that,
at the discretion of Group and its Controlled Affiliates, Special Content and
Exclusive Content may be made available to Company and its Affiliates only upon
the payment by Company or its Affiliates of mutually agreed consideration [***]*
Examples of Special Content or Exclusive Content may be instances where a Group
or its Controlled Affiliate has the right to license or provide: (1) a
cybercast, made available first and exclusively to Company for a limited period
of time or a limited number of broadcasts, and for which Company would pay a fee
and any required Third Party Payments; (2) an exclusive chat with a Group Artist
on terms that may or may not include a fee; (3) prizes or promotional items
provided by Group or its Controlled Affiliate at no cost to Company or its
Affiliates; and (4) digital music downloads on terms that may or may not include
a fee. Notwithstanding anything to the contrary contained in this Agreement,
this Agreement does not place any restrictions whatsoever on Group and its
Affiliates' provision of Content (of any kind, type or nature) to any Person.

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

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         (ii) Notwithstanding paragraph 3(b)(i) above, Group shall, and shall
cause its Controlled Affiliates, to grant Company and its Affiliates the right
to use, [***]* of Exclusive Content, in the aggregate, relating to the Group
Artists each calendar quarter.

         (c) Use of Content. For purposes of clarity, Company and its Affiliates
shall have no obligation to license, acquire or use any Content. With respect to
each license or purchase by a Company or an Affiliate thereof of Content (i.e.,
where Company or an Affiliate thereof is required to pay for such Content), the
parties shall promptly memorialize the financial and all other terms applicable
to such purchase and promptly provide a copy of such memorialization to each the
of Company Contact Person and the Group Contact Person (it being acknowledged
and agreed that failure so to provide such a copy shall not invalidate or
otherwise affect such license or purchase or the terms applicable thereto).

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

         4. Company Obligations.

         (a) Group Artist Web Sites. During the Term, Group shall have the right
to designate, [***]*, up to [***]* Group Artist web sites owned or operated by
Group or any of its Affiliates to be seamlessly integrated into the listings or
directories (or other display of the availability of artist web sites) of artist
web sites accessible by the UBL.com search engine such that a user of such
search engine will not be able to tell which artist web sites are operated by
Company and its Affiliates as opposed to artist web sites operated by Group and
its Affiliates; provided that Group shall not designate any Group Artist web
sites for which there exists, as of the date hereof, a Group Artist Site.
Company shall integrate the Group designated artist web sites as provided above
within 5 Business Days of receipt of Group's designation notice. [***]*. If,
during the Term, Company or its Affiliates provides other listings or
directories of artist web sites (or other display of the availability of artist
web sites) or redesigns of same, Group designated artist web sites shall be
integrated into such listings in the same manner as is contemplated in the
UBL.com search engine.

         (b) Designated Group Artists. During the Term, Group shall have the
right to designate, not more than once each calendar quarter, [***]* Group
Artists to be featured prominently on the Company and its Affiliates web sites,
including the UBL.com search engine, for a continuous period of not less than
[***]*; provided that Group shall not designate more than [***]* whose last
album released within [***]* prior thereto was certified "Gold" in the United
States.

         (c) Availability of Marketing Support. During the Term and subject to
the further provisions of this paragraph 4, Company shall, and shall cause its
Affiliates to, make available to Group and its Affiliates any Marketing Support
that Company and its Affiliates make available to Third Parties [***]*. For
purposes of clarity, Group and its Affiliates shall have no obligation to
acquire or use any particular Marketing Support. The parties shall promptly

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

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memorialize the terms and conditions applicable to the provision of such
Marketing Support and promptly provide a copy of such memorialization to each of
the Group Contact Person and the Company Contact Person (it being acknowledged
and agreed that the failure so to provide such a copy shall not invalidate or
otherwise affect such transaction or the terms applicable thereto).

         (d) Provision of Group Data. During the Term, Company shall provide,
and shall cause its Affiliates to provide, to Group copies of all Group Data
from time to time as requested by Group, but not less frequently than monthly.
The parties shall agree on the form and media in which such data shall be
provided to Group, and that Company shall reasonably cooperate with Group in
creating data collection fields for Group Artist Sites and with respect to the
sale of Group product. Notwithstanding the foregoing, the parties acknowledge
and agree that the provision of Group Data to Group may be subject to the
consent of the applicable Group Artist. [***]*.

         (e) Provision of Other Data, Derived Analyses. During the Term, Company
shall notify, and shall cause each Company Affiliate to notify, Group promptly
after the date Company or an Affiliate thereof first makes available any Other
Data or Derived Analyses created by Company or an Affiliate thereof, to any
Third Party. Such notice shall identify in reasonable detail: (i) the nature of
such Other Data or Derived Analyses, and (ii) the terms and conditions such
Other Data or Derived Analyses was provided to such Third Party [***]*.
Notwithstanding anything contained in this Agreement to the contrary, Company
and its Affiliates shall not be obligated under this Agreement to provide Group
or any Affiliate thereof with any data (A) if the applicable artist or entity
has the right to approve the dissemination of such data and has not give such
approval, (B) the dissemination of such data would violate the privacy policy of
Company or the applicable Company Affiliate, or (C) the dissemination of such
data would violate any law, statute or regulation then in effect including, if
applicable, The Children's Online Privacy Protection Act and any regulation
promulgated by the Federal Trade Commission or any other governmental entity
(whether United States or foreign). Without Company's prior written consent, or
as permitted by the terms applicable to such Other Data or Derived Analyses
consistent with clause (ii) of the first sentence of this paragraph 4(e), Group
and its Affiliates shall not be entitled to transfer, assign, sell or disclose
any Other Data or Derived Analyses to any Person other than to a Group Affiliate
(and the Group Affiliate shall be so restricted). Notwithstanding the
immediately preceding sentence, Other Data or Derived Analysis related to a
particular Group Artist may be made available by Group and its Affiliates to the
applicable Group Artist (provided such artist agrees that it shall not further
assign, sell or disclose same). [***]*.

         (f) [***]*.

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

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

         5. Links. It is the parties intention to mutually agree on a series of
links between web sites owned or operated by the Group and its Affiliates, on
the one hand, and the Company and its Affiliates, on the other hand. In
particular, it is the parties intention to mutually agree on a series of links
between (a) the GetMusic LLC genre web sites and appropriate artist web sites
owned or operated by the Company and its Affiliates; (b) unique programming on
the GetMusic LLC web sites and appropriate web sites (including artist web
sites) owned or operated by the Company and its Affiliates; and (c) web sites
owned or operated by Group and its Affiliates, on the one hand, and the Company
and its Affiliates, on the other hand, relating to the same Group Artists. The
nature, size, type and prominence of such links will be negotiated in good faith
by the parties hereto.

         6. Intellectual Property. All of the intellectual property held, used
or provided by each party hereto and its respective Affiliates, including the
Limited Content provided pursuant to paragraph 7 below, is directly or
indirectly owned thereby or held thereby pursuant to valid and subsisting
licenses or sublicenses. The rights of each party hereto and its respective
Affiliates in, to, or under such intellectual property or its use thereof do not
conflict with or infringe on the rights of any other person. Except as expressly
provided in paragraph 8(b) below, paragraph 9 will be the sole and exclusive
remedy of the parties hereto for a breach of this paragraph 6.

         7. Content Use License. (a) Content License. Upon the delivery by Group
or any of its Affiliates to Company or any of its Affiliates of any Content
("Licensed Content") pursuant to this Agreement, such Group or Affiliate, as the
case may be (for purposes of this paragraph 7, "Licensor"), shall be deemed to
have granted to Company during the Term a revocable, [***]*, non-exclusive
license (except as provided in paragraph 3(b)) for use on English language only
 .com and .net web sites targeted at U.S.-based consumers ("Permitted Web
Sites"): (i) to reproduce the Licensed Content in digital form (alone or in
combination with other works, including text, data, images, photographs,
illustrations, animation, graphics, video and audio segments, and hypertext
links) and (ii) to reproduce, transmit, display, distribute, perform, or
otherwise communicate the Licensed Content through electronic, magnetic,
wireless, cellular, cable telephonic, terrestrial, satellite, radiophonic, or
any other communications technology, whether now known or hereafter developed,
as part of or in conjunction with any Permitted Web Site owned or operated by
Company or any of its Affiliates.

         (b) Ownership. Subject to the license granted hereby, as between
Company and its Affiliates on the one hand, and its Group and its Affiliates on
the other hand, the Licensed Content and all right, title, and interest therein
is and shall remain the exclusive property of Licensor.

         (c) Trademark License and Usage. (i) Licensor hereby grants to Company
during the Term a revocable, [***]*, non-exclusive license for use on Permitted
Web Sites to use

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

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the trademarks, trade names, service marks, and logos owned, controlled, or
licensed by Licensor or any of its Affiliates and described in Schedule I
hereto; and upon the delivery by any Licensor to Company of any Licensed Content
pursuant to this Agreement, such Licensor shall be deemed to have granted to
Company during the Term a revocable, non-royalty-bearing, non-exclusive license
for use on Permitted Web Sites to use any trademarks, trade names, service
marks, or logos owned, controlled, or licensed by Licensor or any of its
Affiliates and incorporated in such Licensed Content (collectively, as they now
exist and as they may hereafter be modified, the "Licensor Marks"), solely for
purposes of and in connection with exploiting and otherwise using as permitted
herein the Licensed Content on any Permitted Web Site owned or operated by
Company or any of its Affiliates.

         (ii) Company shall: (A) prospectively after notice from Group to
Company thereof, comply with the standards established from time to time by the
applicable Licensor with respect to the form of such its Licensor Marks and
their usage; and (B) maintain good business standards in compliance with all
applicable Laws in all matters relating to the Licensor Marks.

         (iii) Company shall not: (A) use the Licensor Marks in any manner not
expressly contemplated by this Agreement; (B) use the Licensor Marks in any
manner which could reasonably be expected to diminish the commercial value of
such Licensor Marks, including in close proximity with any other trademark,
trade name, service mark, logo, name, or image which could reasonably be
expected to create any form of composite mark; (C) permit any unauthorized Third
Party to use the Licensor Marks; or (D) use or permit the use of any trademark,
trade name, service mark, logo, name, or image in a way which could reasonably
be expected to cause confusion with the Licensor Marks.

         (iv) As between as Company and its Affiliates, on the one hand, and
Group and its Affiliates on the other hand, the Licensor Marks and all right,
title, and interest therein are and shall remain the exclusive property of
Licensor, Company shall acquire no proprietary rights in, to, or under the
Licensor Marks by virtue of this Agreement or its use of the Licensor Marks
hereunder, and Company's use of the Licensor Marks hereunder shall inure solely
to the benefit of Licensor.

         (d) Right to Sublicense. Company shall have the right to sublicense to
any Affiliate thereof which is engaged in a substantially similar business, upon
the terms and subject to the conditions set forth in this paragraph 7, all of
its rights under this paragraph 7 with respect to the Licensed Content and the
Licensed Marks. Company shall have no other rights to sublicense the Licensed
Content and the Licensed Marks.

         (e) Revocability of Licenses. Notwithstanding the revocability of the
licenses granted pursuant to clauses (a) and (b) of this paragraph 7, Licensor
agree not to use the revocable nature of the licenses to frustrate the purposes
of this Agreement. Furthermore, Licensor agrees that it will not revoke the
license hereunder with respect to any Licensed Content unless any one of the
following is true: (i) Licensor or Group believes, in good faith, that the
Licensed Content or the use of the Licensed Content is causing, or may
reasonably be expected to cause, an artist relationship or label relationship
issue, (ii) the Licensor's rights in or to the Licensed Content expire, (iii)
the Licensor or any of its Affiliates become aware of any Action or threatened
Action regarding the Licensed Content or the use of the Licensed Content, or
(iv) Licensor or Group believes, in good faith, that the use of the Licensed
Content has, or will have, an adverse effect on Licensor or any its Affiliates
or any of their respective artists.

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         8. Termination. (a) Either party hereto may terminate this Agreement at
any time by delivery of written notice of termination to the other party: (i) if
any representation or warranty of the other party contained herein (other than
with respect to paragraph 6 above) was not true and complete in all material
respects when made, and such other party fails to cure any such breach or
default, if curable, within thirty days of receipt of written notice thereof
from the terminating party; (ii) if the other party fails timely to comply in
all material respects with each covenant or agreement thereof contained in this
Agreement, and such other party fails to cure any such breach or default, if
curable, within thirty days of receipt of written notice thereof from the
terminating party; or (iii) if the other party makes a general assignment for
the benefit of creditors, or any proceeding is instituted by or against the
other party seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any law relating to bankruptcy,
insolvency or reorganization; provided that, in the event of any such proceeding
instituted against the other party, such proceeding has not been stayed or
dismissed for a period of sixty days.

         (b) Notwithstanding anything to the contrary contained herein, either
party shall have the right to terminate this Agreement upon 30 days notice to
the other party in the event such party or its Affiliates are subject to an
Action directly related to a breach of Section 6, so long as such breach was not
caused by the party electing to terminate this Agreement. Notwithstanding
anything to the contrary contained herein, Group shall have the right to
terminate this Agreement upon 30 days notice to Company in the event Company or
its Affiliates becomes owned or controlled (as defined in the definition of
Affiliate) by a Competitor (as defined below) or this Agreement is assigned to a
Competitor; provided that Group shall not have such right of termination so long
as two of James Carroll, Marc Geiger, Steve Rennie and Keith Yokomoto remain
executives of the Company during the Term with responsibilities, which include,
the day-to-day management of the Company and its Affiliates. As used herein
"Competitor" means any Person that owns, operates, or manages an Online Music
Company or has significant operations involving the creation (i.e., traditional
"music label" activities) and/or distribution of music in a physical format.

         (c) The termination or expiration of this Agreement shall not release
either party hereto from any obligation accruing prior to the date of such
termination or expiration or which, in accordance with the terms hereof,
survives such termination or expiration, nor release a defaulting party from
liability for its default hereunder and for the Losses incurred by the other
party as a result of any such default hereunder.

         (d) Neither party will be liable to the other for incidental,
consequential, special, punitive or indirect damages, including, loss of profit,
loss of business or business opportunity.

         9. Indemnification. (a) General. Each party hereto (each such party in
its capacity as indemnitor under this paragraph 9, the "Indemnitor") shall
indemnify each other party hereto, each Affiliate of such other party, each
successor and assign of each such Person, and each Representative of each of the
foregoing (each such Person in its capacity as indemnitee under this paragraph
9, an "Indemnitee"), with respect to, and hold each of them harmless from and
against, all Losses based upon, resulting from, arising out of, or relating to
any breach or alleged breach by Indemnitor of any representation, warranty,
covenant, or agreement of such Indemnitor contained in this Agreement. To the
extent that any obligations of Indemnitor set forth in this paragraph 9 may be
invalid, illegal, or unenforceable, Indemnitor shall, to the fullest extent
permitted under applicable Law, contribute to the payment and

<PAGE>   11
                                       11

satisfaction of all Losses incurred by any Indemnitee. Each Indemnitee shall
promptly give Indemnitor notice of any matter which such Indemnitee has
determined has given or could reasonably be expected to give rise to a right of
indemnification hereunder, stating the amount of the Loss, if known, and method
of computation thereof, and describing in reasonable detail the facts and
circumstances upon which such determination is based; provided, however that any
failure to provide such notice shall not release Indemnitor from any of its
obligations under this paragraph 9 except to the extent that the Indemnitor is
materially prejudiced by such failure.

         (b) Third-Party Claims. The obligations and liabilities of Indemnitor
under this paragraph 9 with respect to Losses arising from claims of any Third
Party which are subject to the indemnification provided for in this paragraph 9
("Third-Party Claims") shall be governed by and contingent upon the following
additional terms and conditions:

                  (i) If an Indemnitee receives notice of any Third-Party Claim,
         such Indemnitee shall give Indemnitor notice of such Third-Party Claim
         within ten Business Days after the receipt by such Indemnitee of such
         notice; provided, however, that the failure to provide such notice
         shall not release Indemnitor from any of its obligations under this
         paragraph 9 except to the extent Indemnitor is materially prejudiced by
         such failure and shall not relieve Indemnitor from any other obligation
         or liability that it may have to any Indemnitee otherwise than under
         this paragraph 9;

                  (ii) If Indemnitor acknowledges in writing its obligation to
         indemnify such Indemnitee under this Agreement against any Losses that
         may result from such Third-Party Claim, then Indemnitor shall be
         entitled to assume and control the defense of such Third-Party Claim at
         its expense and through counsel of its choice (which counsel shall be
         reasonably acceptable to such Indemnitee) if it gives notice of its
         intention to do so to such Indemnitee within five Business Days after
         the receipt of such notice. In the event that Indemnitor exercises the
         right to undertake any such defense against any such Third-Party Claim
         as provided above, such Indemnitee shall cooperate with Indemnitor in
         such defense and make available to Indemnitor all witnesses, pertinent
         records, materials, and information in such Indemnitee's possession or
         under its control relating thereto as is reasonably required by
         Indemnitor. Similarly, in the event that such Indemnitee is conducting
         the defense against any such Third-Party Claim, Indemnitor shall
         cooperate with such Indemnitee in such defense and make available to
         such Indemnitee all such witnesses, records, materials, and information
         in Indemnitor's possession or under its control relating thereto as is
         reasonably required by such Indemnitee. Indemnitor shall not compromise
         or settle any Third-Party Claim without the prior written consent of
         the Indemnitee, unless in connection therewith, such Indemnitee is
         given a full and complete release with respect to such Third-Party
         Claim, in form and substance reasonably satisfactory to such
         Indemnitee.

         10. Miscellaneous.

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

<PAGE>   12
                                       12

         (b) Successors and Assigns. Subject to paragraph 8 above, this
Agreement may be assigned to any Affiliate of the assigning party or to any
Person who purchases all of substantially all of the stock or assets of the
assigning party, provided that the assigning party shall remain primarily liable
under this Agreement for its obligations hereunder. In all other respects, this
Agreement shall not be assigned, in whole or in part, whether voluntarily or by
operation of law, without the consent of the other party hereto, and any such
purported assignment shall be deemed null and void and without force or effect.

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

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

         (e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first class mail
or overnight courier, shall be deemed given on the date received, if delivered
by hand or courier, and four days after deposit into the United States mail, if
mailed, and shall be delivered to the addresses for notice indicated on Schedule
II attached hereto, or at such other addresses as a party may hereafter
designate by notice delivered pursuant to this paragraph 10.

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

         (g) Severability. If any term or other provision hereof is determined
by any court of competent jurisdiction to be invalid, illegal, or unenforceable,
in whole or in part, by reason of any applicable law or public policy now or
hereafter existing, and such determination becomes final and nonappealable, such
term or other provision shall remain in full force and effect to the fullest
extent permitted by law, and all other terms and provisions hereof shall remain
in full force and effect in their entirety.

         (h) Governing Law; Jurisdiction; Jury Trial. This Agreement shall be
governed by the laws of the State of New York. Each party hereto hereby
unconditionally and irrevocably submits, for itself and its property, to the
exclusive jurisdiction of any court of the State of New York and any federal
court of the United States of America, in either case, sitting in the City and
County of New York, and any appellate court therefrom, over any action, suit, or
proceeding based upon, resulting from, arising out of, or relating to this
letter agreement or any transaction or agreement contemplated hereby, or for the
recognition or enforcement of any judgment resulting from any such action, suit,
or proceeding. Each party hereto hereby unconditionally and irrevocably waives
all right to trial by jury in any action, suit, or proceeding (whether based on
contract, tort, or otherwise) based upon, resulting from, arising out of, or
relating to this letter agreement or any transaction or agreement contemplated
hereby.

         (i) Preparation and Negotiation of This Agreement. Each party hereto
has participated equally in the preparation and negotiation of this Agreement,
including all annexes, appendices, exhibits, and schedules hereto, and each
party hereto hereby unconditionally and irrevocably waives to the fullest extent
permitted by law any rule of interpretation or construction

<PAGE>   13
                                       13

requiring that this Agreement, including any annex, appendix, exhibit, or
schedule hereto, be interpreted or construed against the drafting party.

         (j) Survival of Representations and Warranties and Certain Covenants
and Agreements. Each party's representations and warranties contained herein,
and the covenants and agreements contained in paragraphs 9 and 10, shall survive
the termination or expiration hereof.

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

         (l) Publicity. Neither party hereto shall, and each party hereto shall
cause its respective Representatives not to, make or cause to be made any press
release or public announcement with respect to this Agreement or the related
equity investment by Group or one of its Affiliates in Company without the
express written consent of the other party hereto (which consent the other party
may give or withhold in its sole discretion).

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>   14
                                       14

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

                                     ARTISTdirect, INC.

                                     By: /s/ KEITH YOKOMOTO
                                         ---------------------------------------
                                          Keith Yokomoto
                                          President and Chief Operating Officer

                                     BMG MUSIC d/b/a BMG ENTERTAINMENT

                                     By: /s/ THOMAS W. MCINTYRE
                                         ---------------------------------------
                                          Name: Thomas W. McIntyre
                                          Title: Executive Vice President and
                                                 Chief Financial Officer

<PAGE>   15

                                                                      SCHEDULE I

                                     [***]*

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

<PAGE>   16

                                                                     SCHEDULE II

                                     [***]*

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

                                       2<PAGE>   1
                                                                   EXHIBIT 10.43

                       ADVERTISING AND PROMOTION AGREEMENT

This Advertising and Promotion Agreement (the "Agreement") is entered into this
24th day of December, 1999 (the "Effective Date") between Yahoo! Inc. ("Yahoo"),
a Delaware corporation with offices at 3420 Central Expressway, Santa Clara, CA
95051, and ARTISTdirect, Inc. ("ARTISTdirect"), a Delaware corporation with
offices at 17835 Ventura Boulevard, Suite 310, Encino, CA 91316.

               In consideration of the mutual promises contained in this
Agreement, Yahoo and ARTISTdirect hereby agree as follows:

1.      DEFINITIONS.

               The following terms are used in this Agreement with the
respective meanings set forth below:

               "ARTISTdirect Banner" means an advertising unit that (a) promotes
Music Products, ARTISTdirect Content or music related services available on the
ARTISTdirect Network; (b) has dimensions no larger than 468 pixels wide by 60
pixels high; (c) does not contain more than six seconds of animation; (d) does
not contain "looped" animation; (e) has a file size no larger than 15K; and (f)
permits users to navigate directly to a Page on the ARTISTdirect Network
primarily related to the content in the ARTISTdirect Banner.

               "ARTISTdirect Banner Category Pages" means those Pages within the
categories of the Yahoo Directory identified in Exhibit A.

               "ARTISTdirect Banner Keywords" means those keywords identified in
Exhibit A, except that Yahoo may substitute a comparable keyword (based on
projected Page Views) for any ARTISTdirect Banner Keyword if it determines, in
its sole discretion, that such substitution is reasonably necessary to avoid
liability for third-party claims relating to alleged infringement or other
improper use of the particular ARTISTdirect Banner Keyword.

               "ARTISTdirect Banner Pages" means the ARTISTdirect Banner
Category Pages and the ARTISTdirect Banner Search Results Pages.

               "ARTISTdirect Banner Search Results Pages" means those Pages
displayed upon a user's search of the Yahoo Directory for an ARTISTdirect Banner
Keyword.

               "ARTISTdirect Brand Features" means all trademarks, service
marks, logos and other distinctive brand features of ARTISTdirect that are used
in or relate to its business.

               "ARTISTdirect Best Sellers Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit C that (a)
contains a list of the top 5 best-selling recording artists, as provided by
ARTISTdirect on a weekly basis; (b) contains an ARTISTdirect Branded Link; and
(c) permits users to navigate directly to an ARTISTdirect Biased Buy Page from
each entry of the best-seller list.

EXECUTION COPY

<PAGE>   2

               "ARTISTdirect Biased Buy Page" means a Page within Yahoo Shopping
(a) to which users click through directly from the ARTISTdirect Best Sellers
Module, the ARTISTdirect Billboard Module, the ARTISTdirect Buy It Button or the
ARTISTdirect New Releases Module; (b) which permits users to purchase the Music
Products promoted in the particular advertising unit only from the ARTISTdirect
RMI Site; and (c) which is substantially similar in form to the example set
forth in Exhibit D.

               "ARTISTdirect Billboard Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit E that (a)
contains a list of the top 10 albums of the Billboard 200 albums and the
corresponding recording artists, as provided by a third party; (b) contains an
ARTISTdirect Branded Link; and (c) permits users to navigate directly to an
ARTISTdirect Biased Buy Page from the first 10 album entries.

               "ARTISTdirect Branded Link" means a Link substantially similar in
form to the example set forth in Exhibit F that (a) contains ARTISTdirect Brand
Features; (b) has dimensions no larger than 120 pixels wide by 20 pixels high;
(c) is saved in GIF or JPG format; (d) has a file size no larger than 2K; (e)
does not contain animation; (f) contains the phrase "Buy from" or comparable
purchase reference text; and (g) permits users to navigate directly to the front
Page of the ARTISTdirect RMI Site.

               "ARTISTdirect Buy It Button" means an advertising unit
substantially similar in form to the example set forth in Exhibit G that (a) has
dimensions no larger than 88 pixels wide by 31 pixels high; (b) has a file size
no larger than 2K; (c) contains ARTISTdirect Brand Features; (d) contains text
that is provided by Yahoo; and (e) permits users to navigate directly to an
ARTISTdirect Biased Buy Page.

               "ARTISTdirect Chat Banner" means an advertising unit
substantially similar in form to the example set forth in Exhibit X and to the
ARTISTdirect Banner, except that the ARTISTdirect Chat Banner (a) has dimensions
no larger than 468 pixels wide by 90 pixels high and (b) permits users to
navigate directly to a Page on the ARTISTdirect Network primarily related to the
content in the ARTISTdirect Chat Banner.

               "ARTISTdirect Content" means all materials, data and similar
information relating to music that is collected or owned by ARTISTdirect, which
is a collection of HTML files, digital audio files and certain related scripts.
ARTISTdirect Content may include, but is not limited to (a) certain digital song
tracks and clips from the ARTISTdirect database; (b) certain recording artists
who participate in ARTISTdirect sponsored chat events; (c) certain webcasts of
music concerts or other music related events; and (d) certain auctions of Music
Products.

               "ARTISTdirect Destination Page" means any Page on the
ARTISTdirect Network or the ARTISTdirect RMI Site to which users click through
directly from any ARTISTdirect Link. For clarity, ARTISTdirect Destination Page
does not mean any subsequent Page on the ARTISTdirect Network or the
ARTISTdirect RMI Site to which users navigate from the original Destination
Page.

                                       2
<PAGE>   3

               "ARTISTdirect DHTML Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit H that will be
presented to the user in 1 of 2 views:

               (1) Opening View. The Opening View of this advertising unit (a)
                   promotes certain Music Products, certain ARTISTdirect Content
                   or certain music related services available on the
                   ARTISTdirect Network, as further promoted in the Expanded
                   View of this advertising unit; (b) has dimensions no larger
                   than 130 pixels wide by 40 pixels high; (c) does not contain
                   animation; (d) may contain an image in GIF or JPG format; and
                   (e) has a file size no greater than 3K.

               (2) Expanded View. The Expanded View of this advertising unit (a)
                   promotes Music Products, ARTISTdirect Content or music
                   related services available on the ARTISTdirect Network; (b)
                   has a width no larger than 130 pixels and a variable height
                   based on the number of characters used in accordance with
                   subsection (d) below; (c) does not contain animation; and (d)
                   contains headline text of no more than 18 characters,
                   including spaces, and body text of no more than 200
                   characters, including spaces. The body text may contain text
                   links that permit users to navigate directly to Pages on the
                   ARTISTdirect Network primarily related to the content in the
                   Expanded View of this advertising unit, as long as at least
                   one text link permits users to navigate directly to a Page on
                   the ARTISTdirect RMI Site dedicated to the on-line purchase
                   of the Music Products promoted in the Expanded View of this
                   advertising unit.

               "ARTISTdirect E-Mail Message" means an electronic mail message
substantially similar in form to the example set forth in Exhibit I that (a)
presents users with a promotional offer regarding the on-line sale of Music
Products by ARTISTdirect or the provision of ARTISTdirect Content or music
related services by ARTISTdirect at no cost to the user (e.g., 30% discount on
the purchase of compact discs, free music downloads); (b) is targeted to
participating registered Yahoo Mail users who have indicated an interest in
music in their Yahoo profiles based on 1 of the following 5 variables (as
selected by ARTISTdirect and subject to availability), which are provided by
registered Yahoo Mail users upon registration: age, gender, occupation,
interest, zip code; (c) conforms to Yahoo Delivers' then current guidelines; (d)
is a single HTML message that does not exceed 425 pixels in width, which Yahoo
will enclose within a table and place between the required header and footer
information; (e) consists of HTML code that is free of errors and passes the
weblink validation checker; (f) has a total file size, including HTML code and
graphics, no larger than 30K; (g) does not have more than six seconds of
animation; (h) does not contain "looped" animation; (i) does not contain Java,
JavaScript, frames, ActiveX, or dynamic HTML; (j) does not have body background
image or color, except that colored tables may be used to simulate a background
color; (k) addresses users as Yahoo Delivers members (e.g., "An exclusive offer
for Yahoo Delivers members."); (l) has a subject line that contains no more than
35 characters, including spaces, and conforms to the following format: "Yahoo!
Delivers: A Special Offer from ARTISTdirect"; and (m) permits users to navigate
directly to a Page on the ARTISTdirect Network primarily related to the content
in the ARTISTdirect E-Mail Message.

                                       3
<PAGE>   4

               "ARTISTdirect Front Page Promotion" means a promotion that (a)
includes the ARTISTdirect Front Page Promotion Banner; (b) runs for at least 2
weeks, unless otherwise mutually agreed by the parties; (c) runs no more
frequently than once per calendar quarter; and (d) complies with Yahoo's then
current guidelines with respect to front Page promotions, currently located at
http://docs.yahoo.com/docs/advertising/csguide/index.html.

               "ARTISTdirect Front Page Promotion Banner" means an advertising
unit substantially similar in form to the example set forth in Exhibit J that
(a) presents users with a promotional offer regarding the on-line sale of Music
Products by ARTISTdirect or the provision of ARTISTdirect Content or music
related services by ARTISTdirect at no cost to the user (e.g., 30% discount on
the purchase of compact discs, free music downloads, win tickets to see Sting in
concert); (b) has dimensions no larger than 230 pixels wide by 33 pixels high;
(c) does not contain more than 6 seconds of animation; (d) does not contain
"looped" animation; (e) has a file size no greater than 3K and (f) permits users
to navigate directly to a Page on the ARTISTdirect Network primarily related to
the content in the ARTISTdirect Banner.

               "ARTISTdirect Keyword Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit K that (a)
promotes the on-line sale of Music Products by ARTISTdirect; (b) has dimensions
no larger than 88 pixels wide by 31 pixels high; (c) does not contain animation;
(d) has a file size no greater than 2K (e) contains ARTISTdirect Brand Features
that permit users to navigate directly to the front Page of the ARTISTdirect RMI
Site; (f) contains 3 text links on 3 lines that do not exceed 16 characters per
line, including spaces; and (g) permits users to navigate directly to Pages on
the ARTISTdirect RMI Site that ARTISTdirect deems appropriate, except that each
Page must present users with a prominent opportunity to purchase on-line the
Music Products promoted in the ARTISTdirect Keyword Module.

               "ARTISTdirect Keyword Module Category Pages" means those Pages
within the categories of the Yahoo Directory identified in Exhibit B, as amended
by Yahoo from time to time to account for changes in the organization of the
Yahoo Directory.

               "ARTISTdirect Keyword Module Keywords" means those keywords
identified in Exhibit B, except that Yahoo may substitute a comparable keyword
(based on projected Page Views) for any ARTISTdirect Keyword Module Keyword if
it determines, in its sole discretion, that such substitution is reasonably
necessary to avoid liability for third-party claims relating to alleged
infringement or other improper use of the particular ARTISTdirect Keyword Module
Keyword.

               "ARTISTdirect Keyword Module Pages" means the ARTISTdirect
Keyword Module Category Pages and the ARTISTdirect Keyword Module Search Results
Pages.

               "ARTISTdirect Keyword Module Search Results Pages" means those
Pages displayed upon a user's search of the Yahoo Directory for an ARTISTdirect
Banner Keyword.

               "ARTISTdirect Link" means any Link placed by Yahoo under this
Agreement, including but not limited to the ARTISTdirect Banner, the
ARTISTdirect Chat Banner, the ARTISTdirect Shopping Banner, the ARTISTdirect
Front Page Promotion Banner, the ARTISTdirect Best Sellers Module, the
ARTISTdirect Billboard Module, the ARTISTdirect Buy

                                       4
<PAGE>   5

It Button, the ARTISTdirect DHTML Module, the ARTISTdirect Keyword Module, the
ARTISTdirect Message Boards Module, the ARTISTdirect New Releases Module, the
ARTISTdirect Sweepstakes Button, the ARTISTdirect Sweepstakes Text Link, the
Yahoo Mail Welcome Module and the Yahoo Mail Logout Module.

               "ARTISTdirect Message Boards Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit L that (a)
promotes Music Products, ARTISTdirect Content or music related services
available on the ARTISTdirect Network, except that the ARTISTdirect Message
Boards Module may not promote message boards on the ARTISTdirect Network; (b)
has dimensions no larger than 125 pixels wide by 125 pixels high; (c) does not
contain more than six seconds of animation; (d) does not contain "looped"
animation; (e) has a file size no greater than 10K; and (f) permits users to
navigate directly to a Page on the ARTISTdirect Network primarily related to the
content in the ARTISTdirect Message Boards Module.

               "ARTISTdirect New Releases Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit M that (a)
contains 3 images of album art, where each image has dimensions no larger than
80 pixels wide by 80 pixels high, a file size no greater than 3K and permits
users to navigate directly to an ARTISTdirect Biased Buy Page; (b) contains 3
lines of text, where each line provides either the name of the artist or the
title of the album in the corresponding image and serves as a text link that
permits users to navigate directly to an ARTISTdirect Biased Buy Page; and (c)
contains an ARTISTdirect Branded Link.

               "ARTISTdirect Replacement Module" means an advertising unit that
(a) contains at least one link; (b) has dimensions no smaller than the
ARTISTdirect DHTML Module Opening View and no larger than the Expanded View; and
(c) has other specifications as mutually agreed upon by the parties.

               "ARTISTdirect RMI Site" means those Pages within the ARTISTdirect
Network as hosted by Yahoo and included in the Yahoo Remote Merchant Integration
Program.

               "ARTISTdirect Shopping Banner" means an advertising unit
substantially similar in form to the ARTISTdirect Banner, except that the
ARTISTdirect Shopping Banner permits users to navigate directly to a Page on the
ARTISTdirect RMI Site primarily related to the content in the ARTISTdirect
Shopping Banner.

               "ARTISTdirect Network" means the Web properties owned or operated
on behalf of ARTISTdirect, which are dedicated to the on-line promotion and sale
of Music Products and are currently located at http://www.artistdirect.com,
http://www.ubl.com, http://www.imusic.com and http://www.downloadsdirect.com.

               "ARTISTdirect Sweepstakes Button" means an advertising unit
substantially similar in form to the example set forth in Exhibit N that (a)
contains a sweepstakes with a minimum retail prize value of [***]* (to be
provided by Yahoo); (b) contains text that is provided by Yahoo in consultation
with ARTISTdirect; (c) permits users to interact with the

--------

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

                                       5
<PAGE>   6

ARTISTdirect Network as mutually agreed upon by the parties; (d) does not
contain ARTISTdirect Brand Features; (e) is further outlined in a production
scheduled mutually agreed upon by the parties; and (f) permits users to navigate
directly to an ARTISTdirect Sweepstakes Page that will contain ARTISTdirect
Brand Features, and the ARTISTdirect Brand Features permit users to navigate
directly to the front Page of the ARTISTdirect Network, currently located at
http://www.artistdirect.com.

               "ARTISTdirect Sweepstakes Page" means a Page substantially
similar in form to the example set forth in Exhibit P that (a) is hosted by
Yahoo; (b) may contain Yahoo Brand Features and will contain ARTISTdirect Brand
Features that permit users to navigate directly to the front Page of the
ARTISTdirect Network, currently located at http://www.artistdirect.com; and (c)
permits user to register for a sweepstakes.

               "ARTISTdirect Sweepstakes Text Link" means an advertising unit
substantially similar in form to the example set forth in Exhibit O that (a)
contains a sweepstakes with a minimum retail prize value of [***]* (to be
provided by Yahoo); (b) contains text that is provided by Yahoo in consultation
with ARTISTdirect; (c) permits users to interact with the ARTISTdirect Network
as mutually agreed upon by the parties; (d) does not contain ARTISTdirect Brand
Features; (e) is further outlined in a production scheduled mutually agreed upon
by the parties; and (f) permits users to navigate directly to an ARTISTdirect
Sweepstakes Page that will contain ARTISTdirect Brand Features, and the
ARTISTdirect Brand Features permit users to navigate directly to the front Page
of the ARTISTdirect Network, currently located at http://www.artistdirect.com.

               "FTC Order" means that certain "Decision and Consent Order"
issued by the U.S. Federal Trade Commission on February 5, 1999 against
GeoCities, Inc., a California corporation acquired by Yahoo, attached hereto as
Exhibit T and any and all subsequent or related official materials, regulations,
laws judgements or orders.

               "Launch Date" means the date on which the ARTISTdirect RMI Site
is made publicly available by Yahoo.

               "Link" or "link" means a visible graphic or textual indicator
located within a Page that permits a user to navigate the World Wide Web; when
selected by a user, this indicator directs the user's internet browser
connection onward to a specified Page on the same or any other Web site via a
URL (whether perceptible or not) and establishes a direct connection between the
browser and the new Page.

               "Music Merchant" means any company or other third party that
[***]* the on-line sale of Music Products.

               "Music Merchant Best Sellers Module" means an advertising unit
that (a) conforms to the specifications of the ARTISTdirect Best Sellers Module
and (b) is placed on the same Pages on which the ARTISTdirect Best Sellers
Module is placed.

--------

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

                                       6
<PAGE>   7

               "Music Merchant Modules" means (a) the ARTISTdirect Billboard
Module, the ARTISTdirect Buy It Button, the ARTISTdirect DHTML Module, the
ARTISTdirect Keyword Module, the ARTISTdirect New Releases Module, the
ARTISTdirect Sweepstakes Button and the ARTISTdirect Sweepstakes Text Link, and
(b) those advertising units that (1) conform to the specifications of the
aforementioned ARTISTdirect advertising units and (2) are placed within the same
area of the same Pages on which the aforementioned ARTISTdirect advertising
units are placed, either adjacent to the aforementioned ARTISTdirect advertising
units or in rotation with the aforementioned ARTISTdirect advertising units.

               "Music Products" means music recordings and other music related
merchandise (i.e., compact discs, cassettes tapes, mp3 files and other audio
formats, music videos and other audio/video formats, music concert memorabilia,
including but not limited to clothing and posters that commemorate the music
concert, and recording artist memorabilia, including but not limited to clothing
and posters that feature the recording artist).

               "Music Merchant Program" means Yahoo's program consisting of
certain advertising and promotional activities with Music Merchants as further
described in this Agreement.

               "Page" means any World Wide Web page (or, for on-line media other
than Web sites, the equivalent unit of the relevant protocol).

               "Page View" mean a user's request for a Page as measured by
Yahoo's advertising reporting system.

               "Run of Music Rooms" means banner placements in the south banner
position across the chat rooms within the music category of Yahoo Chat.

               "Run of Network" means banner placements in the north banner
position across the Yahoo Properties.

               "Run of Yahoo Music" means banner placements in the north banner
position across Yahoo Music.

               "Run of Yahoo Shopping" means banner placements in the north
banner position across Yahoo Shopping.

               "Term" means the period beginning on the Effective Date and
continuing for twenty-four (24) months from the Launch Date, unless either party
terminates this Agreement on an earlier date in accordance with Section 12.

               "Yahoo Brand Features" means all trademarks, service marks, logos
and other distinctive brand features of Yahoo that are used in or relate to its
business.

               "Yahoo Chat" means Yahoo's U.S. targeted chat property, currently
located at http://chat.yahoo.com.

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<PAGE>   8

               "Yahoo Delivers" means Yahoo's U.S. targeted direct marketing
program conducted via Yahoo Mail.

               "Yahoo Digital" means Yahoo's U.S. targeted digital music
property, currently located at http://digital.yahoo.com.

               "Yahoo Directory" means Yahoo's principal U.S. targeted directory
to the World Wide Web, currently located at http://www.yahoo.com.

               "Yahoo Mail" means Yahoo's U.S. targeted electronic mail
property, currently located at http://mail.yahoo.com.

               "Yahoo Mail Logout Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit R that (a) is
targeted to certain registered Yahoo Mail users based on age, gender, interest
or occupation (e.g., users whose Yahoo profiles reflect an age between 18 and
35); (b) has dimensions no larger than 88 pixels wide by 31 pixels high; (c) has
a file size no greater than 2K; (d) contains no more than 25 characters of text,
including spaces; (e) contains a pull down menu with a file size no greater than
1.35K and with no more than 5 options; (f) does not contain animation; and (g)
permits users to navigate directly to a Page on the ARTISTdirect Network that
(1) is dedicated to the on-line purchase of the Music Products promoted in the
Yahoo Mail Logout Module or (2) presents users with a promotional offer
regarding the on-line sale of Music Products by ARTISTdirect or the provision of
ARTISTdirect Content or music related services by ARTISTdirect at no cost to the
user (e.g., free music downloads, access to ARTISTdirect Content that is not
available to the general public, discounts on the on-line purchase of Music
Products, free shipping and handling on the on-line purchase of Music Products).

               "Yahoo Mail Logout Page" means a Page substantially similar in
form to the example set forth in Exhibit R that is the first Page presented to a
user after the user clicks on the "Sign Out" Link in Yahoo Mail.

               "Yahoo Mail Welcome Module" means an advertising unit
substantially similar in form to the example set forth in Exhibit Q that (a) is
targeted to certain registered Yahoo Mail users based on age, gender, interest
or occupation (e.g., users whose Yahoo profiles reflect an age between 18 and
35); (b) has dimensions no larger than 88 pixels wide by 31 pixels high; (c) has
a file size no greater than 2K; (d) contains 2 lines of text, not to exceed 25
characters, including spaces, per line; (e) does not contain animation; and (f)
permits users to navigate directly to a Page on the ARTISTdirect Network that
(1) is dedicated to the on-line purchase of the Music Products promoted in the
Yahoo Mail Welcome Module or (2) presents users with a promotional offer
regarding the on-line sale of Music Products by ARTISTdirect or the provision of
ARTISTdirect Content or music related services by ARTISTdirect at no cost to the
user (e.g., free music downloads, access to ARTISTdirect Content that is not
available to the general public, discounts on the on-line purchase of Music
Products, free shipping and handling on the on-line purchase of Music Products).

               "Yahoo Mail Welcome Page" means a Page substantially similar in
form to the example set forth in Exhibit Q that (a) is the first Page presented
to a user after the user

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<PAGE>   9

successfully enters a Yahoo ID and password for a Yahoo Mail account and (b) is
presented to the user each time the user accesses the Yahoo Mail account before
clicking on the "Sign Out" Link in Yahoo Mail or before the Yahoo Mail system
signs out the user (e.g., for a sustained period of inactivity).

               "Yahoo Message Boards" means Yahoo's U.S. targeted message board
property, currently located at http://messages.yahoo.com.

               "Yahoo Music" means Yahoo's U.S. targeted music property,
currently located at http://music.yahoo.com.

               "Yahoo Properties" means any Yahoo branded or co-branded media
properties, including but not limited to Internet guides, that are developed in
whole or in part by Yahoo or its affiliates.

               "Yahoo Remote Merchant Integration Program" means that program
through which Yahoo integrates certain Web sites of remote on-line merchants
into Yahoo Shopping.

               "Yahoo Remote Merchant Integration Program Agreement" means the
agreement set forth in Exhibit V.

               "Yahoo Shopping" means Yahoo's U.S. targeted shopping property,
currently located at http://shopping.yahoo.com.

2.      ARTISTDIRECT BANNERS.

               2.1   Yahoo will provide the ARTISTdirect Banner, on a rotating
                     basis until its Page View obligation under Section 10.1 is
                     met, on ARTISTdirect Banner Pages, through Run of Yahoo
                     Music and, based on an interest in music (i.e., targeted to
                     registered Yahoo users who have indicated an interest in
                     music in their Yahoo profiles), through Run of Network.

               2.2   Yahoo will provide the ARTISTdirect Chat Banner, on a
                     rotating basis until its Page View obligation under Section
                     10.1 is met, through Run of Music Rooms.

               2.3   Yahoo will provide the ARTISTdirect Shopping Banner, on a
                     rotating basis until its Page View obligation under Section
                     10.1 is met, through Run of Yahoo Shopping.

               2.4   Yahoo will provide the ARTISTdirect Front Page Promotion
                     Banner on a rotating basis in connection with the
                     ARTISTdirect Front Page Promotion.

3.      ARTISTDIRECT BUTTONS AND MODULES.

               3.1   During the Term, Yahoo will provide the ARTISTdirect Best
                     Sellers Module on Pages within Yahoo Digital, Yahoo Music
                     and Yahoo Shopping.

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<PAGE>   10

               3.2   Yahoo will provide the ARTISTdirect Billboard Module, on a
                     rotating basis with the corresponding Music Merchant Module
                     of the Selected Music Merchant (as defined in Section 9.1)
                     during the Term, on Pages within Yahoo Shopping.

               3.3   Yahoo will provide the ARTISTdirect Buy It Button, on a
                     rotating basis with the corresponding Music Merchant Module
                     of the Selected Music Merchant during the Term, on Pages
                     within Yahoo Music.

               3.4   Yahoo will provide the ARTISTdirect DHTML Module, on a
                     rotating basis with the corresponding Music Merchant Module
                     of the Selected Music Merchant during the Term, on Pages
                     within Yahoo Music. In the event that Yahoo cannot provide
                     the ARTISTdirect DHTML Module, Yahoo will provide the
                     ARTISTdirect Replacement Module on a rotating basis with
                     the Selected Music Merchant on Pages within Yahoo Music
                     during the time that Yahoo is unable to provide the
                     ARTISTdirect DHTML Module. The continued provision of the
                     ARTISTdirect Replacement Module will be subject to review
                     at the quarterly meetings described in Section 10.3.

               3.5   Yahoo will provide the ARTISTdirect Keyword Module, on a
                     rotating basis with and adjacent to the corresponding Music
                     Merchant Module of the Selected Music Merchant during the
                     Term, on the ARTISTdirect Keyword Module Pages.

               3.6   Yahoo will provide the ARTISTdirect Message Boards Module,
                     on a rotating basis until its Page View obligation under
                     Section 10.1 is met, on Pages within the music category of
                     Yahoo Message Boards.

               3.7   Yahoo will provide the ARTISTdirect New Release Module, on
                     a rotating basis with the corresponding Music Merchant
                     Module of the Selected Music Merchant during the Term, on
                     Pages within Yahoo Shopping.

               3.8   Yahoo will provide the Yahoo Mail Welcome Module, on a
                     rotating basis until its Page View obligation under Section
                     10.1 is met, on the Yahoo Mail Welcome Page.

               3.9   Yahoo will provide the Yahoo Mail Logout Module, on a
                     rotating basis until its Page View obligation under Section
                     10.1 is met, on the Yahoo Mail Logout Page.

4.      ARTISTDIRECT SWEEPSTAKES BUTTON AND SWEEPSTAKES TEXT LINK.

               4.1   Yahoo will provide the ARTISTdirect Sweepstakes Button, on
                     a rotating basis with the corresponding Music Merchant
                     Module of the Selected Music Merchant until its Page View
                     obligation under Section 10.1 is met, on Pages within the
                     music category of Yahoo Shopping.

                                       10
<PAGE>   11

               4.2   Yahoo will provide the ARTISTdirect Sweepstakes Text Link,
                     on a rotating basis with the corresponding Music Merchant
                     Module of the Selected Music Merchant until its Page View
                     obligation under Section 10.1 is met, on Pages within Yahoo
                     Music.

               4.3   Yahoo will provide as many as [***]* separate sweepstakes
                     (the "Sweepstakes") in connection with the ARTISTdirect
                     Sweepstakes Button and the ARTISTdirect Sweepstakes Text
                     Link. ARTISTdirect will be responsible for creating the
                     Sweepstakes, including but not limited to drafting the
                     official rules that will govern the Sweepstakes and the
                     acquisition and fulfillment of all prizes in connection
                     with the Sweepstakes, except that Yahoo will provide
                     ARTISTdirect with 1 prize of retail value not less than
                     [***]* for each Sweepstakes that is conducted under this
                     Agreement. The Sweepstakes will be (a) subject to Yahoo's
                     approval, which will not be unreasonably withheld, and (b)
                     conducted in accordance with Yahoo's then current
                     guidelines with respect to sweepstakes. The parties
                     acknowledge and agree that Yahoo's approval of the official
                     rules for the Sweepstakes will not constitute an opinion as
                     to the legal appropriateness or adequacy of such rules or
                     their manner of use.

               4.4   In connection with the Sweepstakes, Yahoo will present
                     users who participate in the Sweepstakes with the
                     opportunity to receive an electronic mail message (the
                     "Follow-Up E-Mail"). Upon ARTISTdirect's election, Yahoo
                     will deliver the Follow-Up E-Mail on behalf of ARTISTdirect
                     to those users who opt to receive the Follow-Up E-Mail.
                     ARTISTdirect will provide to Yahoo all text of the
                     Follow-Up E-Mail, and such text will be subject to Yahoo's
                     approval, which will not be unreasonably withheld.

5.      ARTISTDIRECT E-MAIL MESSAGE.

               5.1   Yahoo will deliver [***] ARTISTdirect E-Mail Messages to
                     those registered Yahoo Mail users who (a) have indicated in
                     their Yahoo Mail preferences an interest in music and a
                     willingness to receive promotional offers via Yahoo
                     Delivers and (b) have provided information in their Yahoo
                     profiles that matches the value selected by ARTISTdirect
                     for purposes of targeting the ARTISTdirect E-Mail Message.
                     Yahoo will deliver the ARTISTdirect E-Mail Message in
                     accordance with Yahoo's privacy policy.

               5.2   ARTISTdirect will provide to Yahoo all text of the
                     ARTISTdirect E-Mail Message and any other materials
                     necessary for ARTISTdirect to participate in Yahoo
                     Delivers. Such materials will be (a) subject to Yahoo's
                     approval, which will not be unreasonably withheld, and (b)

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<PAGE>   12

                     consistent with Yahoo's policies and guidelines for such
                     messages and for Yahoo Delivers generally.

6.      ARTISTDIRECT FRONT PAGE PROMOTION.

               6.1   During the Term, and in connection with the ARTISTdirect
                     Front Page Promotion Banner, Yahoo will provide the
                     ARTISTdirect Front Page Promotion no more frequently than
                     [***]* until its Page View obligation under Section 10.1 is
                     met.

7.      ARTISTDIRECT CONTENT.

               7.1   During the Term and in ARTISTdirect's sole discretion,
                     ARTISTdirect will apprise Yahoo of ARTISTdirect Content
                     when ARTISTdirect develops or acquires such ARTISTdirect
                     Content. Yahoo will, in its sole discretion, consider
                     ARTISTdirect Content for inclusion in appropriate areas of
                     the Yahoo Properties. Under no circumstances will
                     ARTISTdirect be under any obligation, express or implied,
                     to provide ARTISTdirect Content to Yahoo, nor will Yahoo be
                     under any obligation, express or implied, to include any
                     ARTISTdirect Content in any Yahoo Property. If Yahoo
                     chooses to include ARTISTdirect Content in any Yahoo
                     Property, the terms of such inclusion will be mutually
                     agreed upon by the parties.

8.      IMPLEMENTATION.

               8.1   Yahoo will be solely responsible for the user interface and
                     placement of the ARTISTdirect Links and ARTISTdirect will
                     be solely responsible for and will provide Yahoo with all
                     text, artwork and design elements of the ARTISTdirect
                     Links. The parties will use commercially reasonable efforts
                     to make available on Yahoo (a) the ARTISTdirect Banners on
                     or before [***]* and (b) the other ARTISTdirect Links on or
                     before [***]* In any event, ARTISTdirect will deliver to
                     Yahoo all the text, artwork and design elements of the
                     ARTISTdirect Banner no later than [***]* and all text,
                     artwork and design elements of the other ARTISTdirect Links
                     no later than [***]*

               8.2   Yahoo reserves the right, at any time, to redesign or
                     modify the organization, structure, specifications, "look
                     and feel," navigation, guidelines and other elements of the
                     ARTISTdirect Links or any Yahoo Property on which an
                     ARTISTdirect Link is placed. If such a modification
                     materially and adversely affects any specific ARTISTdirect
                     Link, Yahoo will provide ARTISTdirect, as its sole remedy,
                     with a comparable promotional placement on the Yahoo
                     Properties.

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Securities and Exchange Commission.

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<PAGE>   13

               8.3   ARTISTdirect will provide to Yahoo all URLs, URL formats
                     (as applicable), content and other materials necessary for
                     Yahoo to provide the ARTISTdirect Links in accordance with
                     the specifications set forth in this Agreement and Yahoo's
                     standard advertising guidelines, currently located at
                     http://docs.yahoo.com/docs/advertising/ (the "ARTISTdirect
                     Deliverables") on or before the ARTISTdirect Deliverables
                     Due Date. All content and material contained in the
                     ARTISTdirect Links will be subject to Yahoo's approval,
                     which will not be unreasonably withheld, and must comply
                     with all applicable federal, state and local laws, rules
                     and regulations, including but not limited to consumer
                     protection laws and any rules and regulations governing
                     product claims, truth in labeling or false advertising.

               8.4   During the Term, ARTISTdirect hereby grants to Yahoo a
                     non-exclusive, non-transferable, non-sublicensable,
                     worldwide, fully paid license to use, reproduce and display
                     the ARTISTdirect Brand Features solely (a) to indicate the
                     location of the ARTISTdirect Links as set forth herein and
                     (b) in connection with the marketing and promotion of
                     ARTISTdirect in the Yahoo Properties pursuant to this
                     Agreement.

               8.5   In no event will any ARTISTdirect Destination Page contain
                     graphic or text links, advertisements or promotions of
                     [***]* (the "Yahoo Competitors"). Yahoo will be entitled to
                     update the list of Yahoo Competitors on a quarterly basis.
                     The foregoing exclusion of Yahoo Competitors does not apply
                     to any graphic or text link that serves as attribution for,
                     and appears adjacent to, original content that is presented
                     on an ARTISTdirect Destination Page, unless Yahoo
                     determines, in its reasonable discretion, that such link is
                     promotional in nature. If Yahoo makes such a determination,
                     or if Yahoo becomes aware of any link, advertisement or
                     promotion that potentially violates this Section 8.5,
                     [***]*. If the parties cannot resolve the matter within 5
                     business days of Yahoo's notice to ARTISTdirect, Yahoo
                     reserves the right to [***]*).

               8.6   Within [***]* days after the Effective Date of this
                     Agreement, ARTISTdirect will place a Yahoo graphic link on
                     all ARTISTdirect Destination Pages. The Yahoo graphic link
                     must (a) be placed in a manner approved by Yahoo, [***]*;
                     (b) contain the Yahoo name and logo as provided by Yahoo;
                     and (c) directly link the user back to a Page on the Yahoo
                     Properties designated by Yahoo.

               8.7   During the Term, Yahoo hereby grants to ARTISTdirect a
                     non-exclusive, worldwide, fully paid license to use,
                     reproduce and display the Yahoo Brand Features as described
                     in Section 8.6.

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<PAGE>   14

               8.8   ARTISTdirect and Yahoo will execute the Yahoo Remote
                     Merchant Integration Program Agreement, attached hereto as
                     Exhibit V, on the Effective Date of this Agreement.

               8.9   ARTISTdirect will issue to Yahoo a warrant (the "Warrant")
                     substantially in the form attached hereto as Exhibit W on
                     the Effective Date of this Agreement.

               8.10  The ARTISTdirect Network will (a) handle [***]*
                     simultaneous requests; (b) have a minimum [***]* uptime and
                     maximum [***]* downtime per calendar quarter of the term
                     (except for planned downtime that may be required for
                     system enhancements, upgrades or preventative maintenance);
                     and (c) ensure that data transfers from the ARTISTdirect
                     Network to the Yahoo Properties initiate within fewer than
                     [***]* seconds, on average, of request. The parties
                     acknowledge and agree that a failure of the ARTISTdirect
                     Network to meet the aforementioned performance standards
                     for any calendar quarter is a material breach for the
                     purposes of Section 12.2(b).

               8.11  Within [***]* of this Agreement, the parties will use
                     commercially reasonable efforts [***]*, to credit
                     ARTISTdirect with the traffic and reach statistics
                     generated from users who view Pages on the ARTISTdirect RMI
                     Site, as reported by Media Metrix. If the parties cannot
                     devise a means of officially crediting ARTISTdirect with
                     these statistics, either by a change in technology or by a
                     change in Media Metrix's reporting policies, [***]*

9.      LIMITED EXCLUSIVITY; RIGHT OF FIRST PRESENTATION.

               9.1   Commencing on [***]* and continuing through the Term, Yahoo
                     will (a) [***]*

               9.2   The parties acknowledge and agree that, with respect to the
                     Music Merchant Modules only, placement of ARTISTdirect's
                     Music Merchant Modules will [***]*

               9.3   ARTISTdirect acknowledges and agrees that, except with
                     respect to the foregoing limited exclusivity of Sections
                     9.1 and 9.2 above, Yahoo is not precluded from, among other
                     things, promoting or placing any advertising units of a
                     Music Merchant or any other entity in any area of the Yahoo
                     Properties.

               9.4   In the event that Yahoo develops enhancements that
                     materially improve the size, appearance or placement of (a)
                     any ARTISTdirect Link or (b) any other advertising unit
                     made available to Music Merchants generally,

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<PAGE>   15

                     Yahoo will provide ARTISTdirect with written notice of such
                     enhancements prior to their release and will describe
                     Yahoo's reasonable business requirements for providing such
                     enhancements to ARTISTdirect.

               9.5   [***]*

10.     PAGE VIEWS.

               10.1  With respect to the ARTISTdirect Links, Yahoo will deliver
                     a minimum of [***]* Page Views.

               10.2  Yahoo will use commercially reasonable efforts to deliver
                     the aforementioned Page Views according to the allocation
                     set forth below, but Yahoo's Page View obligation is with
                     respect to the Music Merchant Program as a whole. Yahoo
                     will not be in breach of this Agreement for failure to
                     deliver the specific number of Page Views in any of the
                     areas set forth below:

                     (a)  [***]*

               10.3  [***]* Yahoo and ARTISTdirect will meet to discuss the
                     performance of this Music Merchant Program as a whole and
                     agree to consider in good faith ways to optimize elements
                     of this Music Merchant Program. In the event that Yahoo
                     fails to deliver the number of Page Views set forth in
                     Section 10.1 before expiration of the Term, [***]* If Yahoo
                     does not satisfy its Page View obligation within [***]*
                     days after the expiration of the Term, then [***]* The
                     parties acknowledge and agree that the [***]* referenced
                     above has no other significance in this Agreement other
                     than [***]*

               10.4  On a regular basis and at ARTISTdirect's reasonable
                     request, Yahoo will provide ARTISTdirect with access to an
                     electronic database, the accuracy of which is periodically
                     reviewed and certified by Ernst & Young, LLP or a similarly
                     reputable and independent entity, that describes in
                     reasonable detail Yahoo's calculation of the Page Views
                     delivered under this Agreement. To the extent that Yahoo
                     elects, in its sole discretion, to conduct research or
                     analysis on behalf of or at the direction of ARTISTdirect,
                     Yahoo will share its results with ARTISTdirect at [***]*

11.     COMPENSATION.

               11.1  Slotting Fee. In consideration of Yahoo's performance and
                     obligations as set forth herein, ARTISTdirect will pay to
                     Yahoo [***]* of the first payment set forth in the payment
                     schedule below will be designated as a

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<PAGE>   16

                     set up fee for the design, consultation, development,
                     implementation and placement of the ARTISTdirect Links.

                     Payment                                    Date
                     -------                                    ----

                     [***]*

               11.2  Payment Information. Except as set forth in Section 10.3,
                     all payments herein are non-refundable and non-creditable
                     and will be made by ARTISTdirect via wire transfer into
                     Yahoo's main account according to the wire transfer
                     instructions set forth on Exhibit S.

               11.3  Late Payments. Any portion of the above payments that has
                     not been paid to Yahoo within [***]* after the dates set
                     forth above will bear interest at the lesser of (a) [***]*
                     percent [***]* per month or (b) the maximum amount allowed
                     by law. Notwithstanding the foregoing, any failure by
                     ARTISTdirect to make the payments specified in Section 11.1
                     on the dates set forth therein constitutes a material
                     breach of this Agreement.

               11.4  Ability to Pay. ARTISTdirect represents and warrants that
                     it has the ability to pay to Yahoo all fees set forth in
                     this Agreement.

12.     TERM AND TERMINATION.

               12.1  Term. This Agreement will commence upon the Effective Date
                     and, unless terminated as provided herein, will remain in
                     effect for the Term.

               12.2  Termination by Either Party with Cause. This Agreement may
                     be terminated at any time by either party (a) immediately
                     upon written notice if the other party (1) becomes
                     insolvent; (2) files a petition in bankruptcy; or (3) makes
                     an assignment for the benefit of its creditors; or (b) 30
                     days after written notice to the other party of such other
                     party's breach of any of its obligations under this
                     Agreement in any material respect (20 days in the case of a
                     failure to pay), which breach is not remedied within such
                     notice period. In the event that ARTISTdirect does not
                     remedy a breach of its payment obligation under this
                     Agreement within 20 days of Yahoo's written notice to
                     ARTISTdirect, Yahoo will be entitled to suspend its
                     performance under this Agreement immediately. Any notice of
                     breach provided in accordance with subsection (b) will
                     describe any termination of the Warrant that will result
                     from such breach.

               12.3  Survival. The provisions of Sections 1, 10.3, 11, 13
                     through 17 and this 12.3 will survive expiration or
                     termination of this Agreement, except that ARTISTdirect's
                     payment obligations set forth in Section 11.1 will not

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Securities and Exchange Commission.

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<PAGE>   17

                     survive a proper termination of this Agreement by
                     ARTISTdirect in accordance with Section 12.2.

13.     CONFIDENTIAL INFORMATION AND PUBLICITY.

               13.1  Terms and Conditions. The terms and conditions of this
                     Agreement will be considered confidential and will not be
                     disclosed to any third parties except to such party's
                     accountants, attorneys or except as otherwise required by
                     law. Neither party will make any public announcement
                     regarding the existence of this Agreement without the other
                     party's prior written approval and consent. If this
                     Agreement or any of its terms must be disclosed under any
                     law, rule or regulation (e.g., as part of a filing with the
                     United States Securities and Exchange Commission),
                     excluding an order or other discovery request issued by a
                     court of competent jurisdiction, the disclosing party will
                     (a) give written notice of the intended disclosure to the
                     other party at least 3 days in advance of the date of
                     disclosure; (b) redact portions of this Agreement to the
                     fullest extent permitted under any applicable laws, rules
                     and regulations; and (c) submit a request, to be agreed
                     upon by the other party, that such portions and other
                     provisions of this Agreement requested by the other party
                     receive confidential treatment under the laws, rules and
                     regulations of the body or tribunal to which disclosure is
                     being made or otherwise be held in the strictest confidence
                     to the fullest extent permitted under the laws, rules or
                     regulations of any other applicable governing body. With
                     respect to a party's responses to the United States
                     Securities and Exchange Commission's comments on a
                     confidential treatment request, the disclosing party will
                     use best efforts to provide the other party with reasonable
                     prior notice of the intended disclosure, but a failure to
                     provide such notice will not be deemed a breach of this
                     Agreement.

               13.2  Publicity. Yahoo and ARTISTdirect will jointly issue a
                     press release announcing this Agreement. The parties will
                     use commercially reasonable efforts to issue a joint press
                     release announcing this Agreement within 10 days after the
                     Launch Date, but no sooner than January 1, 2000. Any and
                     all publicity relating to this Agreement and subsequent
                     transactions between Yahoo and ARTISTdirect and the method
                     of its release will be approved in advance of the release,
                     in writing, by both Yahoo and ARTISTdirect.

               13.3  Nondisclosure Agreement. Yahoo and ARTISTdirect acknowledge
                     and agree that the terms of the Mutual Nondisclosure
                     Agreement attached as Exhibit U will be incorporated by
                     reference and made a part of this Agreement, and will
                     govern the use and disclosure of confidential information
                     and all discussions pertaining to or leading to this
                     Agreement.

               13.4  User Data. All information and data provided to Yahoo by
                     users of the Yahoo Properties or otherwise collected by
                     Yahoo relating to user activity

                                       17
<PAGE>   18

                     on the Yahoo Properties will be retained by and owned
                     solely by Yahoo. All information and data provided to
                     ARTISTdirect on the ARTISTdirect Network or otherwise
                     collected by ARTISTdirect relating to user activity on the
                     ARTISTdirect Network will be retained by and owned solely
                     by ARTISTdirect. Notwithstanding the foregoing, [***]* will
                     own all information and data provided to Yahoo by users who
                     participate in the Sweepstakes that Yahoo makes available
                     via the ARTISTdirect Sweepstakes Button and the
                     ARTISTdirect Sweepstakes Text Link. Each party agrees to
                     use information and data provided to it by a user only as
                     authorized by that user and will not disclose, sell,
                     license or otherwise transfer this information to any third
                     party or use this information for the transmission of "junk
                     mail," "spam" or any other unsolicited mass distribution of
                     information. With respect to information and data provided
                     by or collected from users in connection with the
                     ARTISTdirect RMI Site, the Yahoo Remote Merchant
                     Integration Program Agreement will govern the ownership and
                     use of such information and data by the parties.

               13.5  Privacy of User Information. ARTISTdirect will (a) ensure
                     that all information provided by users of the ARTISTdirect
                     Network is maintained, accessed and transmitted in a secure
                     environment and in compliance with industry standard
                     security specifications and (b) provide a link to its
                     privacy policy regarding the protection of user data on
                     those Pages of the ARTISTdirect Network where the user is
                     requested to provide personal or financial information.
                     Further, ARTISTdirect represents and warrants that it has
                     reviewed the FTC Order and will not engage in any conduct
                     that it reasonably believes would cause Yahoo to violate
                     the FTC Order. ARTISTdirect agrees to follow and comply
                     with all reasonable instructions and directions of Yahoo to
                     ensure Yahoo's compliance with the FTC Order.

14.     INDEMNIFICATION.

               14.1  By ARTISTdirect. ARTISTdirect, at its own expense, will
                     indemnify, defend and hold harmless Yahoo and its
                     employees, representatives, agents and affiliates against
                     any claim, demand, action or other proceeding brought by
                     any third party against Yahoo to the extent that such
                     claim, demand, action or other proceeding is based on, or
                     arises out of, a claim that any ARTISTdirect Brand Feature,
                     ARTISTdirect Content, any material, product or service
                     produced, distributed, offered or sold by ARTISTdirect, or
                     any material presented on the ARTISTdirect Network or the
                     ARTISTdirect RMI Site (excluding any Yahoo graphic links
                     placed by ARTISTdirect in accordance with Section 8.6)

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

                                       18
<PAGE>   19

                     (a)  infringes in any manner any copyright, patent,
                          trademark, trade secret or any other intellectual
                          property right of any third party;

                     (b)  is or contains any material or information that is
                          obscene, defamatory, libelous, slanderous, or that
                          violates any law or regulation;

                     (c)  violates any rights of any person or entity, including
                          but not limited to rights of publicity, privacy or
                          personality;

                     (d)  has resulted in any consumer fraud, product liability,
                          tort, breach of contract, injury, damage or harm of
                          any kind to any third party; or

                     (e)  is subject to any fees, royalties, licenses or any
                          other payments to any third party;

                     provided, however, that in any such case: (1) Yahoo
                     provides ARTISTdirect with prompt written notice of any
                     such claim; (2) Yahoo permits ARTISTdirect to assume and
                     control the defense of such action or proceeding upon
                     ARTISTdirect's written notice to Yahoo of its intention to
                     indemnify; and (3) upon ARTISTdirect's written request, and
                     at no expense to Yahoo, Yahoo will provide ARTISTdirect
                     with all available information and assistance reasonably
                     necessary for ARTISTdirect to defend such claim.
                     ARTISTdirect will not enter into any settlement or
                     compromise of any such claim, which settlement or
                     compromise would result in any liability to Yahoo, without
                     Yahoo's prior written consent, which will not be
                     unreasonably withheld. ARTISTdirect will pay any and all
                     costs, damages and expenses, including but not limited to
                     reasonable attorneys' fees and costs awarded against or
                     otherwise incurred by Yahoo in connection with or arising
                     from any such claim, demand, action or other proceeding. It
                     is understood and agreed that Yahoo will not be required to
                     edit or review for accuracy or appropriateness any content
                     provided by ARTISTdirect.

               14.2  By Yahoo. Yahoo, at its own expense, will indemnify, defend
                     and hold harmless ARTISTdirect and its employees,
                     representatives, agents and affiliates against any claim,
                     demand, action or other proceeding brought by any third
                     party against ARTISTdirect to the extent that such claim,
                     demand, action or other proceeding is based on, or arises
                     out of, a claim that any Yahoo Brand Feature

                     (a)  infringes in any manner any copyright, patent,
                          trademark, trade secret or any other intellectual
                          property right of any third party;

                     (b)  is or contains any material or information that is
                          obscene, defamatory, libelous, slanderous, or that
                          violates any law or regulation;

                                       19
<PAGE>   20

                     (c)  violates any rights of any person or entity, including
                          but not limited to rights of publicity, privacy or
                          personality;

                     (d)  has resulted in any consumer fraud, product liability,
                          tort, breach of contract, injury, damage or harm of
                          any kind to any third party; or

                     (e)  is subject to any fees, royalties, licenses or any
                          other payments to any third party;

                      provided, however, that in any such case: (1) ARTISTdirect
                      provides Yahoo with prompt written notice of any such
                      claim; (2) ARTISTdirect permits Yahoo to assume and
                      control the defense of such action or proceeding upon
                      Yahoo's written notice to ARTISTdirect of its intention to
                      indemnify; and (3) upon Yahoo's written request, and at no
                      expense to ARTISTdirect, ARTISTdirect will provide Yahoo
                      with all available information and assistance reasonably
                      necessary for Yahoo to defend such claim. Yahoo will not
                      enter into any settlement or compromise of any such claim,
                      which settlement or compromise would result in any
                      liability to ARTISTdirect, without ARTISTdirect's prior
                      written consent, which will not be unreasonably withheld.
                      Yahoo will pay any and all costs, damages and expenses,
                      including but not limited to reasonable attorneys' fees
                      and costs awarded against or otherwise incurred by
                      ARTISTdirect in connection with or arising from any such
                      claim, demand, action or other proceeding.

15.     LIMITATION OF LIABILITY.

               EXCEPT AS PROVIDED IN SECTION 14, UNDER NO CIRCUMSTANCES WILL
               ARTISTDIRECT, YAHOO OR ANY AFFILIATE OF EITHER PARTY BE LIABLE TO
               THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL
               OR EXEMPLARY DAMAGES ARISING FROM THIS AGREEMENT, EVEN IF THAT
               PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
               INCLUDING BUT NOT LIMITED TO LOSS OF REVENUE OR ANTICIPATED
               PROFITS OR LOST BUSINESS.

16.     INSURANCE.

               ARTISTdirect will maintain insurance during the Term with a
               carrier that is reasonably acceptable to Yahoo and with coverage
               for commercial general liability and errors and omissions of at
               least [***]* per occurrence. ARTISTdirect will name Yahoo as an
               additional insured on such insurance and will provide evidence of
               such insurance to Yahoo within 10 days of the Effective Date.
               Such insurance policy will not be cancelled or modified in a
               manner inconsistent with this provision without Yahoo's prior
               written consent.

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

                                       20
<PAGE>   21

17.     GENERAL PROVISIONS.

               17.1  Independent Contractors. It is the intention of Yahoo and
                     ARTISTdirect that Yahoo and ARTISTdirect are, and will be
                     deemed to be, independent contractors with respect to the
                     subject matter of this Agreement, and nothing contained in
                     this Agreement will be deemed or construed in any manner
                     whatsoever as creating any partnership, joint venture,
                     employment, agency, fiduciary or other similar relationship
                     between Yahoo and ARTISTdirect.

               17.2  Entire Agreement. This Agreement, and all Exhibits attached
                     hereto, represents the entire agreement between Yahoo and
                     ARTISTdirect with respect to the subject matter hereof and
                     thereof and will supersede all prior agreements and
                     communications of the parties, oral or written, including
                     but not limited to the Letter of Understanding executed on
                     or about December 1, 1999 between Yahoo and ARTISTdirect.

               17.3  Amendment and Waiver. No amendment to, or waiver of, any
                     provision of this Agreement will be effective unless in
                     writing and signed by both parties. The waiver by any party
                     of any breach or default will not constitute a waiver of
                     any different or subsequent breach or default.

               17.4  Governing Law. This Agreement will be governed by and
                     interpreted in accordance with the laws of the State of
                     California without regard to the conflicts of laws
                     principles thereof.

               17.5  Successors and Assigns. Neither party will assign its
                     rights or obligations under this Agreement without the
                     prior written consent of the other party, which will not
                     unreasonably be withheld or delayed. Notwithstanding the
                     foregoing, either party may assign this Agreement to an
                     entity that acquires substantially all of the stock or
                     assets of a party to this Agreement, except that consent
                     will be required if the non-assigning party reasonably
                     determines that the assignee will not have sufficient
                     capital or assets to perform its obligations hereunder, or
                     that the assignee is a direct competitor of the
                     non-assigning party. All terms and provisions of this
                     Agreement will be binding upon and inure to the benefit of
                     the parties hereto and their respective permitted
                     transferees, successors and assigns.

               17.6  Force Majeure. Neither party will be liable for failure to
                     perform or delay in performing any obligation (other than
                     the payment of money) under this Agreement if such failure
                     or delay is due to fire, flood, earthquake, strike, war
                     (declared or undeclared), embargo, blockade, legal
                     prohibition, governmental action, riot, insurrection,
                     damage, destruction or any other similar cause beyond the
                     control of such party. If such event continues for more
                     than 30 days, the other party may terminate this Agreement
                     without further obligation.

                                       21
<PAGE>   22

               17.7  Notices. Any notice, request or other communication called
                     for by this Agreement will be (a) in writing; (b) sent by
                     overnight or certified mail return receipt requested; and
                     (c) deemed delivered to the party to whom such
                     communication is directed, if by overnight mail, on the
                     date delivered or, if by certified mail, 2 days following
                     the date sent. If to Yahoo, such notices will be addressed
                     to 3420 Central Expressway, Santa Clara, CA 95051, Fax:
                     [***]* Attention: Senior Vice President, Sales, with a copy
                     to its General Counsel. If to ARTISTdirect, such notices
                     will be addressed to 17835 Ventura Boulevard, Suite 310,
                     Encino, CA 91316 Attention: Chief Operating Officer, with a
                     copy to its counsel, Lenard & Gonzalez LLP, 1900 Avenue of
                     the Stars, 25th Floor, Los Angeles, CA 90067, Attention:
                     Allen D. Lenard, Esq.

               17.8  Severability. If any provision of this Agreement is held to
                     be invalid, illegal or unenforceable for any reason, such
                     invalidity, illegality or unenforceability will not effect
                     any other provisions of this Agreement, and this Agreement
                     will be construed as if such invalid, illegal or
                     unenforceable provision had never been contained herein.

               17.9  Sole Responsibility. ARTISTdirect will remain solely
                     responsible for the operation of the ARTISTdirect Network,
                     and Yahoo will remain solely responsible for the operation
                     of Yahoo's principal U.S. targeted Web site (the "Yahoo
                     Site"). Each party (a) acknowledges that the ARTISTdirect
                     Network and the Yahoo Site may be subject to temporary
                     shutdowns due to causes beyond the operating party's
                     reasonable control and (b) subject to the terms of this
                     Agreement, retains sole right and control over the
                     programming, content and conduct of transactions over its
                     respective internet-based service.

               17.10 Counterparts. This Agreement may be executed in two
                     counterparts, both of which taken together will constitute
                     a single instrument. Execution and delivery of this
                     Agreement may be evidenced by facsimile transmission.

               17.11 Authority. Each of Yahoo and ARTISTdirect represents and
                     warrants that the negotiation and entry of this Agreement
                     will not violate, conflict with, interfere with, result in
                     a breach of, or constitute a default under any other
                     agreement to which they are a party.

               17.12 Attorneys Fees. The prevailing party in any action to
                     enforce this Agreement will be entitled to reimbursement of
                     its expenses, including reasonable attorneys' fees.

                            [SIGNATURE PAGE FOLLOWS]

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

                                       22
<PAGE>   23

               This Advertising and Promotion Agreement has been executed by the
duly authorized representatives of the parties, effective as of the Effective
Date.

YAHOO! INC.                                ARTISTDIRECT, INC.

By: /s/ ANIL SINGH                         By: /s/ KEITH YOKOMOTO
    ---------------------------------         ----------------------------------

Name: Anil Singh                           Name: Keith Yokomoto
     --------------------------------           --------------------------------

Title: Senior Vice President               Title: President and COO
      -------------------------------            -------------------------------

Attn: Senior Vice President, Sales         Attn: Chief Operating Officer
3420 Central Expressway
Santa Clara, CA 95051
Tel.:  (408) 731-3300                      Tel: (818) 758-8700
[***                                       ***
***                                        ***]*

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

                                       23
<PAGE>   24

                                    EXHIBIT T

                             FTC DECISION AND ORDER

                                                                         9823015
                                                                         B251544
                            UNITED STATES OF AMERICA
                            FEDERAL TRADE COMMISSION

COMMISSIONERS:

    ROBERT PITOFSKY, CHAIRMAN

    SHEILA F. ANTHONY

    MOZELLE W. THOMPSON

    ORSON SWINDLE

                                IN THE MATTER OF
                            GEOCITIES, A CORPORATION.
                                DOCKET NO. C-3850
                               DECISION AND ORDER

The Federal Trade Commission having initiated an investigation of certain acts
and practices of the respondent named in the caption hereof, and the respondent
having been furnished thereafter with a copy of a draft of complaint which the
Bureau of Consumer Protection proposed to present to the Commission for its
consideration and which, if issued by the Commission, would charge respondent
with violation of the Federal Trade Commission Act; and

The respondent, its attorneys, and counsel for Federal Trade Commission having
thereafter executed an agreement containing a consent order, an admission by the
respondent of all the jurisdictional facts set forth in the aforesaid draft of
complaint, a statement that the signing of said agreement is for settlement
purposes only and does not constitute an admission by respondent that the law
has been violated as alleged in such complaint, or that the facts as alleged in
such complaint, other than jurisdictional facts, are true and waivers and other
provisions as required by the Commission's Rules; and

The Commission having considered the matter and having determined that it had
reason to believe that the respondent has violated the said Act, and that
complaint should issue stating its charges in that respect, and having thereupon
accepted the executed consent agreement and placed such agreement on the public
record for a period of sixty (60) days, and having duly considered the comments
filed thereafter by interested persons pursuant to Section 2.34 of its Rules,
now in further conformity with the procedure prescribed in Section 2.34 of its
Rules, the Commission hereby issues its complaint, makes the following
jurisdictional findings and enters the following order:

    1. Respondent GeoCities, is a corporation organized, existing, and doing
    business under and by virtue of the laws of the State of California, with
    its office or principal place of business located at 1918 Main Street, Suite
    300, Santa Monica, California 90405.

    2. The Federal Trade Commission has jurisdiction of the subject matter of
    this proceeding and of the respondent, and the proceeding is in the
    proceeding is in the public interest.

                                       i
<PAGE>   25

                                      ORDER
                                   DEFINITIONS

For purposes of this order, the following definitions shall apply:

    1. "Child" or "children" shall mean a person of age twelve (12) or under.

    2. "Parents" or "parental" shall mean a legal guardian, including, but not
    limited to, a biological or adoptive parent.

    3. "Personal identifying information" shall include, but is not limited to,
    first and last name, home or other physical address (e.g., school), e-mail
    address, telephone number, or any information that identifies a specific
    individual, or any information which when tied to the above becomes
    identifiable to a specific individual.

    4. "Disclosure" or "disclosed to third party(ies)" shall mean (a) the
    release of information in personally identifiable form to any other
    individual, firm, or organization for any purpose or (b) making publicly
    available such information by any means including, but not limited to,
    public posting on or through home pages, pen pal services, e-mail services,
    message boards, or chat rooms.

    5. "Clear(ly) and prominent(ly)" shall mean in a type size and location that
    are not obscured by any distracting elements and are sufficiently noticeable
    for an ordinary consumer to read and comprehend, and in a typeface that
    contrasts with the background against which it appears.

    6. "Archived" database shall mean respondent's off-site "back-up" computer
    tapes containing member profile information and GeoCities Web site
    information.

    7. "Electronically verifiable signature" shall mean a digital signature or
    other electronic means that ensures a valid consent by requiring: (1)
    authentication (guarantee that the message has come from the person who
    claims to have sent it); (2) integrity (proof that the message contents have
    not been altered, deliberately or accidentally, during transmission); and
    (3) non-repudiation (certainty that the sender of the message cannot later
    deny sending it).

    8. "Express parental consent" shall mean a parent's affirmative agreement
    that is obtained by any of the following means: (1) a signed statement
    transmitted by postal mail or facsimile; (2) authorizing a charge to a
    credit card via a secure server; (3) e-mail accompanied by an electronically
    verifiable signature; (4) a procedure that is specifically authorized by
    statute, regulation, or guideline issued by the Commission; or (5) such
    other procedure that ensures verified parental consent and ensures the
    identity of the parent, such as the use of a reliable certifying authority.

    9. Unless otherwise specified, "respondent" shall mean GeoCities, its
    successors and assigns and its officers, agents, representatives, and
    employees.

    10. "Commerce" shall mean as defined in Section 4 of the Federal Trade
    Commission Act, 15 U.S.C. Section 44.

                                       I.

IT IS ORDERED that respondent, directly or through any corporation, subsidiary,
division, or other device, in connection with any online collection of personal
identifying information from consumers, in or affecting commerce, shall not make
any misrepresentation, in any manner, expressly or by

                                       ii
<PAGE>   26

implication, about its collection or use of such information from or about
consumers, including, but not limited to, what information will be disclosed to
third parties and how the information will be used.

                                       II.

IT IS FURTHER ORDERED that respondent, directly or through any corporation,
subsidiary, division, or other device, in connection with any online collection
of personal identifying information from consumers, in or affecting commerce,
shall not misrepresent, in any manner, expressly or by implication, the identity
of the party collecting any such information or the sponsorship of any activity
on its Web site.

                                      III.

IT IS FURTHER ORDERED that respondent, directly or through any corporation,
subsidiary, division, or other device, in connection with the online collection
of personal identifying information from children, in or affecting commerce,
shall not collect personal identifying information from any child if respondent
has actual knowledge that such child does not have his or her parent's
permission to provide the information to respondent. Respondent shall not be
deemed to have actual knowledge if the child has falsely represented that (s)he
is not a child and respondent does not knowingly possess information that such
representation is false.

                                       IV.

IT IS FURTHER ORDERED that respondent, directly or through any corporation,
subsidiary, division, or other device, in connection with the online collection
of personal identifying information, in or affecting commerce, shall provide
clear and prominent notice to consumers, including the parents of children, with
respect to respondent's practices with regard to its collection and use of
personal identifying information. Such notice shall include, but is not limited
to, disclosure of:

    A. what information is being collected (e.g., "name," "home address,"
    "e-mail address," "age," "interests");

    B. its intended use(s);

    C. the third parties to whom it will be disclosed (e.g., "advertisers of
    consumer products," mailing list companies," "the general public");

    D. the consumer's ability to obtain access to or directly access such
    information and the means by which (s)he may do so;

    E. the consumer's ability to remove directly or have the information removed
    from respondent's databases and the means by which (s)he may do so; and

    F. the procedures to delete personal identifying information from
    respondent's databases and any limitations related to such deletion.

    Such notice shall appear on the home page of respondent's Web site(s) and at
    each location on the site(s) at which such information is collected.

Provided that, respondent shall not be required to include the notice at the
locations at which information is collected if such information is limited to
tracking information and the collection of such information is described in the
notice required by this Part.

Provided further that, for purposes of this Part, compliance with all of the
following shall be deemed adequate notice: (a) placement of a clear and
prominent hyperlink or button labeled PRIVACY NOTICE on the home page(s), which
directly links to the privacy notice screen(s); (b) placement of the information
required in this Part clearly and prominently on the privacy notice screen(s),
followed on the same screen(s) with a button that must be clicked on to make it
disappear; and (c) at each

                                      iii
<PAGE>   27

location on the site at which any personal identifying information is collected,
placement of a clear and prominent hyperlink on the initial screen on which the
collection takes place, which links directly to the privacy notice and which is
accompanied by the following statement in bold typeface: NOTICE: WE COLLECT
PERSONAL INFORMATION ON THIS SITE. TO LEARN MORE ABOUT HOW WE USE YOUR
INFORMATION CLICK HERE.

                                       V.

IT IS FURTHER ORDERED that respondent, directly or through any corporation,
subsidiary, division, or other device, in connection with the online collection
of personal identifying information from children, in or affecting commerce,
shall maintain a procedure by which it obtains express parental consent prior to
collecting and using such information.

Provided that, respondent may implement the following screening procedure that
shall be deemed to be in compliance with this Part. Respondent shall collect and
retain certain personal identifying information from a child, including birth
date and the child's and parent's e-mail addresses (hereafter "screening
information"), enabling respondent to identify the site visitor as a child and
to block the child's attempt to register with respondent without express
parental consent. If respondent elects to have the child register with it,
respondent shall: (1) give notice to the child to have his/her parent provide
express parental consent to register; and/or (2) send a notice to the parent's
e-mail address for the purpose of obtaining express parental consent. The notice
to the child or parent shall provide instructions for the parent to: (1) go to a
specific URL on the Web site to receive information on respondent's practices
regarding its collection and use of personal identifying information from
children and (2) provide express parental consent for the collection and use of
such information. Respondent's collection of screening information shall be by a
manner that discourages children from providing personal identifying information
in addition to the screening information. All personal identifying information
collected from a child shall be held by respondent in a secure manner and shall
not be used in any manner other than to effectuate the notice to the child or
parent, or to block the child from further attempts to register or otherwise
provide personal identifying information to respondent without express parental
consent. The personal identifying information collected shall not be disclosed
to any third party prior to the receipt of express parental consent. If express
parental consent is not received by twenty (20) days after respondent's
collection of the information from the child, respondent shall remove all such
personal identifying information from its databases, except such screening
information necessary to block the child from further attempts to register or
otherwise provide personal identifying information to respondent without express
parental consent.

                                       VI.

Nothing in this order shall prohibit respondent from collecting personal
identifying information from children or from using such information, as
specifically permitted in the Children's Online Privacy Protection Act of 1998
(without regard to the effective date of the Act) or as such Act may hereafter
be amended; regulations or guides promulgated by the Commission; or
self-regulatory guidelines approved by the Commission pursuant to the Act.

                                      VII.

IT IS FURTHER ORDERED that respondent GeoCities, and its successors and assigns,
shall provide a reasonable means for consumers, including the parents of
children, to obtain removal of their or their children's personal identifying
information collected and retained by respondent and/or disclosed to third
parties, prior to the date of service of this order, as follows:

A. Respondent shall provide a clear and prominent notice to each consumer over
the age of twelve (12) from whom it collected personal identifying information
and disclosed that information to CMG Information Services, Inc., describing
such consumer's options as stated in Part VI.C and the manner in which (s)he may
exercise them.

                                       iv
<PAGE>   28

B. Respondent shall provide a clear and prominent notice to the parent of each
child from whom it collected personal identifying information prior to May 20,
1998, describing the parent's options as stated in Part VI.C and the manner in
which (s)he may exercise them.

C. Respondent shall provide the notice within thirty (30) days after the date of
service of this order by e-mail, postal mail, or facsimile. Notice to the parent
of a child may be to the e-mail address of the parent and, if not known by
respondent, to the e-mail address of the child. The notice shall include the
following information:

    1. the information that was collected (e.g., "name," "home address," "e-mail
    address," "age," "interests"); its use(s) and/or intended use(s); and the
    third parties to whom it was or will be disclosed (e.g., "advertisers of
    consumer products," "mailing list companies," "the general public") and with
    respect to children, that the child's personal identifying information may
    have been made public through various means, such as by publicly posting on
    the child's personal home page or disclosure by the child through the use of
    an e-mail account;

    2. the consumer's and child's parents' right to obtain access to such
    information and the means by which (s)he may do so;

    3. the consumer's and child's parents' right to have the information removed
    from respondent's or a third party's databases and the means by which (s)he
    may do so;

    4. a statement that childrens information will not be disclosed to third
    parties, including public posting, without express parental consent to the
    disclosure or public posting;

    5. the means by which express parental consent may be communicated to the
    respondent permitting disclosure to third parties of a child's information;
    and

    6. a statement that the failure of a consumer over the age of twelve (12) to
    request removal of the information from respondent's databases will be
    deemed as approval to its continued retention and/or disclosure to third
    parties by respondent.

D. Respondent shall provide to consumers, including the parents of children, a
reasonable and secure means to request access to or directly access their or
their children's personal identifying information. Such means may include direct
access through password protected personal profile, return e-mail bearing an
electronically verifiable signature, postal mail, or facsimile.

E. Respondent shall provide to consumers, including the parents of children, a
reasonable means to request removal of their or their children's personal
identifying information from respondent's and/or the applicable third party's
databases or an assurance that such information has been removed. Such means may
include e-mail, postal mail, or facsimile.

F. The failure of a consumer over the age of twelve (12) to request the actions
specified above within twenty (20) days after his/her receipt of the notice
required in Part VI.A shall be deemed to be consent to the information's
continued retention and use by respondent and any third party.

G. Respondent shall provide to the parent of a child a reasonable means to
communicate express parental consent to the retention and/or disclosure to third
parties of his/her child's

                                       v
<PAGE>   29

personal identifying information. Respondent shall not use any such information
or disclose it to any third party unless and until it receives express parental
consent.

H. If, in response to the notice required in Part VI.A, respondent has received
a request by a consumer over the age of twelve (12) that respondent should
remove from its databases the consumer's personal identifying information or has
not received the express consent of a parent of a child to the continued
retention and/or disclosure to third parties of a child's personal identifying
information by respondent within twenty (20) days after the parent's receipt of
the notice required in Part VI.B, respondent shall within ten (10) days:

    1. Discontinue its retention and/or disclosure to third parties of such
    information, including but not limited to (a) removing from its databases
    all such information, (b) removing all personal home pages created by the
    child, and (c) terminating all e-mail accounts for the child; and

    2. Contact all third parties to whom respondent has disclosed the
    information, requesting that they discontinue using or disclosing that
    information to other third parties, and remove the information from their
    databases.

    With respect to any consumer over the age of twelve (12) or any parent of a
    child who has consented to respondent's continued retention and use of
    personal identifying information pursuant to this Part, such consumer's or
    parent's continuing right to obtain access to his/her or a child's personal
    identifying information or removal of such information from respondent's
    databases shall be as specified in the notice required by Part IV of this
    order.

I. Within thirty (30) days after the date of service of this order, respondent
shall obtain from a responsible official of each third party to whom it has
disclosed personal identifying information and from each GeoCities Community
Leader a statement stating that (s)he has been advised of the terms of this
order and of respondent's obligations under this Part, and that (s)he agrees,
upon notification from respondent, to discontinue using or disclosing a
consumer's or child's personal identifying information to other third parties
and to remove any such information from its databases.

J. As may be permitted by law, respondent shall cease to do business with any
third party that fails within thirty (30) days of the date of service of this
order to provide the statement set forth in Part VI.I or whom respondent knows
or has reason to know has failed at any time to (a) discontinue using or
disclosing a child's personal identifying information to other third parties, or
(b) remove any such information from their databases. With respect to any
GeoCities Community Leader, the respondent shall cease the Community Leader
status of any person who fails to provide the statement set forth in Part VI.I
or whom respondent knows or has reason to know has failed at any time to (a)
discontinue using or disclosing a child's personal identifying information to
other third parties, or (b) remove any such information from their databases.

For purposes of this Part: "third party(ies)" shall mean each GeoCities
Community Leader, CMG Information Services, Inc., Surplus Software, Inc.
(Surplus Direct/Egghead Computer), Sage Enterprises, Inc. (GeoPlanet/Planetall),
Netopia, Inc. (Netopia), and InfoBeat/Mercury Mail (InfoBeat).

                                       vi
<PAGE>   30

                                      VIII.

IT IS FURTHER ORDERED that for the purposes of this order, respondent shall not
be required to remove personal identifying information from its archived
database if such information is retained solely for the purposes of Web site
system maintenance, computer file back-up, to block a child's attempt to
register with or otherwise provide personal identifying information to
respondent without express parental consent, or to respond to requests for such
information from law enforcement agencies or pursuant to judicial process.
Except as necessary to respond to requests from law enforcement agencies or
pursuant to judicial process, respondent shall not disclose to any third party
any information retained in its archived database. In any notice required by
this order, respondent shall include information, clearly and prominently, about
its policies for retaining information in its archived database.

                                       IX.

IT IS FURTHER ORDERED that for five (5) years after the date of this order,
respondent GeoCities, and its successors and assigns, shall place a clear and
prominent hyperlink within its privacy statement which states as follows in bold
typeface:

NOTICE: CLICK HERE FOR IMPORTANT INFORMATION ABOUT SAFE SURFING FROM THE FEDERAL
TRADE COMMISSION.

The hyperlink shall directly link to a hyperlink/URL to be provided to
respondent by the Commission. The Commission may change the hyperlink/URL upon
thirty (30) days prior written notice to respondent.

                                       X.

IT IS FURTHER ORDERED that respondent GeoCities, and its successors and assigns,
shall maintain and upon request make available to the Federal Trade Commission
for inspection and copying the following:

    A. For five (5) years after the last date of dissemination of a notice
    required by this order, a print or electronic copy in HTML format of all
    documents relating to compliance with Parts IV through VIII of this order,
    including, but not limited to, a sample copy of every information collection
    form, Web page, screen, or document containing any representation regarding
    respondent's information collection and use practices, the notice required
    by Parts IV through VI, any communication to third parties required by Part
    VI, and every Web page or screen linking to the Federal Trade Commission Web
    site. Each Web page copy shall be accompanied by the URL of the Web page
    where the material was posted online. Electronic copies shall include all
    text and graphics files, audio scripts, and other computer files used in
    presenting information on the World Wide Web; and

Provided that, after creation of any Web page or screen in compliance with this
order, respondent shall not be required to retain a print or electronic copy of
any amended Web page or screen to the extent that the amendment does not affect
respondent's compliance obligations under this order.

    B. For five (5) years after the last collection of personal identifying
    information from a child, all materials evidencing the express parental
    consent given to respondent.

                                       XI.

IT IS FURTHER ORDERED that respondent GeoCities, and its successors and assigns,
shall deliver a copy of this order to all current and future principals,
officers, directors, and managers, and to all current and future employees,
agents, and representatives having responsibilities with respect to the subject
matter of this order. Respondent shall deliver this order to current personnel
within thirty (30) days after the date of service of this order, and to future
personnel within thirty (30) days after the person assumes such position or
responsibilities.

                                      vii
<PAGE>   31

                                      XII.

IT IS FURTHER ORDERED that respondent GeoCities, and its successors and assigns,
shall establish an "information practices training program" for any employee or
GeoCities Community Leader engaged in the collection or disclosure to third
parties of consumers' personal identifying information. The program shall
include training about respondent's privacy policies, information security
procedures, and disciplinary procedures for violations of its privacy policies.
Respondent shall provide each such current employee and GeoCities Community
Leader with information practices training materials within thirty (30) days
after the date of service of this order, and each such future employee or
GeoCities Community Leader such materials and training within thirty (30) days
after (s)he assumes his/her position or responsibilities.

                                      XIII.

IT IS FURTHER ORDERED that respondent GeoCities, and its successors and assigns,
shall notify the Commission at least thirty (30) days prior to any change in the
corporation that may affect compliance obligations arising under this order,
including, but not limited to, a dissolution, assignment, sale, merger, or other
action that would result in the emergence of a successor corporation; the
creation or dissolution of a subsidiary, parent, or affiliate that engages in
any acts or practices subject to this order; the proposed filing of a bankruptcy
petition; or a change in the corporate name or address. Provided, however, that,
with respect to any proposed change in the corporation about which respondent
learns less than thirty (30) days prior to the date such action is to take
place, respondent shall notify the Commission as soon as is practicable after
obtaining such knowledge. All notices required by this Part shall be sent by
certified mail to the Associate Director, Division of Enforcement, Bureau of
Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

                                      XIV.

IT IS FURTHER ORDERED that respondent GeoCities, and its successors and assigns,
shall, within sixty (60) days after service of this order, and at such other
times as the Federal Trade Commission may require, file with the Commission a
report, in writing, setting forth in detail the manner and form in which they
have complied with this order.

                                       XV.

This order will terminate on February 5, 2019, or twenty (20) years from the
most recent date that the United States or the Federal Trade Commission files a
complaint (with or without an accompanying consent decree) in federal court
alleging any violation of the order, whichever comes later; provided, however,
that the filing of such a complaint will not affect the duration of:

    A. Any Part in this order that terminates in less than twenty (20) years;

    B. This order's application to any respondent that is not named as a
    defendant in such complaint; and

    C. This order if such complaint is filed after the order has terminated
    pursuant to this Part.

Provided, further, that if such complaint is dismissed or a federal court rules
that the respondent did not violate any provision of the order, and the
dismissal or ruling is either not appealed or upheld on appeal, then the order
will terminate according to this Part as though the complaint had never been
filed, except that the order will not terminate between the date such complaint
is filed and the later of the deadline for appealing such dismissal or ruling
and the date such dismissal or ruling is upheld on appeal.

                                      viii
<PAGE>   32

By the Commission.
Donald S. Clark
Secretary
ISSUED: February 5, 1999
SEAL

                                       ix
<PAGE>   33

                                    EXHIBIT U
                         MUTUAL NONDISCLOSURE AGREEMENT

1.  "Confidential Information" is that confidential, proprietary, and trade
    secret information being disclosed by the disclosing party pursuant to this
    Agreement.

2.  Except as set forth in this Section 2, all Confidential Information shall be
    in tangible form and shall be marked as Confidential or proprietary
    information of the disclosing party. If the Confidential Information is
    disclosed orally or visually, it shall be identified as such at the time of
    disclosure and confirmed in a writing to the recipient within thirty (30)
    days of such disclosure.

3.  Each of the parties agrees that it will not make use of, disseminate, or in
    any way disclose any Confidential Information of the other party to any
    person, firm or business, except to the extent necessary for negotiations,
    discussions, and consultations with personnel or authorized representatives
    of the other party and any purpose the other party may hereafter authorize
    in writing. Each of the parties agrees that it shall disclose Confidential
    Information of the other party only to those of its employees, consultants,
    advisors and investors who need to know such information and who have
    previously agreed, either as a condition to employment or in order to obtain
    the Confidential Information, to be bound by terms and conditions
    substantially similar to those of this Agreement.

4.  There shall be no liability for disclosure or use of Confidential
    Information which is (a) in the public domain through no fault of the
    receiving party (b) rightfully received from a third party without any
    obligation of confidentiality, (c) rightfully known to the receiving party
    without any limitation on use or disclosure prior to its receipt from the
    disclosing party, (d) independently developed by the receiving party without
    use of any Confidential Information and by persons who have not had access
    to any Confidential Information (e) generally made available to third
    parties without any restriction on disclosure, or (f) communicated in
    response to a valid order by a court or other governmental body, as
    otherwise required by law, or as necessary to establish the rights of either
    party under this Agreement (provided that the party so disclosing has
    provided the other party with a reasonable opportunity to seek protective
    legal treatment for such Confidential Information).

5.  Each of the parties agrees that it shall treat all Confidential Information
    of the other party with the same degree of care as it accords to its own
    Confidential Information, and each of the parties represents that it
    exercises reasonable care to protect its own Confidential Information.

6.  Each of the parties agrees that it will not modify, reverse engineer,
    decompile, create other works from, or disassemble any software programs
    contained in the Confidential Information of the other party unless
    otherwise specified in writing by the disclosing party.

7.  All materials (including, without limitation, documents, drawings, models,
    apparatus, sketches, designs and lists) furnished to one party by the other,
    and which are designated in writing to be the property of such party, shall
    remain the property of such party and shall be returned to it promptly at
    its request, together with any copies thereof.

                                       x
<PAGE>   34

8.  This Agreement shall govern all communications between the parties that are
    made during the period from the effective date of this Agreement to the date
    on which either party receives from the other written notice that subsequent
    communications shall not be so governed, provided, however, that each
    party's obligations under Sections 2 and 3 with respect to Confidential
    Information of the other party which it has previously received shall
    continue unless and until such Confidential Information falls within Section
    4. Neither party shall communicate any information to the other in violation
    of the proprietary rights of any third party. Neither party acquires any
    licenses under any intellectual property rights of the other party under
    this Agreement.

                                       xi

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