ARTISTdirect Reorganizes Company Into Five Distinct Business Groups; Exceeds Plans to Reduce Cost Structure.

Business/Entertainment Editors

LOS ANGELES--(BUSINESS WIRE)--Jan. 18, 2001

ARTISTdirect Inc. (Nasdaq:ARTD) today announced plans to reorganize the company into five distinct business groups and develop strategies to realize the potential value of each business.

By reorganizing into distinct lines, focusing on core activities and aggressively reducing costs, the company also announced that it expects to exceed its previously disclosed plans to reduce its cost structure.

"We believe that online music represents a major growth opportunity not reflected in our current stock price," said ARTISTdirect chief executive officer, Marc Geiger. "To pursue this opportunity in the face of a difficult market environment, we feel that it is important to define the company's distinct business groups, significantly reduce our cost structure, and continue to develop strategic initiatives for each business."

The five business groups are:

1. ARTISTdirect Media Group, comprised of the ARTISTdirect online music network, including ARTISTdirect.com, the Ultimate Band List (ubl.com), and more than 120 official artist stores and sites operated by the company.

2. E-Commerce Retail Services Group, which sells merchandise, CDs, tickets and digital downloads.

3. Digital Media Distribution Group, which is developing an entertainment jukebox that will feature on-demand audio streaming and downloads. ARTISTdirect is in negotiations with major record labels for licenses to launch the streaming and downloading application with ARTISTdirect content embedded to provide a comprehensive user experience.

4. Talent Agency and Live Event Group, which consists of an agency that represents such artists as the Beastie Boys, Beck, Red Hot Chili Peppers, Foo Fighters and others, as well as ownership in concert tours and live events, such as Sno-Core, Ritual and Fan Nation.

5. Record Label and Content Production, detailed plans for which have yet to be announced.

ARTISTdirect had previously announced a goal of reducing EBITDA loss by 30 percent to 40 percent in 2001. Based on the announced actions, the company now expects 2001 EBITDA loss to be 50 percent to 60 percent less than in 2000. The company expects these cost savings to come primarily from reduced marketing expenses and staff reductions.

The company expects cash operating expenses for 2001 to be approximately $28 million to $30 million. Assuming a moderate increase in the company's revenue for 2001, this should result in an EBITDA loss in the range of $18 million to $20 million for 2001.

As of Dec. 31, 2000, the company had cash and short-term investments of approximately $85 million, or approximately $2.25 per share, which the company believes will be sufficient to fund its operations through the point of becoming cash flow positive.

About ARTISTdirect Inc.

ARTISTdirect Inc. (Nasdaq:ARTD) is a music and media company that combines an online music network with integrated offline assets to provide a single-stop solution for music fans, artists, labels and advertisers.

ARTISTdirect.com (www.artistdirect.com), a comprehensive online destination, blends music programming, community, e-commerce retail and digital music services. Through the ARTISTdirect Talent Agency, the company also manages offline musical tour booking and develops event-marketing programs extending sponsor reach. The company has headquarters in Los Angeles.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release may contain projections or other forward-looking statements regarding future events or the future financial performance of ARTISTdirect, specifically, expectations as to revenues, profitability, reduction in cash burn rate, cash flow and cost savings from cost-cutting measures. These projections and statements involve risks and uncertainties. Readers are cautioned that these statements are based on information currently available to management and are only predictions. These predictions may differ materially from the company's actual future events or results. Potential risks and uncertainties that may affect future events and the company's business, financial status and operating results include, among others, general uncertainties related to amounts spent on online advertising and e-commerce, ARTISTdirect's ability to attract new artists and retain existing artists, competition in its industry, including from Web sites offering free music, ability to enter into new strategic relationships and leverage existing strategic relationships, ability to increase revenue from online product sales, advertising and other revenue streams, and to generate revenue from digital distribution, ability to increase visits to ARTISTdirect's network of sites, ability to offer compelling content, and ability to protect and/or obtain intellectual property rights. Although the company believes that the expectations reflected in the forward-looking statements are reasonable, ARTISTdirect cannot assure the public that future results, levels of activity, cost-cutting measures, performance or achievements will meet these expectations. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. ARTISTdirect is under no duty to update any of the forward-looking statements after the date of this release to conform those statements to actual results or to changes in the company's expectations. More information about potential factors that could affect the company's business and financial results is included in the documents filed by ARTISTdirect with the SEC, including its most recent Quarterly Report on Form 10-Q, current report on Form 8-K and its Registration Statements on Form S-1 and all amendments thereto.