SETTLEMENT AGREEMENT AND MUTUAL RELEASE

        This Settlement Agreement and Mutual Release (together with the exhibits
and schedules attached hereto, the "Settlement Agreement") is entered into
effective as of ____________ __, 2000 by and between MP3.COM, INC. ("MP3"
herein), on the one hand, and Sony Music Entertainment Inc. ("Company"), on the
other hand, both of which are sometimes collectively referred to as the
"Parties" and each of which is sometimes individually referred to as a "Party"
and is made with reference to the following:

1.      RECITALS:

        a)     Company is a Plaintiff and MP3 is the defendant in the following
               litigation (the "Litigation"): UMG RECORDINGS, INC., SONY MUSIC
               ENTERTAINMENT INC., WARNER BROS. RECORDS INC., ARISTA RECORDS
               INC., ATLANTIC RECORDING CORPORATION, BMG MUSIC D/B/A THE RCA
               RECORDS LABEL, CAPITOL RECORDS, INC., ELEKTRA ENTERTAINMENT
               GROUP, INC., INTERSCOPE RECORDS, AND SIRE RECORDS GROUP INC.,
               Plaintiffs, vs. MP3.COM, INC., Defendant, Case No. 00 Civ. 0472
               (JSR).

        b)     Each of the Parties to this Settlement Agreement desire to
               permanently settle and resolve any and all claims, disputes,
               issues or matters that exist between them as of the date of this
               Settlement Agreement and to dismiss with prejudice the
               Litigation.

        c)     NOW, THEREFORE, in consideration of the mutual promises,
               covenants and agreements set forth herein, and subject to the
               terms and conditions set forth below, the Parties desire to, and
               hereby do, resolve their differences and agree as follows:

2.      SETTLEMENT TERMS:

        a)     In consideration hereof, concurrently with the execution hereof
               and of the License Agreement referred to in subparagraph (f)
               below, and the execution by counsel for the Parties hereto and
               delivery of a copy to MP3 for filing of the Dismissal With
               Prejudice of the Litigation as described hereinbelow MP3 will pay
               Company the sum of [...***...] plus [...***...]

               [...***...]


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               Bank Address: [...***...]
               Bank Contact: [...***...]

        b)     In the event that MP3 enters into a settlement agreement with any
               of BMG Entertainment, Warner Music Group, Inc., UMG Recordings,
               Inc.; and EMI Records Group (each, together any entity
               controlling, controlled by or under common control with such
               entity, a "Plaintiff"), which settlement agreement obligates MP3
               to pay such Plaintiff a "Settlement Amount" (defined below)
               greater than the applicable amount set forth in the schedule in
               subparagraph 2(b)(ii)(a) - (d) below, then MP3 shall pay to
               Company an additional settlement payment (the "Additional
               Payment(s)) defined as described in subparagraphs 2(b)(ii) and
               (iii) below.

               i)     The "Settlement Amount" is defined as sums paid to a
                      particular Plaintiff in settlement of the Litigation,
                      exclusive of sums payable pursuant to subparagraphs
                      equivalent to this subparagraph, exclusive of sums paid as
                      a result of a damage award, exclusive of legal fees,
                      exclusive of any recoupable sums or royalties in
                      connection with any future exploitation of sound
                      recordings or musical compositions, but inclusive of any
                      non-recoupable amounts paid pursuant to any license or any
                      other agreement directly related to the MyMp3 Service and
                      any payments to said Plaintiff with respect to past uses
                      of musical compositions. The MyMP3 Service means MP3's
                      proprietary service, currently accessed via the URL
                      "www.MyMP3.com" on the MP3.com website, under which a
                      registered user can establish and maintain and/or access a
                      specific collection of recordings, together with other
                      interactive features, which can be accessed and used by
                      such registered user.

               ii)    The Additional Payment shall be defined as the amount in
                      excess of the amount set forth in subparagraph 2(a) above
                      determined after multiplying the amount set forth in
                      subparagraph 2(a) above by a fraction (the "Fraction"),
                      the denominator of which is the applicable amount
                      described in the following schedule and the numerator of
                      which is the Settlement Amount actually paid to the
                      applicable Plaintiff.

                      a)     BMG Entertainment, - [...***...]

                      b)     Warner Music Group, Inc. - [...***...]

                      c)     UMG Recordings, Inc. - [...***...]; and


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                      d)     EMI Records Group - [...***...]

               iii)   Such Additional Payment shall be calculated and made
                      promptly after MP3 has executed any applicable agreements
                      with any of said Plaintiffs in respect of the settlement
                      of the Litigation, in whole or in part. MP3 is obligated
                      to advise Company promptly of any such applicable
                      agreement. The total Additional Payment(s) shall be based
                      on the Settlement Amount which effectively yields the
                      single largest Fraction, if any, with respect to any of
                      the four Plaintiffs. Thus, if any one such agreement with
                      a Plaintiff results in a certain Fraction requiring an
                      Additional Payment, then any subsequent agreement with
                      another Plaintiff will only result in a further Additional
                      Payment to the extent the Fraction applicable to such
                      subsequent agreement is greater than the Fraction
                      resulting from such prior agreement.

        c)     For no additional consideration, Company also hereby agrees that
               the master recordings and phonorecord copyrights, excluding the
               musical compositions or literary or dramatic works embodied
               therein, previously copied by MP3 which are owned or controlled
               by Company shall be deemed to have been copied with Company's
               consent.

        d)     Reference is made to all musical compositions owned or controlled
               by Company's music publishing affiliates and related entities,
               including, without limitation, Sony/ATV Music Publishing LLC (the
               "Compositions", Sony/ATV Music Publishing LLC is sometimes
               referred to herein as "Sony/ATV"). Company and Sony/ATV agree
               that the general release herein covers MP3's reproduction,
               distribution, or other exploitation, prior to the date of this
               Settlement Agreement, of the Compositions. Company, Sony/ATV and
               MP3 agree that the release herein does not cover any additional
               reproduction, distribution, or other exploitation of the
               Compositions which takes place after the date of this Settlement
               Agreement, including, without limitation, any further
               exploitations of Compositions already copied into MP3's database.

        e)     It specifically is understood that the term "Company" shall
               include any corporation or other entity controlling, or
               controlled by, or under common control therewith, including
               without limitation, Company's affiliates and divisions in the
               music publishing and the recorded music businesses.

        f)     Concurrently herewith, Company and MP3 are entering into a
               License Agreement in the form annexed hereto as Exhibit A (the
               "License Agreement").


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3.      RELEASES

        a)     Company Release. Company, on behalf of itself and its heirs,
               agents, employees, representatives, partners, owners, related
               entities, officers, parents, shareholders, directors,
               subsidiaries, affiliates, attorneys, transferees, predecessors,
               successors, and assigns does hereby irrevocably release, acquit
               and forever discharge MP3 and each of its respective heirs,
               agents, employees, representatives, partners, owners, related
               entities, officers, parents, shareholders, directors,
               subsidiaries, parents, subsidiaries, divisions, affiliates,
               officers, directors, shareholders, investors, family members,
               attorneys, transferees, predecessors, successors, and assigns,
               jointly and severally in their representative capacities (the
               "MP3 Releasees"), of and from any and all debts, suits, claims,
               actions, causes of action, controversies, demands, rights,
               damages, losses, expenses, costs, attorneys' fees, compensation,
               liabilities and obligations whatsoever (hereinafter referred to
               collectively as "Company Claims"), suspected or unsuspected,
               known or unknown, foreseen or unforeseen, arising at any time up
               to and including the date of this Settlement Agreement, which
               Company may now have or at any time heretofore may have had, or
               which at any time hereafter may have or claim to have against the
               MP3 Releasees, relating to, arising from, or concerning the MyMP3
               Service or the Litigation (hereinafter "Company Released
               Claims").

        b)     MP3 Release. MP3, on behalf of itself and its heirs, agents,
               employees, representatives, partners, owners, related entities,
               officers, parents, shareholders, directors, subsidiaries,
               affiliates, attorneys, transferees, predecessors, successors, and
               assigns does hereby irrevocably release, acquit and forever
               discharge Company and each of its respective heirs, agents,
               employees, representatives, partners, owners, related entities,
               officers, parents, shareholders, directors, subsidiaries,
               affiliates, attorneys, transferees, predecessors, successors, and
               assigns, jointly and severally in their representative capacities
               (the "Company Releasees"), of and from any and all debts, suits,
               claims, actions, causes of action, controversies, demands,
               rights, damages, losses, expenses, costs, attorneys' fees,
               compensation, liabilities and obligations whatsoever (hereinafter
               referred to collectively as "MP3 Claims"), suspected or
               unsuspected, known or unknown, foreseen or unforeseen, arising at
               any time up to and including the date of this Settlement
               Agreement, which MP3 may now have or at any time heretofore may
               have had, or which at any time hereafter may have or claim to
               have against the Company Releasees, relating to, arising from, or
               concerning the MyMP3 Service or the Litigation (hereinafter "MP3
               Released Claims").

        c)     Statutory Waiver. With respect to the Company Released Claims and
               the MP3 Released Claims (collectively, the "Released Claims"),
               all rights under



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<PAGE>   5

               California Civil Code Section 1542 (and any other law of similar
               effect), are hereby expressly waived by the Parties, and each of
               them, notwithstanding any provision to the contrary. Section 1542
               provides as follows:

                      "A general release does not extend to claims which the
                             creditor does not know or suspect to exist in his
                             favor at the time of executing the Release, which
                             if known by him must have materially affected his
                             settlement with the debtor."

        d)     The Parties, and each of them, and their representatives, heirs
               and assigns expressly waive and release any right or benefit
               which they have or may have under Section 1542 of the Civil Code
               of the State of California, to the fullest extent that they may
               waive all such rights and benefits pertaining to the matters
               released herein. It is the intention of the Parties, and each of
               them, through this Settlement Agreement, and with the advice of
               counsel, to fully, finally and forever settle and release all
               such matters, and all claims relative thereto, in furtherance of
               such intention.

        e)     Dismissal With Prejudice. Company, concurrently with the
               execution and delivery hereof and payment of the sum described in
               2(a) above, shall execute, file and deliver to MP3 a Dismissal
               With Prejudice of the Litigation, in the form annexed hereto as
               Exhibit B.

4.      NOTICES

        a)     Any notice, demand, request, consent, approval, or communication
               that either Party desires or is required to give to the other
               Party is ordered to be addressed and served on or delivered to
               the other Party at the address set forth below. Any Party may
               change his/his/its address by notifying the other Parties of
               their change of address(es) in writing.

               i)     The addresses for MP3 are as follows:

                      MP3.com, Inc.
                      4790 Eastgate Mall
                      San Diego, CA 92121
                      Attn: General counsel and VP Legal

                      With simultaneous copies to:

                      Gary Stiffelman, Esq.
                      Ziffren, Brittenham, Branca & Fischer LLP



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<PAGE>   6

                      1801 Century Park West
                      Los Angeles, California 90067

               ii)    The address for Company is as follows:

                      Sony Music Entertainment Inc.
                      550 Madison Avenue
                      New York, NY 10022-3211
                      Attn: Senior Vice President and General Counsel

                      With simultaneous copies to:

                      Sony Music Entertainment Inc.
                      550 Madison Avenue
                      New York, NY 10022-3211
                      Attn: Senior Vice-President, Business Affairs &
                      Administration

5.      MISCELLANEOUS PROVISIONS

        a)     In order to carry out the terms and conditions of this Settlement
               Agreement, the Parties agree to promptly execute upon reasonable
               request any and all documents and instruments consistent herewith
               necessary to effectuate the terms of this Settlement Agreement.

        b)     By entering into this Settlement Agreement, no Party admits or
               acknowledges that they committed any wrongdoing on their part.

        c)     This Settlement Agreement and any controversy which might arise
               therefrom shall in all respects be interpreted, enforced and
               governed by the laws of the State of New York applicable to
               agreements made and to be fully performed therein. All parties
               consent to the sole and exclusive personal jurisdiction and venue
               in the United States District Court for the Southern District New
               York, and agree that all disputes or litigation regarding this
               Settlement Agreement shall be submitted to and determined by said
               court which shall have sole and exclusive jurisdiction.

        d)     This Settlement Agreement, together with the License Agreement,
               is the entire agreement between the Parties with respect to the
               Released Claims or subject matter of this Settlement Agreement
               and supersedes all prior and contemporaneous oral and written
               agreements and discussions pertaining to the Released Claims or
               subject matter of this Settlement Agreement. This Settlement
               Agreement may be amended only by a written agreement executed by
               each of the Parties hereto. No breach of the License Agreement
               may or



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<PAGE>   7

               shall be deemed a breach of this Settlement Agreement.

        e)     No breach of any provision hereof can be waived unless in writing
               signed by the party to be charged with such a waiver. Waiver of
               any one breach of any provision hereof shall not be deemed to be
               a waiver of any other breach of the same or any other provision
               hereof.

        f)     This Settlement Agreement shall be binding upon and inure to the
               benefit of the Parties hereto and his/his/its respective heirs,
               agents, employees, representatives, partners, parents,
               subsidiaries, divisions, affiliates, officers, related entities,
               licensees, directors, shareholders, investors, attorneys,
               transferors, transferees, predecessors, successors, trustees in
               bankruptcy, and assigns and each and every entity which now or
               ever was a division, parent, successor, predecessor, division,
               affiliate, officer, director, shareholder, investor, employee,
               attorney, transferor, transferee, or subsidiary for each Party
               and its respective legal successors and assigns.

        g)     The Parties represent and warrant that each of them have not
               assigned all or any portion of any claim pertaining to the
               Released Claims to any person or entity. In the event any claims
               are made by any third persons or entities based upon any
               purported assignment or any such liens or claims are asserted in
               connection with the Released Claims or proceeds of the Settlement
               Agreement, then the Party who has breached his representation or
               warranty contained herein agrees to indemnify and hold harmless
               the other Party from any said claims being made.

        h)     In the event that any covenant, condition or other provision
               herein contained is held to be invalid, void or illegal by any
               court of competent jurisdiction, the same shall be deemed
               severable from the remainder of this Settlement Agreement and
               shall in no way affect, impair or invalidate any other covenant,
               condition or other provision herein contained. If such condition,
               covenant or other provisions shall be deemed invalid due to its
               scope or breadth, such covenant, condition or other provision
               shall be deemed valid to the extent of the scope or breadth
               permitted by law.

        i)     Each of the Parties hereto represent and declare that in
               executing this Settlement Agreement, they rely solely upon their
               own judgment, belief and knowledge, and on the advice and
               recommendations of their own independently selected legal
               counsel, concerning the nature, extent and duration of their
               rights and claims and that they have not been influenced to any
               extent whatsoever in executing the same by any representations or
               statements covering any matters made by any of the Parties hereto
               or by any person representing them or any of them. The Parties
               acknowledge that



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<PAGE>   8

               neither any Party hereto nor any of their representatives have
               made any promise, representation or warranty whatsoever, written
               or oral to any other party, as any inducement to enter into this
               Settlement Agreement, except as expressly set forth in this
               Settlement Agreement or in the License Agreement.

        j)     The Parties hereto or responsible officer or representative
               thereof, and each of them, further represent and warrant that
               they have carefully read this Settlement Agreement and know and
               understand the contents hereof, and that they signed this
               Settlement Agreement freely and voluntarily and have had the
               benefit of the advice of legal counsel before executing this
               Settlement Agreement. Each of the representatives executing this
               Settlement Agreement on behalf of their respective corporations
               or partnerships is empowered to do so and thereby binds his
               respective corporation or partnership.

        k)     This Settlement Agreement may be executed in counterparts and
               when each Party has signed and delivered at least one such
               counterpart to each of the other Parties, each counterpart shall
               be deemed an original, and all counterparts taken together shall
               constitute one and the same agreement, which shall be binding and
               effective as to all Parties. This Settlement Agreement may be
               executed via facsimile signatures, which shall have the same
               force and effect as if they were original signatures to be
               followed by executed originals.

        l)     Each party hereto warrants and represents that it has all
               necessary right, title, and authority to enter into this
               Settlement Agreement, to grant the rights and interests herein
               granted, and to perform all of its obligations under this
               Settlement Agreement.

        m)     Company, MP3 and each of their respective affiliates agree that
               they shall, and they shall instruct in writing their respective
               attorneys, accountants and other professional advisors
               (collectively, "Advisors") to, hold in confidence and not
               communicate, transmit, publish, disseminate or otherwise disclose
               any of the terms and conditions of this Agreement or any fact,
               matter, event or surrounding circumstance leading to or relating
               to the negotiation thereof to which such Party was privy or of
               which they were otherwise made aware (e.g., by being copied on
               correspondence or by being advised of such fact, matter, event or
               circumstance by another party to the negotiation) (collectively,
               "Confidential Information"); provided, however, that nothing in
               this subparagraph (m) shall prohibit disclosure of such
               Confidential Information: (a) by Company, MP3 or any Affiliate to
               its respective financial officers, management, bankers or others
               as may be reasonably necessary in the operation of its respective
               business or by Company to any of its Affiliates; (b) by Company,
               MP3 or any Affiliate to its respective



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<PAGE>   9

               Advisors to the extent that such disclosure is in the opinion of
               such Advisors required to enable such Advisors fully to represent
               the person or entity concerned (or by any of Company's Affiliates
               or licensees to their respective attorneys, accountants and other
               professional advisors); (c) in connection with any legal or
               governmental proceeding; or (d) to any judicial, governmental or
               regulatory body. Notwithstanding the foregoing, in the event that
               either Party seeks or is required to disclose Confidential
               Information as a result of the circumstances described in clauses
               (c) or (d) of the preceding sentence, the Party seeking to
               disclose Confidential Information shall use reasonable efforts to
               promptly notify the other Party of such potential disclosure so
               that such other Party may seek an appropriate protective order to
               prevent the disclosure of such Confidential Information. MP3 also
               shall have the right to provide copies hereof to the Plaintiffs
               in connection with provisions similar to 2(b) above.

        n)     Company and MP3 and each of their respective affiliates agree
               that the disclosure of the existence of this agreement or any of
               the transactions contemplated in this Agreement, including,
               without limitation, any Confidential Information, in the context
               of any formal public communication to a third party of any kind,
               including, for the avoidance of doubt and without limitation, in
               the context of a formal press announcement or press conference,
               shall be subject to MP3's and Company's mutual approval. Attached
               hereto as Exhibit C to this Agreement is a formal press
               announcement which is deemed mutually approved by both MP3 and
               Sony (the "Agreed Statement").



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<PAGE>   10

        IN WITNESS WHEREOF, the Parties hereto have executed this Settlement
Agreement on the date(s) written beside his/his/its name, respectively.

                                        Sony Music Entertainment Inc.


Dated:                                  By: /s/ RON WILCOX
        --------------                      ------------------------------------
                                             Ron Wilcox

                                        Its: Senior Vice President,
                                             Business Affairs and Administration
                                            ------------------------------------


Dated:                                  MP3.com, Inc.
        --------------

                                        By: /s/ ROBIN RICHARDS
                                            ------------------------------------
                                        Its: Pres
                                            ------------------------------------



APPROVED AND ACCEPTED INSOFAR AS THE UNDERSIGNED IS CONCERNED:

                                        Sony/ATV Music Publishing LLC


                                        By: /s/ [SIGNATURE ILLEGIBLE]
                                            ------------------------------------
                                        Its: Executive VP
                                            ------------------------------------



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<PAGE>   11

                                    EXHIBIT A
                                LICENSE AGREEMENT



<PAGE>   12


                                  MP3.com, Inc.
                               4790 Eastgate Mall
                               San Diego, CA 92121

                                 August __, 2000

Sony Music, a Group of Sony Music Entertainment Inc.
550 Madison Avenue
New York, NY 10022-3211

Gentlepersons:

This letter, when and if fully executed, will set forth the terms of the license
agreement between Sony Music, a Group of Sony Music Entertainment Inc. ("Sony"
or "Company") and MP3.com, Inc. ("MP3", "us" or "we"), with respect to Sony
licensing certain rights to MP3 on the following terms:

1.      DEFINITIONS:

        a)     "Adjusted Gross Revenues": All gross sums actually received by
               MP3, or credited against a prior advance, in the form of:

               i)     sums paid by or on behalf of Locker Owners in connection
                      with accessing MyMP3 or any Lockers, including, for the
                      avoidance of doubt and without limitation, all
                      subscription fees, registration fees, access fees, storage
                      fees, password fees or other remuneration paid to or for
                      the benefit of MP3, in order to enable a Locker Owner to
                      access Lockers or otherwise use MyMP3, less actual,
                      out-of-pocket amounts (not to exceed [...***...] paid by
                      or on behalf of Locker Owners) paid to third parties who
                      are carriers furnishing telephone or other communications
                      services or other similarly-situated third parties
                      entitled to a percentage of gross sums for providing
                      Locker Owners with access to MyMP3;

               ii)    sums paid by or on behalf of third parties for sponsorship
                      of Lockers or for the right to include advertising
                      specifically in Lockers, less actual, out-of-pocket
                      amounts paid to advertising agencies (not to exceed
                      [...***...] paid by or on behalf of third parties) in
                      connection with such sponsorship or advertising revenues;

               iii)   sums paid by or on behalf of third parties in the form of
                      e-commerce bounties, referral fees or affiliate program
                      fees resulting from Links within My.MP3 to any other point
                      of presence on the Internet (as herein defined); and i)


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               iv)    sums paid by or on behalf of third parties in respect of
                      the sale of products or services from any Web Page that is
                      part of MyMP3 (including any Locker) (less only MP3's
                      actual, out-of-pocket costs of goods sold, shipping and
                      handling, sales taxes and third party participations).

               v)     It is understood that MP3 sells certain advertising which
                      appears simultaneously on Web Pages that are part of MyMP3
                      and Web Pages that are not part of MyMP3 but are otherwise
                      part of the MP3 Site ("Site Advertising"). So long as such
                      Site Advertising does not occupy [...***...] of a Web Page
                      which is part of MyMp3, no portion of the sums received
                      from the sale of such Site Advertising shall be included
                      in Adjusted Gross Revenues hereunder. To the extent that
                      Site Advertising does exceed the limits described in the
                      preceding sentence, revenues from such excess Site
                      Advertising shall be subject to inclusion in Adjusted
                      Gross Revenues as described in subparagraph 1(a)(ii)
                      above. Notwithstanding anything to the contrary, it is
                      agreed that any monies specifically attributable to access
                      by Locker Owners to a particular service within MyMP3 in
                      respect of which Persons pay additional, incremental
                      consideration in order to access such service or the
                      recorded content provided thereby, none of which recorded
                      content is [...***...] (e.g., MP3's existing classical
                      music subscription service as presently structured) shall
                      not be included in the calculation of Adjusted Gross
                      Revenues.

               vi)    Further notwithstanding anything to the contrary, it is
                      agreed that any monies received for or in connection with
                      end users accessing a specific subscription, download or
                      other service which offers content [...***...] shall be
                      included in the calculation of Adjusted Gross Revenues
                      only after deduction of any license fees or other amounts
                      payable to any such entity in connection with such
                      service. It is understood that nothing contained in this
                      agreement permits MP3 to establish any service other than
                      as specifically set forth herein.

               vii)   If revenues are paid to or received by MP3 in the form of
                      advertising inventory or other services, products or any
                      thing of value received in lieu of cash consideration
                      (i.e., trade or barter), the fair market value of any such
                      inventory, products or services or any thing of value
                      shall be included in the calculation of Adjusted Gross
                      Revenues.


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        b)     "Affiliate": Any corporation or other person or entity
               controlling, or controlled by, or under common control with a
               party or Person, as the case may be, and any joint ventures in
               which any of the foregoing participate.

        c)     "Artist": A recording artist, record producer, or other third
               party entitled to a royalty or other participation in revenues
               derived from the exploitation of Company Recordings ("Record
               Revenue Participation"). Artists shall not include Persons in the
               capacity of songwriters or music publishers, including any third
               party to the extent same is entitled to a royalty or other
               participation in revenues derived from Compositions or other
               literary, dramatic or other works other than audio Recordings
               embodied in Company Recordings ("Publishing Revenue
               Participation"). To the extent any of said Persons also are
               entitled to a Record Revenue Participation in their capacity as a
               performer, producer or otherwise, then said Person will be an
               Artist but only to the extent such Person's Record Revenue
               Participation is concerned and not insofar as such Person's
               Publishing Revenue Participation is concerned.

        d)     "Beam It": means the system currently utilized by MP3 (and any
               future enhancements thereto in accordance with this Agreement),
               pursuant to which a Locker Owner can place a pre-owned Phonograph
               Record into a computer CD-ROM drive, MP3's proprietary software
               verifies the existence and identity of such Phonograph Record
               and, upon completion of such verification, the Recordings
               embodied in such Phonograph Record are automatically added to the
               Locker Owner's Title List. In the event that a technology is
               available hereafter during the Term which enables the Beam It
               system with commercially reasonable reliability to identify and
               distinguish separate Phonograph Record copies of the same Company
               Album from one another, MP3 shall adopt such system so as to not
               allow the same Phonograph Record copy to be used to add Company
               Recordings to multiple Lockers or to allow an unauthorized copy
               of a Company Album (e.g., a CD-R copy) to be used to add Company
               Recordings to Lockers; provided such technology (i) does not
               permit the rejection of misidentified Company Albums so that two
               copies of the same Company Album are incorrectly identified as
               the same copy and the second is rejected; (ii) does not
               materially increase the time required for the Beam It system to
               add Recordings to a Locker Owner's Title List with the result
               that implementation of such technology would render the user
               experience materially inferior to that experience available
               without such technology; and (iii) there is no more than a di
               minimus cost (relative to the costs of operation of MyMP3) to MP3
               to employ such technology.

        e)     "Company Album": A long-playing Phonograph Record, as said term
               presently is understood in the United States recording industry,
               which is or was at any time (before or during the Term) listed in
               [...***...] active product catalog in the United States, in
               respect of which [...***...] has [...***...]


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               [...***...]

        f)     "Company Master": the Recordings embodied in a Company Album or
               other Record which is or was at any time (before or during the
               Term) listed in [...***...] active product catalog in the United
               States, in respect of which [...***...] has [...***...]

        g)     "Company Recordings": All Company Albums and Company Masters.
               Company shall provide MP3 with up-to-date lists of Company
               Recordings on written request, no more than once per quarter
               during the Term.

               i)     In the event (A) there is a written, contractual
                      prohibition on Company's right to grant rights to a
                      particular Company Recording herein; and/or (B) Company
                      requires that a Company Recording or any of the elements
                      related thereto as described in paragraph 2(a)(iii) below
                      (the "Elements") be excluded from the license herein
                      because Company has a good faith concern (e.g., as a
                      result of the threat or commencement of any legal action
                      by a third party) that (i) Company lacks the right to
                      license such Company Recording or Elements as contemplated
                      herein, or (ii) such Company Recording or Elements
                      infringe upon the rights of any Person, Company shall so
                      notify MP3 in writing identifying the reason for such
                      notice, and MP3's sole obligation shall be to remove said
                      Company Recording or Elements, as applicable, from MyMP3
                      as soon as possible, but no later than five (5) business
                      days after receipt of such notice unless and until such
                      time as Company shall be able to grant such rights (which
                      Company shall so inform MP3 as soon as possible) or MP3
                      separately can secure such rights. Company shall only have
                      the right to send the notice described in the preceding
                      sentence if it concurrently ceases all other exploitations
                      of the applicable Recordings or Elements either generally
                      or with respect to all on-line usages, as applicable.

               ii)    Company Recordings shall not include [...***...]


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<PAGE>   16
                      [...***...]

               iii)   Company Recordings also shall not include either (i)
                      Recordings owned or controlled by any Person which is not
                      an Affiliate of Company and which acquires all or
                      substantially all of Company's stock or assets and/or (ii)
                      Recordings owned or controlled by any Person who is not an
                      Affiliate of Company with which Company merges or
                      otherwise combines with Company (each such event, a
                      "Merger"). Notwithstanding the foregoing, if as a result
                      of a Merger, Company or an Affiliate transfers any of its
                      rights in and to a Company Recording to any third party (a
                      "Successor Label"), such Company Recording shall continue
                      to be deemed to be a Company Recording. In addition, if as
                      a direct result of such Merger, either the [...***...]
                      labels or any substantial portion of their active rosters
                      of artists (the "Relevant Labels") is merged or combined
                      with a record label that is not as of the date of such
                      Merger wholly owned or controlled by Company (a "Combined
                      Label"), then, if the Combined Label [...***...] the
                      Parties shall endeavor to determine in good faith (taking
                      into account the license arrangement between MP3.com and
                      the other record label) the percentage of new Recordings
                      released by such Combined Label to be deemed to be Company
                      Recordings so that MP3's right to add new Recordings to
                      Title Lists throughout the Term is not materially affected
                      by the Merger (the "Percentage"). If the parties are
                      unable to agree to the Percentage within sixty (60) days
                      of the commencement of such meetings, either party may
                      initiate binding arbitration in New York, New York under
                      the rules of the American Arbitration Association and the
                      laws of New York, before a mutually agreed arbitrator. The
                      result of any such arbitration shall be binding upon the
                      parties. Each party shall bear its own expenses incurred
                      in connection with such arbitration. No arbitrator shall
                      be an employee of, or advisor to, either party (or any
                      Affiliate of such party). The subject matter of any such
                      meetings, mediation or arbitration shall be limited solely
                      to the Percentage and no other matters whatsoever.

        h)     "Company Shelf" means [...***...]


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<PAGE>   17
               [...***...] The Company shall have the right in its sole,
               unrestricted discretion (i) to design and customize the Company
               Shelf (with any such artwork, graphics, photographs, colors and
               other materials desirable to the Company), (ii) to program all
               Web Pages of the Company Shelf with content and information and
               (iii) to include on the Company Shelf hyperlinks to any Web Site
               selected by the Company. MP3 shall [...***...] As soon as
               practicable after the date hereof, MP3 shall provide the Company
               with [...***...] to access each Locker's Company Shelf to make
               changes thereto; provided, that until such time as [...***...]
               are available, MP3 shall [...***...] as Company shall direct in
               each instance. The size of the Company Shelf shall not exceed
               [...***...] The Company shall be entitled to post on the Company
               Shelf (or post hyperlinks to) [...***...] provided, that MP3
               shall respect all usage rules set by the Company with respect to,
               and shall utilize technology designated by the Company for
               [...***...] MP3 shall not be required to incur any expense in
               compliance with usage rules not otherwise applicable to the
               Streaming of Company Recordings hereunder or not otherwise
               applicable to the operation of the MP3 Web Site in the ordinary
               course of its business. MP3 will not itself give Locker Owners
               the right or ability to [...***...] The Parties agree to work
               together to develop the features of the Company Shelf and to
               enhance the marketing and promotional benefits afforded by the
               Company Shelf.

        i)     "Composition" - a single musical composition, irrespective of
               length, including all spoken words and bridging passages and
               including a medley.


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<PAGE>   18
        j)     "Download" or Downloading" - a media delivery method whereby
               [...***...] The fact that a file [...***...] does not constitute
               Downloading for purposes hereof. The fact that a person is
               [...***...] which shall have been Streamed by MP3 in accordance
               with this agreement shall not deem such Steaming to have resulted
               in a Download so long as MP3 shall at all times use [...***...]
               of Streams of Company Recordings, consistent with industry
               standards employed for such purposes, and is otherwise complying
               with the terms hereof including, for the avoidance of doubt and
               without limitation, paragraph 12 below and Exhibits A and B
               annexed hereto.

        k)     "Electronic Digital Copy" - a copy of a Recording in a digital
               format.

        l)     "The Fraction": "The Fraction": A fraction, the numerator of
               which is [...***...] and the denominator of which is the
               [...***...]

        m)     "Home Page" - the individual Web Page of a Web Site intended by
               the Person maintaining the Web Site concerned to be the first Web
               Page viewed by new end-users the first time they access such Web
               Site.

        n)     "Instant Listen": A system described more particularly on Exhibit
               A annexed hereto the purpose of which is to enable a Locker Owner
               to add to that Locker Owner's Title List any Company Recordings
               embodied on a Company Album at the time such Company Album is
               purchased from a bona fide on-line retailer at a customary retail
               price. It is agreed that a Company Album shall not be available
               for access by a Locker Owner, even if same may be purchased from
               an on-line retailer until [...***...] MP3 shall use its best
               commercially reasonable efforts to require that all such
               retailers remove from a Locker Owner's Title List any Company
               Recordings embodied on a Company Album that the Locker Owner (or
               a Person acting on behalf of such Locker Owner) returns to the
               applicable retailer.


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<PAGE>   19
        o)     "Internet": A medium consisting of wired or wireless electronic
               or electromagnetic networks (including without limitation, fiber
               optic, microwave, twisted-pair copper wires, coaxial cable,
               satellite, wireless transmission, cellular networks, and
               combinations thereof) and collections thereof now or hereafter
               existing, wherever, located, for the transmission from a distant
               location of digital data (e.g., text, information, graphics,
               audio, video, or combination of the foregoing), through the use
               of any protocols or standards now known or hereafter devised
               (including without limitation, Transmission Control
               Protocol/Internet Protocol ["TCP/IP"] and subsequent extensions
               or modifications thereof) from or to electronic devices (e.g.,
               computers [mainframe, desktop, laptop, handheld, etc.], set-top
               boxes, cable modems, handheld devices, cell phones, televisions,
               etc.) capable of transmitting or receiving digital data or
               digital information, irrespective of whether such networks are
               open or proprietary, public or private, or whether a fee is
               charged or a subscription or membership is required in order to
               access such networks. "Internet" also includes without limitation
               the computer network comprising inter-connected networks commonly
               referred to as the "Internet" and the "World Wide Web."
               Notwithstanding anything to the contrary contained in the
               foregoing, "Internet" shall not include [...***...] The fact that
               a medium also delivers [...***...] shall not preclude such medium
               from being deemed the "Internet," so long as the medium itself is
               generally [...***...]

        p)     "Link" - an embedded icon, object, graphic or text within a Web
               Page that consists of a hypertext pointer to the URL of another
               Web Page.

        q)     "Locker": The Web Pages within MyMP3 in which each Locker Owner's
               Title List is maintained and Recordings may be accessed by such
               Locker Owner. A Locker may be accessed by a Locker Owner only
               after correctly entering the password assigned to such Locker
               Owner in accordance with the procedures described in Exhibit A to
               this agreement.

        r)     "Locker Owner": an individual end-user who:

               i)     has registered for and has been assigned by MP3 a unique
                      "account" for access to MyMP3 (a "User Account");

               ii)    has had a unique password approved by MP3 in respect of
                      each User Account, which must be correctly entered prior
                      to the commencement of any session during which such
                      end-user is permitted to access


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<PAGE>   20

                      MyMP3 (i.e., Persons that do not have such a unique
                      password cannot access MyMP3.

        s)     "Mechanical Royalties" - royalties payable to any Person for the
               right to reproduce and distribute copyrighted Compositions,
               literary works and other similar copyrighted materials embodied
               in a phonorecord, other than sound recording copyrights, on
               Phonograph Records.

        t)     "MP3 Site" - the Web Site created, maintained and hosted by MP3,
               the Home Page of which is currently located at and accessed via
               the URL "www.mp3.com". Except with respect to co-branded versions
               of MyMP3, it is agreed that there will only be [...***...]

        u)     "MyMP3": MP3's proprietary service, currently accessed via the
               URL "www.MyMP3.com" on the MP3 Site, under which a Locker Owner
               can establish and maintain a Title List, together with other
               interactive features, which can be accessed and used by such
               Locker Owner, all as described subject to the limitations set
               forth elsewhere in this Agreement including in the specifications
               attached hereto as Exhibit A.

        v)     "Person": any natural person, legal entity, or other organized
               group of persons or entities. (All pronouns, whether personal or
               impersonal, which refer to Persons include natural persons and
               other Persons.)

        w)     A "Phonograph Record" is a Record as embodied by the manufacturer
               and/or distributor in a physical, audio-only Record configuration
               (e.g., vinyl LP's, cassettes and compact discs).

        x)     "Record": Any and all forms of reproductions, transmissions or
               communications of audio Recordings (e.g., Albums, singles, etc.),
               now or hereafter known, manufactured, distributed, transmitted or
               communicated primarily for home use, school use, juke box use, or
               use in means of transportation.

        y)     "Record Labels" means [...***...]

        z)     "Recording": every recording of sound, not coupled with a visual
               image, by any method and on any substance or material, or in any
               other form or format, whether now or hereafter known, which is
               used or useful in the recording, production and/or manufacture of
               Records.

        aa)    "Company Site" - the primary Web Site created, hosted and
               maintained by Company for the promotion of Company Recordings on
               the Internet, the Home Page of which is currently located at and
               accessible via the URL "www.sonymusic.com", and all Web Pages
               comprising such Web Site.


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<PAGE>   21

        bb)    (A) "Stream" - a digital transmission of a Recording in
               compressed form solely by means of the Internet that (i) is
               [...***...] and (ii) does not [...***...] (B) "Streaming";
               "Streamed" the act or process of transmitting Streams.

        cc)    "Title List(s)": The specific Recordings accessible from within
               an individual Locker. Multiple listings of the same Recording
               within an individual Locker, as in the case of different
               groupings or organizations of those Recordings selected by a
               Locker Owner (e.g., separate playlists within a Locker derived
               from a Title List, such as a particular arrangement of music for
               listening while the Locker Owner is exercising) for that reason
               alone shall not be deemed separate Title Lists for purposes
               hereof.

        dd)    "Web Page" - a document that is either (a) written in HTML (i.e.,
               Hypertext Markup Language), or another industry standard mark-up
               language, that is made available for viewing by end users at a
               single URL or domain name via the World Wide Web portion of the
               Internet by server software using HTTP (i.e., Hypertext Transfer
               Protocol) to effectuate data transmission (or server software
               using any other generally accepted protocols utilized to
               effectuate data transmissions via the World Wide Web portion of
               the Internet); or (b) written in any computer programming
               language other than HTML, that is intended to be accessible,
               directly or indirectly, simultaneously to end users throughout
               the world via a computer or any other electronic device on any
               public data network that uses Transmission Control
               Protocol/Internet Protocol (i.e., TCP/IP) or Wireless Application
               Protocol (i.e., WAP) to effectuate data transmission (or any
               other generally accepted protocols utilized to effectuate data
               transmissions via public data networks). For purposes of the
               preceding sentence, only, the requirement that end users pay a
               subscription fee or other charge in consideration of accessing a
               data network shall not, by that reason alone, mean that such data
               network is not a public data network.

        ee)    "Web Site" - a collection of Web Pages with a common theme or
               subject matter which are (a) organized hierarchically, (b) owned,
               managed and operated by the same Person or at the direction of
               such Person, and (c) interconnected via Links.

2.      LICENSE:

        a)     Subject to the terms and conditions of this agreement, Company
               hereby licenses to MP3 during the Term the non-exclusive,
               non-sublicensable right:

               i)     To reproduce one or a reasonable number of copies of the
                      Company Recordings, solely to the extent necessary to
                      enable the digital audio


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<PAGE>   22

                      transmission of the Company Recordings in accordance with
                      the terms and conditions prescribed elsewhere in this
                      Agreement; and

               ii)    To make digital audio transmissions of the Company
                      Recordings solely by means of Streaming in accordance with
                      paragraph 12 and the Exhibits hereto, from MP3's servers,
                      to Locker Owners solely as part of MyMP3.

               iii)   To use the names and tradenames of Company (as and solely
                      to the extent that same appear on Company Recordings), the
                      titles of Company Albums and Company Masters, the names of
                      any Artists or other Persons rendering services or
                      granting rights to Company with respect to Company
                      Recordings, and any front Company Album cover artwork
                      utilized by Company and its Affiliates in the United
                      States, in connection with Company Recordings solely for
                      informational purposes to identify Company Recordings in
                      Lockers as part of MyMP3, e.g., on Title Lists and on
                      display during Streaming. MP3 shall have the right to use
                      such front album cover art only to the extent that Company
                      can license such rights. Except as provided above, MP3
                      shall not have the right to use any of said materials,
                      without Company's approval, which it can withhold in its
                      absolute discretion. [...***...] MP3 agrees [...***...]

               iv)    [...***...]


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<PAGE>   23

        b)     Company Recordings can be added to or inserted in an individual
               Locker solely:

               i)     Via MP3's "Instant Listen" system, or

               ii)    Via MP3's "Beam-it" system, or

               iii)   By any other system established by MP3 which enables MP3
                      to affirm with no less than the same level of certainty as
                      via Instant Listen or Beam-It that the Locker Owner has
                      acquired a lawfully produced copy of a Phonograph Record
                      embodying the Company Recordings that such Person desires
                      to add to his or her Title List and which does not require
                      an end-user to transfer Phonograph Recordings to storage
                      devices (e.g. computer servers) maintained by any Person
                      other than such end-user.

               iv)    MP3 shall at all times utilize all commercially available
                      technologies, and all technologies proprietary to MP3.com,
                      if any, to minimize the possibility of Persons adding
                      Company Recordings to their Title Lists other than by the
                      methods outlined hereinabove or hereinbelow.

        c)     The determination as to whether a Company Recording may be added
               to a Locker shall be made independently for each Company
               Recording (i.e., although an individual end user of MyMP3 may be
               authorized to add a single Company Recording to a Locker, such
               end-user and may concurrently not be authorized to add a
               different Company Recording to a Locker (a "Non-Qualified
               Recording"), in which case such end-user shall not be granted
               access to MyMP3 in respect of any such Non-Qualified
               Recording(s).

        d)     Recordings accessible by Locker Owners via a Locker shall be
               organized and made available for access through the use of music
               management tools developed, established and maintained by MP3,
               which tools shall, inter alia, permit the Locker Owner to access
               such Recordings from a single locale at any one time. It is
               understood that a Locker Owner shall have the right to access
               such Person's Locker from any Internet enabled device or other
               connection; provided MyMP3 will not enable more than one
               simultaneous connection to a Locker.

        e)     MP3 shall not enable Locker Owners to Download or facilitate the
               Downloading of Company Recordings. MP3 shall at all times use
               commercially reasonable measures to: (i) minimize the opportunity
               for Persons to create or facilitate the creation of Electronic
               Digital Copies of Streams of Company Recordings, and (ii) prevent
               circumvention of any security features related to MyMP3 adopted
               by MP3, consistent with industry standards employed for such
               purposes.

        f)     It is agreed that no rights whatsoever to Compositions or other
               dramatic, literary or other works other than sound recordings
               that are embodied in



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<PAGE>   24

               Company Recordings are being conveyed herein and that MP3
               separately shall secure any rights required in connection with
               the use of same in connection with MyMP3.

        g)     MP3 shall be solely responsible for processing all subscriptions
               and memberships in and to MyMP3 placed by Locker Owners during
               the Term. Except as expressly authorized by Company in writing in
               each instance, Company shall have no responsibilities or
               obligations of any nature with respect to any end users of MyMP3.
               In connection with each such subscription and membership, MP3
               exclusively will: interact directly with Locker Owners; prepare
               the necessary order and billing forms; approve and implement all
               unique passwords; bill, collect and process all payments and
               cancellations; assume the risk of canceled orders and
               non-payment; collect and pay all applicable taxes; and handle all
               customer service. Except as expressly authorized by Company in
               writing in each instance or agreed in this Agreement, Company
               shall have no responsibilities or obligations of any nature with
               respect to any end users of MyMP3, including, for the avoidance
               of doubt and without limitation, any Locker Owners.

        h)     The license granted in this Section 2 is limited to the use of
               the Company Recordings and the materials described in 2(a)(iii)
               above solely in the manner set forth in this Agreement. Any and
               all other rights in connection with the Company Recordings and
               the materials described in 2(a)(iii) above are specifically
               reserved by Company. Nothing herein shall be construed as
               permitting MP3 to otherwise exploit the Company Recordings and
               the materials described in 2(a)(iii) above, and/or engage in the
               sale or distribution of any Electronic Digital Copies of any
               Company Recordings.

        i)     Except as expressly provided in this agreement or permitted under
               applicable law, MP3 may not use the Company Recordings for any
               original programming, products, services or marketing campaigns
               of any type or nature, including but not limited to use in any
               so-called interactive "Internet Radio", so-called "jukebox"
               services, any games, sweepstakes or trivia contests.

        j)     Except as expressly provided herein or permitted under applicable
               law: (a) neither MP3 nor any Person deriving rights from MP3
               shall have any right to edit, modify or otherwise alter any of
               the Company Recordings; and (b) neither MP3 nor any Person
               deriving rights from MP3 will include the Company Recordings in
               computer files other than computer files created for use
               exclusively MyMP3 in accordance with this Agreement.

3.      EXCLUSIVITY: The rights granted to MP3 hereunder shall be non-exclusive.

4.      TERM AND TERRITORY:



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<PAGE>   25

        a)     The territory shall be [...***...] (the "Territory").

               i)     Notwithstanding the foregoing, (A) MP3 shall have the
                      right to permit all existing Locker Owners outside the
                      Territory as of the date hereof (which MP3 represents
                      [...***...] to continue to have all of the rights of
                      Locker Owners in the Territory (the "Grandfathered Locker
                      Owners"), and (B) MP3 shall have no liability by reason of
                      persons outside of North America becoming Locker Owners
                      unless [...***...] MP3 agrees during the Term that,
                      without the prior written consent of Company, it shall
                      [...***...]

               ii)    Other than as permitted in 4(a)(iii) below, MP3 shall
                      [...***...] provided that the mere possibility of access
                      to MyMP3 by Persons outside the Territory will not
                      constitute [...***...] as long as such Persons outside the
                      Territory are not [...***...]

               iii)   Notwithstanding subparagraphs (i) and (ii) above:

                      a)     In the event that during the Term MP3 [...***...],
                             Company shall [...***...] Company or its Affiliate
                             [...***...] shall have [...***...] If Company
                             [...***...]


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                      b)     In the event that at a particular time during the
                             Term Company or an Affiliate [...***...] Company
                             shall have [...***...] which shall be [...***...]
                             MP3 shall [...***...] Notwithstanding the
                             foregoing, in no event shall MP3 [...***...] If MP3
                             does [...***...] If MP3 does not [...***...] then
                             MP3 shall [...***...]

        b)     The term of this license (the "Term") shall commence forthwith
               and shall continue until the date which is [...***...] after the
               earlier of January 1, 2001 or the date hereafter that MP3 begins
               Streaming Company Recordings to Locker Owners Upon termination of
               the License for any reason, or upon the termination or expiration
               of the Term: (a) all rights granted to MP3 herein to include
               Company Recordings and the materials described in paragraph
               2(a)(iii) above (collectively, the "Company Materials") in MyMP3
               shall immediately terminate; (b) MP3 shall thereafter have no
               right to make any use of any Company Materials in connection with
               MyMP3; (c) MP3 shall immediately cease to use the computer files
               embodying the Company Materials and any other materials owned or
               controlled by Company including, for the avoidance of doubt and
               without limitation, any Company trademarks; (d) MP3 shall
               immediately remove all Links to Web Sites owned or controlled by
               Company or its licensees on all Web Pages that are a part of
               MyMP3; (e) MP3 shall immediately remove all Company Shelves from
               MyMP3; and (f) MP3 shall promptly furnish Company with a sworn


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<PAGE>   27

               affidavit, in a form satisfactory to Company in its reasonable
               discretion, confirming that MP3 have returned or destroyed or
               removed, as the case may be, all copies of the foregoing
               materials. For the avoidance of doubt, no termination of the
               License or the termination or expiration of the Term shall affect
               Company's right to payment of all monies due hereunder.

5.      CONSIDERATION:In consideration of this license, Company shall receive
        the following:

        a)     The greater of:

               i)     [...***...] of the Adjusted Gross Revenues multiplied by
                      the Fraction; or

               ii)    A royalty (the "Royalty") of [...***...] for each Company
                      Master of which more than [...***...] consecutive seconds
                      (without regard to delays attributable to congestion
                      caused by network traffic on the Internet, etc.) is
                      Streamed by MP3 via a Locker. No consideration shall be
                      payable to Company for Streams of a Company Master of
                      [...***...] seconds duration or less. It is agreed that
                      MP3 shall have the right to Stream Company Masters of less
                      than [...***...] seconds duration solely in connection
                      with MyMP3 and the MP3 Site, e.g., in conjunction with the
                      "Instant Listening" service, without compensation to
                      Company of any kind.

        b)     [...***...] for each additional Company Master embodied on a
               Phonograph Record which is electronically added to any Locker by
               means of the "Instant Listen" or "Beam It" services, or any
               equivalent service authorized hereunder, in excess of those so
               added prior to the date hereof (the "Per Master Fee"). For
               clarification, it is understood that a single Company Master may
               be added to multiple Title Lists, and each separate inclusion of
               a Company Master into an individual Title List shall generate a
               separate Per Master Fee.

        c)     It is agreed that revenues associated with a Company-owned or
               controlled Locker(s) shall be excluded in computing MP3's payment
               obligations under 5(a) and (b) above. The presence of a Company
               Shelf in a Locker shall not imply Company's control of such
               Locker.

        d)     MP3 shall provide Company [...***...]

        e)     MP3 agrees that [...***...]


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               [...***...] Company shall be [...***...] If such [...***...] MP3
               shall [...***...] Company shall [...***...] If Company elects to
               [...***...] For example, if Company [...***...]

        f)     The Company shall have the right to maintain a Company Shelf in
               all Lockers. On request from the Company [...***...] MP3 will
               [...***...] If MP3 allows Persons specifically to [...***...] For
               example, if [...***...] then Company shall have [...***...]
               Otherwise, MP3 shall provide the Company on a bi-monthly basis
               with a written report containing aggregate data concerning the
               Recordings that are included in individual Lockers, as well as
               such other categories of information concerning the Lockers and
               Locker Owners, on a aggregate basis, as may be available to MP3,
               such as the age, gender, zip codes connection speed and other
               demographics and MyMP3 usage data, so as to enable the Company
               better to customize the information to be included on the Company
               Shelf. In addition to the foregoing, to the extent that MP3
               reasonably is able to do so, MP3 shall provide Company with
               [...***...]


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               [...***...]  The costs of [...***...]

        g)     As soon as practicable after the date hereof, MP3 shall make
               available to the Company [...***...] including, without
               limitation, [...***...] It is understood that MP3 shall not
               provide [...***...] The Company acknowledges that [...***...] is
               confidential and is proprietary to MP3. Notwithstanding the
               foregoing, MP3 acknowledges that information contained on a
               Company Shelf is confidential and proprietary to the Company.
               Also, MP3 acknowledges that the Company Shelf may include
               solicitations for the Locker Owner directly to contact the
               Company. Any information collected by Sony after referral to
               Company from the Company Shelf shall be exclusively owned and may
               be exclusively used or otherwise exploited by Company, as between
               the parties hereto.

        h)     The Company agrees that in respect of each purchase which is paid
               for and not returned (other than for credit) or reversed of
               Company Recordings or other products directly from the Company or
               its Affiliates through the Company Shelf [...***...] the Company
               shall pay to MP3 a fee (the "Commission") equal to [...***...] of
               the monies actually received by the Company from a Locker Owner
               for such Company Recording or other product [...***...] The
               Commission shall be accounted, paid and subject to audit on the
               same basis as is the compensation payable to Company hereunder.

6.      ACCOUNTINGS:

        a)     MP3 will compute the sums due Company under paragraphs 5(a), 5(b)
               and 5(d) as of each [...***...] after the date hereof. Within
               sixty-(60) days after each [...***...] MP3


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<PAGE>   30

               will send Company a statement covering sums due hereunder and
               shall concurrently pay Company all sums shown due thereunder.

        b)     MP3 will maintain (for at least 5 years after the end of the
               Term) books and records with respect to sums payable to Company
               hereunder. Company may, at its own expense no more than once per
               calendar year, examine and copy those books and records, as
               provided in this paragraph. Company may make such an examination
               for a particular statement within three and one-half (3-1/2)
               years after the date when MP3 sends Company the statement
               concerned. Company shall only have the right to institute suit
               with respect to a particular statement within three years after
               the close of the Term hereof. As an alternative, Company shall
               have the right to conduct a single audit of MP3, otherwise as set
               forth herein, at any time within eighteen (18) months after the
               end of the Term. Company may make those examinations only during
               MP3's usual business hours, and at the place where it keeps the
               books and records. Such books and records shall be kept at the
               MP3 office in San Diego, California, unless otherwise notified.
               Company will be required to notify MP3 at least ten (10) days
               before the date of planned examination. In the event that an
               audit proves (as a result of a mutually approved settlement or a
               binding judgment) an underpayment to Company of greater than
               [...***...] of sums properly due for the audited period, MP3
               shall reimburse Company for its reasonable audit costs.

        c)     The statements referred to paragraph 7(a) above shall provide
               Company information, sorted by both artist and title, setting
               forth [...***...] MP3 will work in good faith with Company to
               develop formats for MP3's accounting statements, including
               computer-sensible formats, which will assist Company in
               accounting to Artists with respect to the exploitation by MP3 of
               Company Recordings and incorporating the information directly
               into Company's accounting systems.

        d)     If Company does not receive any accounting statement as and when
               required hereunder for more than three accounting periods in any
               one (1) year period, then with respect to the next accounting
               period(s), MP3 shall submit License Fee payments that are
               [...***...] than the quarterly payments due for the preceding
               quarter, and payments shall continue at that increased rate,
               until Company receives the late accounting statement. If the
               amount paid pursuant to this subparagraph is more than the amount
               actually due, the overpayment shall be credited against future
               license fees due to Company under this agreement.

7.      WARRANTIES; AUTHORITY TO CONTRACT:


*** Confidential Treatment Requested


                                       19
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        a)     MP3 warrants and represents that:

               i)     MP3 has the right and power to enter into and fully
                      perform this license agreement and to make the commitments
                      MP3 makes herein, and has obtained or will obtain all
                      necessary licenses, permissions and consents.

               ii)    Company shall not be subject to any Mechanical Royalties
                      or any royalties in respect of the reproduction or public
                      performance of any Compositions or other literary,
                      dramatic or other works (other than underlying sound
                      recording rights in the Company Recording itself) embodied
                      in the Company Recordings.

               iii)   MP3 is fully-qualified to render the services described
                      herein and to maintain and operate the MP3 Site as
                      described herein. MP3 shall operate the Service to the
                      best of MP3's abilities in accordance with the technical
                      specifications attached hereto as Exhibit A.

               iv)    MP3 owns, and will own at all times during the Term, all
                      right, title and interest in and to the MP3 Site and the
                      Service and all materials embodied, reproduced or
                      otherwise contained therein (other than the rights and
                      materials licensed by Company hereunder), and all
                      copyrights and other rights therein, throughout the
                      Territory, free and clear of any and all claims or
                      encumbrances whatsoever. The MP3 Site and the Service, and
                      the operation and use thereof for the purposes described
                      herein, shall not, and at no time shall during the Term,
                      violate any law (including, without limitation, any
                      federal law or regulation) or infringe upon or violate the
                      rights of any Person, including, without limitation, any
                      trademarks, names, logos, copyrights, materials or other
                      content MP3 creates, licenses, uses, publishes, performs,
                      reproduces, distributes or displays (other than the
                      Recordings or other materials licensed or furnished to MP3
                      by Company hereunder).

               v)     MP3 have obtained from all necessary third parties all
                      licenses and other rights necessary or advisable in order
                      to create and operate the Service.

               vi)    MP3 is a corporation duly organized and in good standing
                      under the laws of Delaware.

               vii)   MyMP3 will not display any advertising or promotional
                      material within a Locker that contains Company Recordings
                      which material is pornographic in Company's good faith
                      determination, nor shall there appear within such Locker a
                      Link to a Web Site the principal focus of which is
                      pornography. The foregoing shall in no way restrict the
                      type



                                       20
<PAGE>   32

                      of Recordings or related information that can be included
                      on Title Lists in any Lockers.

               viii)  MP3 shall not mislead, misrepresent or make any fraudulent
                      representations through or in connection with the
                      Services.

               ix)    MP3 shall not enter into any agreement whatsoever on
                      behalf of Company, or make any representations or
                      warranties on behalf of Company, or represent to any
                      Person that MP3 have the power, whether express or
                      implied, to bind Company in any way or enter into
                      contracts on Company's behalf.

               x)     MP3 shall not make any use of any Company Recordings or
                      any other materials owned or controlled by Company or its
                      Licensees, or authorize any third party to make any use of
                      any Company Recordings or any other materials owned or
                      controlled by Company or its Licensees, except as
                      specifically permitted pursuant to the terms of this or
                      another written agreement.

               xi)    MP3 shall comply with all applicable laws, rules,
                      regulations and privacy policies.

               xii)   MP3 shall not cut, edit, change, alter, add to, delete
                      from or revise any Company Recordings in whole or in part,
                      directly or indirectly. Without limiting the generality of
                      the foregoing, MP3 shall not alter or delete any title,
                      credit or copyright notice, any trademarks or service
                      marks, or the featured and non-featured talent, writing,
                      producing, or other credits required by Company to be used
                      or displayed in conjunction with the Licensed Recording
                      concerned as directed by Company. The use of compression
                      technologies solely to the extent necessary to serve the
                      Company Recordings as permitted in this Agreement as
                      herein contemplated will not be deemed a violation of any
                      of the foregoing restrictions.

        b)     Company represents and warrants:

               i)     that it has the full legal right, power and all authority
                      and approval required to enter into, execute and deliver
                      this Agreement;

               ii)    that it has the full legal right, power and all authority
                      and approval to grant the rights and licenses herein
                      granted and fully to perform its obligations hereunder;

               iii)   that no third party consent is required to grant to MP3
                      the rights and licenses herein granted;

               iv)    that Company will be responsible for payment of any Record
                      Revenue Participations; and



                                       21
<PAGE>   33

               v)     that this Agreement has been duly authorized, executed and
                      delivered by such party and constitutes the valid and
                      binding obligation of Company enforceable in accordance
                      with its terms.

        c)     Either Party may terminate the Term of this Agreement upon a
               material breach of any of the material agreements made by the
               other Party hereto, including without limitation a failure to
               account for more than three (3) consecutive accounting periods in
               any year, which breach is not cured within thirty (30) days from
               date of detailed written notice by the non-breaching Party of any
               such breach.

        d)     The Company may terminate the Term of this Agreement if MP3 is
               dissolved or liquidated, or becomes bankrupt or otherwise
               insolvent.

8.      INDEMNITY:

        a)     MP3 shall at all times indemnify and hold harmless Company and
               its Affiliates from and against any and all claims, losses,
               damages, liabilities, costs and expenses, including, without
               limitation, legal expenses and reasonable counsel fees arising
               out of any breach or alleged breach by MP3 or any MP3 Affiliate
               of any of warranty, representation, covenant or obligation by MP3
               or any MP3 Affiliate hereunder (individual and collectively, "MP3
               Claims"). In the event of any MP3 Claim: (i) Company shall notify
               MP3 of the MP3 Claim concerned promptly following the date that
               Company or any Company Affiliate becomes aware of it; (ii) MP3
               shall defend against the MP3 Claim concerned (at MP3's own
               expense) through legal counsel selected by MP3 with Company's
               consent, which consent Company shall not unreasonably withhold;
               and (iii) each Party shall reasonably cooperate with the other in
               the defense of the MP3 Claim concerned. MP3 shall be solely
               responsible for the amount of any settlement approved by MP3 or
               judgment for such MP3 Claim and all legal expenses and counsel
               fees incurred by MP3 in connection therewith, subject to section
               8(b) below.

        b)     In the event that MP3 or any MP3 Affiliate is failing for any
               reason to defend against the MP3 Claim concerned, Company shall
               have the right to assume the defense and settlement of the MP3
               Claim concerned through legal counsel selected by Company, but
               MP3 shall be solely responsible at all times for the amount of
               any settlement or judgment for such MP3 Claim, as well as all
               reasonable legal expenses and reasonable counsel fees incurred by
               Company in connection therewith. Any settlement of an MP3 Claim
               shall be subject to MP3's consent, which consent MP3 shall not
               unreasonably withhold. Notwithstanding the foregoing, in the
               event that MP3 defends against the MP3 Claim concerned (at MP3's
               own expense) through legal counsel selected by MP3 in accordance
               with and subject to clause (ii) of section 8(a) above, Company
               shall have the right at all times to actively participate in the
               defense thereof, and to employ legal counsel selected by Company
               at Company's own



                                       22
<PAGE>   34

               expense [separate from the counsel employed by MP3], it being
               understood that MP3 shall have the right at all times, in MP3's
               sole discretion, to maintain control of the conduct of the
               defense.

        c)     Company shall at all times indemnify and hold harmless MP3 and
               its Affiliates from and against any and all claims, losses,
               damages, liabilities, costs and expenses, including, without
               limitation, legal expenses and reasonable counsel fees arising
               out of any breach or alleged breach by Company of any warranty,
               representation, covenant or obligation by Company hereunder
               (individually and collectively, "Company Claims"). In the event
               of any Company Claim: (i) MP3 shall notify Company of the Company
               Claim concerned promptly following the date that MP3 becomes
               aware of it; (ii) Company shall defend against the Company Claim
               concerned (at Company's own expense) through legal counsel
               selected by Company with MP3's consent, which consent MP3 shall
               not unreasonably withhold; and (iii) each Party shall reasonably
               cooperate with the other in the defense of the Company Claim
               concerned. Company shall be solely responsible for the amount of
               any settlement or judgment for such Company Claim and all legal
               expenses and counsel fees incurred by Company in connection
               therewith, subject to section 8(d) below.

        d)     In the event that Company or any Company Affiliate is failing for
               any reason to defend against the Company Claim concerned, MP3
               shall have the right to assume the defense and settlement of the
               Company Claim concerned through legal counsel selected by MP3,
               but Company shall be solely responsible at all times for the
               amount of any settlement or judgment for such Company Claim, as
               well as all reasonable legal expenses and reasonable counsel fees
               incurred by MP3 in connection therewith. Any settlement of a
               Company Claim shall be subject to Company's consent, which
               consent Company shall not unreasonably withhold. Notwithstanding
               the foregoing, in the event that Company defends against the
               Company Claim concerned (at Company's own expense) through legal
               counsel selected by Company in accordance with and subject to
               clause (ii) of section 8(c) above, MP3 shall have the right at
               all times to actively participate in the defense thereof, and to
               employ legal counsel selected by MP3 at MP3's own expense
               [separate from the counsel employed by Company], it being
               understood that Company shall have the right at all times, in
               Company's sole discretion, to maintain control of the conduct of
               the defense.

9.      INJUNCTIVE RELIEF: MP3 acknowledges that the rights licensed by Company
        hereunder have a special, unique and extraordinary character which gives
        them a peculiar value, and that, in the event of a material breach of
        any material term, condition, representation, warranty, covenant or
        agreement contained in this agreement, Sony may be caused irreparable
        injury, which cannot be adequately compensated in monetary damages.
        Accordingly, in the event of any such breach, actual or threatened,
        Company shall have, in addition to any other legal remedies, the right
        to seek injunctive or other equitable relief. (The preceding sentence
        shall not be



                                       23
<PAGE>   35

        construed to preclude MP3 from opposing any application for such relief
        based upon contest of other facts alleged by Company in support of the
        application.).

10.     NOTICES: All notices to be given hereunder shall be in writing and shall
        be sent by courier or other personal delivery or by registered or
        certified mail to the applicable address set forth on page 1 hereof or
        at such other address as shall be designated in writing from time to
        time by the party receiving notice. Company shall send a copy of each
        such notice to MP3 to Ziffren, Brittenham, Branca & Fischer, LLP., 1801
        Century Park West, Los Angeles, California 90067, Attn: Gary Stiffelman,
        Esq. MP3 shall send a copy of each notice to Company to its Senior Vice
        President of Business Affairs and Administration and its Senior Vice
        President and General Counsel. Except as otherwise provided herein, such
        notices shall be deemed given when personally delivered or mailed,
        except that notices of change of address shall be effective only after
        the actual receipt thereof.

11.     MISCELLANEOUS:

        a)     This Agreement sets forth the entire understanding of the parties
               hereto relating to the subject matter hereof and supersedes all
               prior and contemporaneous agreements and understandings, whether
               oral or written. This Agreement may be amended, modified,
               superseded, canceled, renewed or extended, and the terms hereof
               may be waived, only by a written instrument signed by the parties
               hereto or, in the case of a waiver, by the party waiving
               compliance.

        b)     Company may assign its rights under this agreement in whole or in
               part to any subsidiary, affiliated or controlling corporation, to
               any Person owning or acquiring a substantial portion of the stock
               or assets of Company, or to any partnership or other venture in
               which Company participates, and such rights may be similarly
               assigned by any assignee. No such assignment shall relieve
               Company of any of its obligations hereunder. Company may also
               assign its rights to any of its Licensees if advisable in
               Company's sole discretion to implement the license granted. MP3
               shall not have the right to assign this agreement or any of its
               rights hereunder other than to a Person owning or acquiring a
               substantial portion of its stock or assets without Company's
               prior written consent; provided no such assignment shall relieve
               MP3 of any of its obligations hereunder. Any purported assignment
               by MP3 in violation of this paragraph shall be void.

        c)     This Agreement shall be governed and construed in accordance with
               the laws of the State of New York applicable to agreements made
               and to be performed entirely within such State. The New York
               courts (State and Federal), only, will have jurisdiction of any
               controversies regarding this agreement; any action or other
               proceeding which involves such a controversy will be brought in
               those courts and not elsewhere. Except as is specifically
               provided herein, nothing in this Agreement is intended to confer
               on any person not a party hereto any rights or remedies under
               this Agreement.



                                       24

<PAGE>   36

        d)     Neither party shall be deemed to be in breach of any of its
               obligations hereunder unless and until the other party shall have
               given specific written notice describing in reasonable detail the
               breach and the allegedly breaching party shall have failed to
               cure that breach within a reasonable time after its receipt of
               that written notice.

        e)     This agreement may not be modified except by an instrument in
               writing executed by each party hereto. The invalidity or
               unenforceability of any provision hereof shall not affect the
               validity or enforceability of any other provision hereof.

        f)     MP3 acknowledges that Company shall have the right to license or
               establish businesses similar to MyMP3.

        g)     In entering into this agreement, and in providing services
               pursuant hereto, MP3 and Company have and shall have the status
               of independent contractors and nothing herein contained shall
               contemplate or constitute MP3 or Company as each other's agents
               or employees.

        h)     A waiver by either party of any provision of this agreement in
               any instance shall not be deemed to waive it for the future.

        i)     All remedies, rights, undertakings, and obligations contained in
               this agreement shall be cumulative and none of them shall be in
               limitation of any other remedy, right, undertaking or obligation
               of either party. No exercise of any of a Party's options or
               remedies under this Agreement will limit a Party's right to
               recover damages by reason of any default by the other Party, a
               Party's right to exercise any of its other options or remedies
               under this Agreement, or any of any Party's other rights or
               remedies. The captions of the Articles in this agreement are
               included for convenience only and will not affect the
               interpretation of any provision.

        j)     MP3 will bear and pay any and all taxes, duties and customs of
               any kind, however designated, levied or based in any way anywhere
               in the Territory upon the performance of this agreement or the
               sale or resale of any products or services by MP3 and its
               Affiliates, including, for the avoidance of doubt and without
               limitation, all sales, use, excise, purchase, value added or
               similar taxes but excluding income or similar taxes on sums
               payable to Company, which income or similar taxes, for the
               avoidance of doubt, Company shall bear. If any claim is made
               against Company for such taxes, MP3 will promptly remit to
               Company such sums together with any penalties and interest
               assessed immediately, unconditionally and without offset.

12.     SECURITY:

        a)     Reference is made to Exhibit A hereof, which is incorporated
               herein by this reference. MP3 represents that the security
               systems outlined in Exhibit A are presently in place with respect
               to MyMP3 and that such systems, or systems



                                       25
<PAGE>   37

               more protective or effective, as the case may be, shall remain in
               place throughout the Term hereof as applicable to Company
               Recordings. Promptly after becoming aware that any Person has
               circumvented any security systems implemented in MyMP3 as
               described herein or in Exhibits A and B hereto (a "Security
               Flaw") and continues to utilize or exploit such Security Flaw,
               either directly or indirectly, or immediately after Company has
               advised MP3 that Persons are utilizing or exploiting any Security
               Flaw, either directly or indirectly: (i) MP3 shall notify such
               Person and undertake an investigation with respect to such
               activity, (ii) MP3 shall warn such Person that if the practice in
               question continues, MP3 may cancel such Person's Locker or deny
               access to Company Recordings thereunder, and (iii) MP3 shall take
               reasonable steps to monitor such Person's activity so as to take
               such further measures as may be appropriate to protect the
               Company Recordings from illicit usages. If such activity
               nonetheless continues, MP3 shall take reasonable steps designed
               to ensure that such Person can no longer access Company
               Recordings via MyMP3. MP3 at all times actively shall monitor
               MyMP3 to detect any potential Security Flaws. If a Person
               disseminates on a Web Site, directly or indirectly, any method
               pursuant to which any of the security systems described in
               Exhibit A may be circumvented in a manner so as to permit
               uncontrolled access to Company Recordings in contravention of
               MP3's Security Systems and/or the policies and standards in
               effect for MyMP3, Company shall have the right to require that
               MP3 suspend and toll the Term hereof until such time as such
               uncontrolled access can substantially be prevented. No suspension
               or tolling shall apply for a breach of [...***...] In the event
               that a suspension and tolling continues for more than a year, and
               the cause thereof solely affects MP3, Company shall have the
               right to terminate the tolling of the Term by written notice to
               Company. In the event that a suspension and tolling continues for
               more than two years, and the cause thereof affects MP3 and all
               companies offering digital locker services similar to MyMP3,
               Company shall have the right to terminate the tolling of the Term
               by written notice to Company. A termination of tolling shall not
               of itself result in the termination of suspension.

        b)     Commencing [...***...] and so long as [...***...] MP3 shall,
               [...***...] only Stream Company Recordings [...***...] Commencing
               on [...***...] MP3 shall only Stream Company Recordings
               [...***...]


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                                       26
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               [...***...] Until such time [...***...] MP3 shall not increase
               the bit-rate at which Company Recordings are encoded from the
               rate at which Recordings presently are encoded generally by MP3
               (i.e., a encoding "bit rate" of 128Kbs) or such higher rate as
               Company permits third parties to encode Company Recordings.

        c)    Notwithstanding anything contained herein, MP3 shall [...***...]

13.     CONFIDENTIALITY; PRESS RELEASE:

        a)     Company, MP3 and each of their respective Affiliates agree that
               they shall, and they shall instruct in writing their respective
               attorneys, accountants and other professional advisors
               (collectively, "Advisors") to, hold in confidence and not
               communicate, transmit, publish, disseminate or otherwise disclose
               any of the terms and conditions of this Agreement or any fact,
               matter, event or surrounding circumstance leading to or relating
               to the negotiation thereof to which such Party was privy or of
               which they were otherwise made aware (e.g., by being copied on
               correspondence or by being advised of such fact, matter, event or
               circumstance by another party to the negotiation) (collectively,
               "Confidential Information"); provided, however, that nothing in
               this paragraph 13 shall prohibit disclosure of such Confidential
               Information: (a) by Company, MP3 or any Affiliate to its
               respective financial officers, management, bankers or others as
               may be reasonably necessary in the


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                                       27
<PAGE>   39
               operation of its respective business or by Company to any of its
               Affiliates; (b) by Company, MP3 or any Affiliate to its
               respective Advisors to the extent that such disclosure is in the
               opinion of such Advisors required to enable such Advisors fully
               to represent the Person concerned (or by any of Company's
               Affiliates or licensees to their respective attorneys,
               accountants and other professional advisors); (c) in connection
               with any legal or governmental proceeding; or (d) to any
               judicial, governmental or regulatory body. Notwithstanding the
               foregoing, in the event that either Party seeks or is required to
               disclose Confidential Information as a result of the
               circumstances described in clauses (c) or (d) of the preceding
               sentence, the Party seeking to disclose Confidential Information
               shall use reasonable efforts to promptly notify the other Party
               of such potential disclosure so that such other Party may seek an
               appropriate protective order to prevent the disclosure of such
               Confidential Information. [...***...]

        b)     Company, MP3 and each of MP3's Affiliates agree that the
               disclosure of the existence of this agreement or any of the
               transactions contemplated in this Agreement, including, without
               limitation, any Confidential Information, in the context of any
               formal public communication to a third party of any kind,
               including, for the avoidance of doubt and without limitation, in
               the context of a formal press announcement or press conference,
               shall be subject to MP3's and Company's mutual approval. Attached
               hereto as Exhibit C to this Agreement is a formal press
               announcement which is deemed mutually approved by both MP3 and
               Sony (the "Agreed Statement").

        Please indicate your acceptance of the above terms by signing in the
space indicated below.

                                            Very truly yours,

                                            MP3.COM, INC.


                                            By:  /s/ ROBIN RICHARDS
                                                --------------------------------

AGREED AND ACCEPTED:

Sony Music, A Group of Sony Music Entertainment Inc.


By:   /S/ RON WILCOX
    --------------------------------
    Ron Wilcox
    Senior Vice President
    Business Affairs and Administration



*** Confidential Treatment Requested


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<PAGE>   40

                                    EXHIBIT A
                                     My.MP3



Beam-it
-------
[...***...]



*** Confidential Treatment Requested


<PAGE>   41

                                    EXHIBIT B
                                   [...***...]



*** Confidential Treatment Requested


<PAGE>   42

                                    EXHIBIT C
                           Exemplar of MyMP3 Web Page


                   [Graphic Depicting A My.MP3.com Web Page]

<PAGE>   43

                                    EXHIBIT B
                                   STIPULATION

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

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

UMG RECORDINGS, INC., SONY MUSIC
ENTERTAINMENT INC., WARNER BROS. RECORDS          Case No.: 00 Civ. 0472 (JSR)
INC., ARISTA RECORDS INC., ATLANTIC
RECORDING CORPORATION, BMG MUSIC d/b/a THE
RCA RECORDS LABEL, CAPITOL RECORDS, INC.,         Stipulation and Order
ELEKTRA ENTERTAINMENT GROUP, INC.,                of Discontinuance
INTERSCOPE RECORDS, and SIRE RECORDS GROUP        With Prejudice
INC.,

                  Plaintiffs,

        v.

MP3.COM, INC.,

                  Defendant.

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

IT IS HEREBY STIPULATED AND AGREED, by and among the undersigned counsel for
Plaintiff Sony Music Entertainment Inc. (the "Settling Plaintiff") and Defendant
MP3.com, Inc. that, pursuant to said parties' settlement agreement, the
Complaint in the above-captioned action is hereby dismissed with prejudice
pursuant to Fed.R.Civ.P. Rule 41 as to the claims of the Settling Plaintiff.

Dated:  August 15, 2000



                                            ARNOLD & PORTER



                                        By: /s/ HADRIAN R. KATZ
                                            ------------------------------------
                                            Hadrian R. Katz
                                            555 Twelfth Street, N.W.
                                            Washington, D.C.  20004





<PAGE>   44

                                            (202) 942-5000

                                            Counsel for Plaintiff
                                            Sony Music Entertainment Inc.

                                            COOLEY GODWARD LLP



                                        By: /s/ MICHAEL B. CARLINSKY
                                            ------------------------------------
                                            Michael G. Rhodes (MR 0426)
                                            4365 Executive Drive
                                            Suite 1100
                                            San Diego, CA 92121-2128
                                            Tel:       (858) 550-6000
                                            Fax:       (858) 453-3555

                                                 -and-

                                            ORRICK, HERRINGTON & SUTCLIFFE LLP
                                            Michael B. Carlinsky (MC-6594)
                                            666 Fifth Avenue
                                            Suite 1100
                                            San Diego, CA  92121
                                            (212) 506-5000

                                            Counsel for Defendant
                                            MP3.com, Inc.


SO ORDERED.



--------------------------------
Hon. Jed Rakoff
U.S.D.J.




<PAGE>   45
                                    EXHIBIT C
                                  PRESS RELEASE


                                                                     FOR MP3.COM
                                                                   GREG WILFAHRT
                                                                  (858) 623-7280
                                                                      pr@mp3.com

                                                   FOR SONY MUSIC ENTERTAINMENT:
                                                                 LAURIE JAKOBSEN
                                                                  (212) 833-5047
                                                   laurie_jakobsen@sonymusic.com


     MP3.COM AND SONY MUSIC ENTERTAINMENT SETTLE COPYRIGHT INFRINGEMENT SUIT


     SONY MUSIC ENTERTAINMENT GRANTS MP3.COM LICENSE FOR MY.MP3.COM SERVICE

SAN DIEGO and NEW YORK, Aug. XX, 2000 -- MP3.com, Inc. (Nasdaq: MPPP) and Sony
Music Entertainment (SME) announced today that they have settled the copyright
infringement suit brought by Sony Music Entertainment in connection with
MP3.com's My.MP3.com system. In addition to a payment by MP3.com for past acts,
the companies announced that MP3.com has entered into a non-exclusive, North
American license with SME for use of SME-controlled recordings with the
My.MP3.com system, including the "Beam-It(TM)" and "Instant Listening(TM)"
software services. These services are designed to require, among other things,
users to verify the CDs they own in order to access that music in their
My.MP3.com Music Manager (i.e. personal digital locker).

"It is clear that Sony Music Entertainment understands and embraces the Internet
and values responsible technologies that excite consumers and reward content
owners," said Michael Robertson, chairman and chief executive officer of
MP3.com. "MP3.com respects the rights of copyright holders, and now, with this
settlement and license, we can offer consumers an avenue to access music online
from CDs they have purchased."

"Sony Music Entertainment strongly enforces its copyrights. This settlement
affirms and upholds the right of copyright owners to be paid for the use of
their works on the Internet," said Al Smith, Senior Vice President, Sony Music
Entertainment. "Sony Music has always understood that changes in technology
create new ways for consumers to experience entertainment. This licensing
agreement with MP3.com is one of a number of initiatives that we have underway
to enhance music fans' experience in an environment that protects intellectual
property rights."

About MP3.com

MP3.com, Inc. has created what it believes is a unique and robust technology
infrastructure for the storage, management, promotion and delivery of digital
music. As the Internet's premier Music Service Provider (MSP), the company is
dedicated to providing consumers with anytime, anywhere access to their music
using any web-enabled device. The company's web site hosts what it believes is
the largest collection of digital music available on the Internet, with more
than 562,000 songs and audio files from over 87,000 digital artists and record
labels. Dedicated to growing the digital music space, the company's products and
services include on-demand Subscription Music Channels, an innovative Retail
Music Program, a Syndicated Radio Division and others. Additionally, through the
company's MSP initiative, MP3.com is partnering with a variety of
forward-looking technology companies to expand its digital music strategy.
MP3.com common stock is traded on the Nasdaq National Market under the ticker
symbol MPPP. The company is based in San Diego, California. For more information
on MP3.com, visit www.mp3.com.

About Sony Music Entertainment

Sony Music Entertainment (SME), a leading global producer, manufacturer, and
marketer of recorded music and video, has a presence in 60 countries. In 1994,
the company created the New Technology and Business Development division, which
operates companies, directs investments and provides incubation facilities for
early stage digital media companies from three principal locations in San
Francisco, New York and Los Angeles. The group's holdings include over 30
companies in the digital media infrastructure, technology, wireless, service and
digital content areas, reflecting SME's strategy for the broadband era. These
companies include AllStarCharity.com, AudioBase, C4, Digital On-Demand, Emazing,
Exactis/ 24/7 Media, Gig.com, Indimi (the parent company of AdTools and
InfoBeat), i3 Mobile, lastminute.com, Launch Media, Listen.com, MongoMusic,
NetGen, Palm, Inc, Quintus, Reciprocal, Redband Broadcasting, Spinner.com, T-10,
Urbanworld and Yupi.com.

Statements in this press release that are not strictly historical are
forward-looking statements within the meaning of section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
statements include references to activities expected to occur in connection with
MP3.com's settlement and license arrangement with Sony Music Entertainment.
These statements involve a high degree of risk and uncertainty, are only
predictions, and actual events or results may differ materially from those
projected in such forward-looking statements. Factors that could cause or
contribute to differences include risks related to: implementation of MP3.com's
license arrangement with Sony Music Entertainment; MP3.com's current litigation
proceedings, including without limitation the inability to reach settlement with
all parties to such litigation proceedings; MP3.com's new and uncertain business
model; acceptance of MP3.com's products and services; MP3.com's limited
operating history, and MP3.com's rapid growth, as well as other risks detailed
from time-to-time in MP3.com's reports to the Securities and Exchange
Commission, including its report on Form 10-K for the year ended December 31,
1999 and its most recent report on Form 10-Q.

Source: OneCLE Business Contracts.