Digital Music Group, Inc. Announces Expansion Into Digital Music Video Market

Digital Music Group, Inc. Announces Expansion Into Digital Music Video Market

SACRAMENTO, Calif., Aug. 9 /PRNewswire-FirstCall/ -- Digital Music Group, Inc. (NASDAQ:DMGI), a content owner and distributor of digital music recordings focused on past-hits, out-of-print, back catalog, and independent label recordings, today announced that it has expanded its business model to include music video content. As part of this announcement, DMGI also announced three long-term distribution agreements with music video catalog owners as well as a new channel relationship with Google Video. Additionally, DMGI announced the expansion of its iTunes Music Store relationship to include music videos.

The three music video catalogs announced today are:
* Hard 'N' Heavy: Hard 'N' Heavy was a video magazine that featured the
best heavy metal, hard rock and early-'90s alternative bands, with
video clips interspersed with interview footage. The 10-minute
segments are a treasure trove from the era when big hair and
pointy-headstock guitars ruled rock 'n' roll.
* Beyond Warped: Beyond Warped is a video series that chronicles some
up-and-coming bands, along with other well-established artists, from
the second stages of the 2004 Vans(R) Warped tour. Included in the
catalog are acts such as The Lordz of Brooklyn, Guttermouth, Duane
Peters and the Huns, and From First to Last, as well as a two-hour
documentary chronicling the tour from a behind-the-scenes perspective.
* San Juan Music Group: From San Juan Music Group comes a number of
live-concert videos from the world of soul and R&B (the Spinners, the
Stylistics, the Chi-Lites, Chic), country (Mickey Gilley, Freddy
Fender, Poco, Pam Tillis, Lynn Anderson), pop (Dionne Warwick, Air
Supply), rock (Starship) and jazz (Duke Ellington, Louis Armstrong).

Collectively, these catalogs represent a variety of music video clips, interviews, and live performance highlights from many different artists across many different genres. Each music video will be released in a 5 - 30 minute video segment and be delivered to the online music video marketplace where it will be made available to consumers.

"We are very excited to announce the expansion into the music video market," said Mitchell Koulouris, Chief Executive Officer of Digital Music Group. "With the growing popularity of portable video devices such as the Apple iPod(R), consumers are looking for high quality content. Today's acquisitions bring high quality downloadable video product to these consumers." Koulouris added, "The market is growing rapidly and this is a natural extension of our business model and our focus on music. Because processing digital music videos is very similar to processing digital sound recordings, our operations team already has the knowledge and capacity required to enter this market with little or no incremental operating cost."

Additionally today, Digital Music Group announced the expansion of its sales channel to include Google Video, which delivers music videos to consumers via downloading and streaming, as well as an extension of its current relationship with the iTunes Music Store to include music videos.

DMGI expects to begin selling music videos and recognizing revenue from this added source by the fourth quarter of 2006.

About Google Video

Google Video (http://video.google.com/) is a comprehensive index of free and paid, user-generated and professional video content that makes it easy for users to watch and share videos and video producers to monetize and distribute their content.

About Digital Music Group, Inc.

Founded in 2005, Digital Music Group, Inc. (NASDAQ:DMGI) is focused on helping consumers worldwide to experience more music, in more ways. Digital Music Group acquires the digital rights to music recordings and processes these recordings into digital format for distribution to online music stores such as the iTunes Music Store, MSN Music, RealNetworks, Napster, Wal-Mart Music and Yahoo! Music, where they are available for purchase by consumers via downloading. For more information, please visit www.dmgi.com.

Digital Music Group is a trademark of Digital Music Group, Inc. Other names mentioned herein are the property of their respective owners.

Forward-Looking Statements

This release contains forward-looking statements (including, without limitation, information regarding Digital Music Group's acquisitions of the Hard 'N' Heavy, San Juan Music, and Beyond Warped music video catalogs and making these catalogs available in the current and future digital channel, including Google Video and the iTunes Music Store) that involve risks and uncertainties that could cause the results of Digital Music Group to differ materially from management's current expectations. Actual results may differ materially due to a number of factors including, among others: unforeseen difficulties assembling and processing the digital albums and videos; potential changes in consumers' tastes and preferences in music and videos; unforeseen problems distributing videos through our new video channels; and our dependence on the iTunes Music Store and other online music stores to make the digital albums and videos available for purchase by consumers. The matters discussed in this press release also involve risks and uncertainties described in Digital Music Group's most recent filings with the Securities and Exchange Commission. Digital Music Group assumes no obligation to update the forward-looking information contained in this release.

Press Contact

Digital Music Group, Inc.: Anders Brown, Chief Operating Officer,
Telephone: (916) 239-6010 x2504
Allen & Caron Inc.: Len Hall, VP Media Relations,
Telephone: (949) 474-4300,
e-mail: Len@allencaron.com

Investor Relations Contact

Digital Music Group, Inc.: Karen Davis, Chief Financial Officer,
Telephone: (916) 239-6010 x2505
Allen & Caron Inc.: Jesse Deal, Account Manager,
Telephone: (212) 691-8087,
e-mail: Jesse@allencaron.com

Source: Digital Music Group, Inc.

CONTACT: Media, Anders Brown, Chief Operating Officer of Digital Music
Group, Inc., +1-916-239-6010, ext. 2504; or Len Hall, VP Media Relations of
Allen & Caron Inc., +1-949-474-4300, Len@allencaron.com, for Digital Music
Group, Inc.; or Investor Relations, Karen Davis, Chief Financial Officer of
Digital Music Group, Inc., +1-916-239-6010, ext. 2505; or Jesse Deal, Account
Manager of Allen & Caron Inc., +1-212-691-8087, Jesse@allencaron.com, for
Digital Music Group, Inc.

Web site: http://video.google.com/

Web site: http://www.dmgi.com/

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