DMGI Announces New Video Catalog Acquisitions

DMGI Announces New Video Catalog Acquisitions

Agreements for The Mr. Bill Show, Hopalong Cassidy, Night of the Living Dead, and Norm Crosby's Comedy Shop Anchor Expanded Catalog

SACRAMENTO, Calif., Jan. 12 /PRNewswire-FirstCall/ -- Digital Music Group, Inc. (NASDAQ:DMGI), a content owner and global leader in the digital distribution of independently owned music and video catalogs, today announced that it has completed a number of long-term distribution agreements with television, film, and video catalog owners representing nearly 200 hours and 400 episodes of video content. These acquisitions will be marketed as part of the "DMGI Network" content channels, joining the approximately 4,000 hours of video content previously announced in November 2006.

"We're very excited about the breadth and quality of the television, film, and video catalogs we are announcing today," said Mitchell Koulouris, Chief Executive Officer of DMGI. "We built a strong foundation last November when we first launched our video initiative and although digital distribution of video is still evolving, the market reception so far has been excellent. The catalogs we are announcing today further extend our plans to deliver high-quality properties to the maturing digital video market."

DMGI Network: Something for Everyone

The television, film, and video catalogs announced today will be marketed as part of the DMGI Network categories:

* Classics: Approximately 100 hours of classic TV series and
feature-length films will be added to this channel, including Hopalong
Cassidy (52 episodes and 60 feature length films), and 13
feature-length films adapted from the legendary Zane Grey series.
* Kids: Over 10 hours of children's content will be added to this channel
including Baby Know It All: Animals and ABCs, Baby Know It All: Colors
& 123s, Molly and Roni's Dance Party featuring Jamie Lee Curtis and
Adam Baldwin; and Magical Musical Express.
* Sports: New catalogs totaling over 15 hours of newly acquired content
for this sports-themed channel include: The Masters of Poker series
featuring Poker experts Phil Hellmuth and Annie Duke (12 hours);
Binion's Poker Series, and Poker Secrets from the Poker Champs
featuring Poker greats Phil Ivey, Johnny Chan, and Ted Forrest, among
others.
* Comedy: New catalogs will be added to this channel totaling over
35 hours of content and including some of the best names in comedy,
including: Laffapalooza, hosted by Academy Award Winner Jamie Foxx and
featuring some of the top names in comedy including David Alan Grier,
Aries Spiers, Steve Harvey, Will Smith, and Mike Epps; and Norm
Crosby's Comedy Shop, featuring comedy greats Jay Leno, Milton Berle,
Jackie Mason, Henny Youngman, Jimmy Walker, Paul Rodriguez, Garry
Shandling, Howie Mandel, Gallagher, and Franklin Ajaye, among others.
* Edge: New content will be added to this channel, featuring over
30 hours of content that spans from the ridiculous to the raunchy and
includes great series such as The Mr. Bill Show, the animated classic
made popular on Saturday Night Live, the cult movie classic Night of
the Living Dead, Valor Fighting, Ultimate Predator (featuring Manny
"The Shark Man" Puig, and Jackass cast members Johnny Knoxville,
Steve-O, and Chris Pontius), Bareknuckle Beatdown, Combat Zone
Wrestling, Gang Life: Xposed, Desperados Del Ring, and the XYZ catalog
featuring classic, lost footage from skateboarding champion Tony Hawk,
Danny Way, and early footage and antics of current Jackass cast member
Steve-O, among others.

"Today's announcement underscores our commitment to expanding the DMGI Network to include quality content and brands for audiences of all ages and demographics," said Mr. Koulouris. "In addition to content acquisitions, we are focused on forging expanded or new relationships with our digital retailers to include video distribution to a wide variety of devices. This is all part of our strategy to position DMGI as a leading distributor of digital entertainment. We look forward to working with content owners of all types of entertainment properties to help them access the digital media market."

For more information on the catalogs and content announced today, please visit www.dmgi.com/video/. Also, as more fully discussed in DMGI's most recent filing on Form 10-Q for the quarter ended September 30, 2006, the Company does not presently expect to achieve any meaningful revenue from video distribution until the second half of 2007, and it is possible that DMGI could never achieve meaningful revenue from investments in video distribution.

About DMGI

Founded in 2005, Digital Music Group Inc. (NASDAQ:DMGI) is a content owner and global leader in the digital distribution of independently owned music, TV, film and video catalogs. DMGI acquires the digital rights to media catalogs and digitally encodes them into multiple formats for distribution to online music, mobile, and video stores. Our retailers include: the iTunes Music Store, Google Video, RealNetworks, Napster, Wal-Mart Music, Yahoo! Music, InfoSpace, Moderati, Zingy, 9Squared, and many others. 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 new long-term distribution agreements for television, film, and video catalogs, DMGI's plans to deliver high-quality properties to the maturing digital video market, DMGI's efforts to forge expanded or new relationships with digital retailers to include video distribution to a wide variety of devices, DMGI's strategy to position DMGI as a leading distributor of digital entertainment, and DMGI's plans to work with content owners of all types of entertainment properties to help them access the digital media market) 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: we may not be able to determine the proper valuation for the licensing of digital rights to video recordings; we will be substantially dependent on online stores and mobile services for the distribution and sale of our digital video recordings; we currently have digital video distribution agreements with a limited number of online stores and mobile services, and if we are unable to enter into additional distribution agreements with channel outlets on commercially favorable terms, this could limit our revenue; our success in this area depends on the market demand for digital video recordings and our ability to acquire and offer for purchase video recordings that appeal to consumers' tastes and preferences which are unpredictable; our approach for licensing music may not work well for licensing video recordings; video distribution is in its infancy and technical requirements are evolving; we may encounter unexpected difficulties in processing the video into digital formats or in meeting the technical requirements of the online stores; we may have to make significant investments in our technology and operating cost structure to meet evolving technical requirements; delays in processing and delivering video recordings to the online stores may cause delays in expected revenue growth; any significant changes from current processing requirements could increase our costs and delay or impede our ability to achieve a profit from the distribution of our video catalogs; online stores and mobile services could limit the types or amount of video content they will accept from content owners and distributors like us, and our revenue could be significantly reduced if we are unable to exploit all of the content we have under contract. 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

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, Len Hall, VP Media Relations of Allen & Caron, Inc.,
+1-949-474-4300, len@allencaron.com, for DMGI; 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 DMGI

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

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