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8/30/2005

 
ARTISTdirect, Inc. Reports Results of Operations for the Three Months and Six Months Ended June 30, 2005

- Company Reports First Operating Profit in its History

- Quarterly Revenue Grows by 168% Over Q2 2004 to $3.2 million

LOS ANGELES, Aug. 30 /PRNewswire-FirstCall/ -- ARTISTdirect, Inc. (BULLETIN BOARD: ARTD) , a leading integrated digital entertainment company providing distribution and copyright protection services for content owners, today announced the results of its operations for the three months and six months ended June 30, 2005. Net revenue for the quarter was $3.169 million, up 168.3% over the prior year's results for the same period. Income from continuing operations for the quarter was $0.604 million, or $0.15 per diluted common share, up $1.056 million from a $0.452 million loss, or ($0.13) per diluted common share, in the same three-month period of the prior year.

"After a significant restructuring and determined effort to focus the company on becoming the independent leader in delivering digital content online, it has been gratifying to see the positive response from music fans, advertisers and our customers who develop digital content," said Jon Diamond, CEO of ARTISTdirect, Inc. "As we move ahead, we will continue to emphasize the profitability of our distribution network while leveraging the unique capabilities of our recently acquired MediaDefender unit -- the leader in Internet piracy protection (IPP) -- to provide additional high-value services to record labels and movie studios looking to direct customers toward legal digital distribution alternatives."

The ARTISTdirect Network currently estimates that it averages approximately 13 million unique visitors per month and 286 million page views per month -- making it the largest independent online music and media platform, and the fourth largest music destination on the Internet. On July 28, 2005, ARTISTdirect acquired MediaDefender, which has a proprietary suite of IPP solutions covering the 15 networks that constitute over 95 percent of all peer-to-peer (P2P) file-sharing activity, as well as Internet Relay Chat (IRC) and Usenet.

Segment Results

Media revenue for the three months ended June 30, 2005, was $2.517 million, an increase of $2.018 million, or 404.4%, over $0.499 million for the three months ended June 30, 2004, as a result of an increase in the number of online advertisers, an increase in the cost per thousand ("CPM") rates earned from the sales of impression- and non-impression based advertising and offline sponsorships, and an expansion of affiliations with other websites for which the Company both markets advertising and participates in advertising revenues. For the quarter, E-commerce revenue decreased by 4.4% to $0.652 million in 2005 from $0.682 million in 2004, primarily due to a decrease in sales of products related to one music merchandising entity.

For the six months, Media revenue increased to $3.172 million, an increase of $2.433 million, or 329.2%, over $0.739 million for the six months ended June 30, 2004. For the six months, E-commerce revenue decreased by 8.4% to $1.287 million in 2005 from $1.405 million in 2004.

A short-term program with a major advertiser contributed approximately $1.761 million of the increase in revenue during the three months and six months ended June 30, 2005. The program ended June 30, 2005, and is not expected to continue. The Company expects to continue to focus its efforts on increasing media revenue from various advertisers during the remainder of the year.

Discontinued Operations

During December 2004, ARTISTdirect discontinued the operations of its iMusic record label and has therefore accounted for the operations of iMusic as a discontinued operation for all periods presented.

Effective February 28, 2005, ARTISTdirect completed the sale of all of its interest in ARTISTdirect Records, LLC, to Radar Records Holdings, LLC, an entity owned by the Company's Chairman, and has therefore accounted for its interest in ARTISTdirect Records, LLC as a discontinued operation for all periods presented.

About ARTISTdirect

ARTISTdirect, Inc. is an innovative and diversified music and media entertainment company that is home to a critically acclaimed and groundbreaking online destination and is a leader in anti-piracy solutions in the Internet piracy protection industry.

The ARTISTdirect Network is a popular site for high-profile recording artists in the areas of pop, country, rock, hip-hop and R&B to congregate and promote themselves. With over 500,000 artist pages, ARTISTdirect has established brand loyalty by bringing fans and artists closer together through an unparalleled online network of resources, merchandise, promotional assets and original content, including free audio and video streams and downloads, up-to-the-minute music news, a unique online store, ringtones, ticket sales, album reviews and more.

Forward-Looking Statements

This news release may contain "forward-looking" statements, which are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The forward-looking statements in this news release involve known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of the Company to differ materially from those expressed in or implied by the forward-looking statements contained herein. Except as required by applicable law or regulation, the Company undertakes no obligation to revise or update any forward-looking statements contained herein in order to reflect future events or circumstances.

Results of operations for the three months and six months ended June 30, 2005 are summarized as follows (all dollar amounts are presented in thousands):

Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004

Net revenue $ 3,169 $ 1,181 $ 4,459 $ 2,144

Income (loss) from
continuing operations $604 $(452) $229 $(942)

Income (loss) from
discontinued operations:

Loss from operations of
discontinued businesses
(primarily ARTISTdirect
Records, LLC) - (214) (271) (436)

Gain from sale of interest
in ARTISTdirect Records,
LLC (substantially all
non-cash) - - 21,079 -

Net income (loss) $604 $(666) $21,037 $(1,378)

Net income (loss) per common share for the three months and six months ended June 30, 2005 and 2004 is summarized as follows:

Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004

Net income (loss) per
common share - basic:

From continuing
operations $ 0.17 $(0.13) $ 0.07 $(0.27)

From discontinued
operations - (0.06) 5.94 (0.12)

Net income (loss) $ 0.17 $(0.19) $ 6.01 $(0.39)

Net income (loss) per
common share - diluted:

From continuing
operations $ 0.15 $(0.13) $ 0.06 $(0.27)

From discontinued
operations - (0.06) 5.70 (0.12)

Net income (loss) $ 0.15 $(0.19) $ 5.76 $(0.39)

Weighted average common
shares outstanding:

Basic 3,502,117 3,502,117 3,502,117 3,502,117

Diluted 3,927,844 3,502,117 3,652,081 3,502,117

Source: ARTISTdirect, Inc.

CONTACT:
Michael Gross of Robinson Lerer & Montgomery for ARTISTdirect,
Inc., +1-646-805-2003

This company's web site http://www.artistdirect.com/




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