DNA and Diamante Form Distribution Venture

Business Wire, April 24, 2000

Business Editors/Entertainment Writers

WOODLAND & NEWPORT BEACH, Calif.--(BUSINESS WIRE)--April 24, 2000

DNA, the independent distribution division of Valley Media, Inc. (Nasdaq: VMIX), and Diamante Music Group (DMG), an independent Christian music distributor, have entered into a co-distribution agreement through which DMG products will be distributed by DNA in the general market and DNA's Christian products will be distributed by Diamante to the Christian Booksellers' Association (CBA) marketplace. DNA was releasing products to the CBA through its own Christian distribution group, DNA Christian (DNAC), which DNA will discontinue on April 30th.

Valley and Diamante have signed a letter of intent regarding a potential equity stake in DMG for Valley.

According to Bill Conine, Founder and President of DMG, "Combining Diamante's position as a leading independent Christian music distributor with DNA, a leading general market distributor, will result in expanded markets for both companies. Diamante has done a great job with a select group of accounts, but this new alliance will provide our labels the potential for national distribution into the general market. As a division of Valley Media, DNA brings tremendous opportunity to Diamante that only a billion dollar company can provide. The first release through DNA will be the remixed version of P.O.D.'s independent release, "Snuff The Punk", and Diamante will be releasing projects to the CBA by Kathie Lee Gifford and John Tesh. When I discovered that Jim Colson (Valley's Vice President of Independent Distribution and General Manager of DNA), shared the same vision for reaching today's world through Christian music, I knew we would make a perfect match."

Colson stated, "This agreement allows our existing labels with Christian products a highly effective way to reach both marketplaces. Bill and I will work together to coordinate combined distribution strategies, which will help retailers in both market segments and maximize our ability to reach the consumer. We are committed to work very closely with Diamante and our retailers to ensure a smooth transition from DNA Christian to Diamante.

Colson continued, "To implement the transition, Diamante's sales reps will closely manage the sales of DNAC titles with CBA accounts. There will be no product barcode changes in conjunction with the transition. DNAC titles that do not move to Diamante will continue to be available through DNAC's toll-free number for several months. Returns of product previously sold by DNAC may be made either to DNAC or to Diamante. We will focus on providing a comfortable transition for CBA accounts. We are very excited about our new relationship with Diamante and view this transition to be a very positive opportunity for our customers."

About Diamante Music Group: DMG distributes Christian and Gospel music, video and DVD products to the Christian marketplace. DMG's marketing and in-house sales group is headquartered in Newport Beach, CA, and the company supports a team of field sales representatives nationwide.

About Valley Media: Valley Media is a distributor of music, video and DVD product offering Full-line distribution, Independent distribution, publications, and proprietary database products. Valley provides e-commerce fulfillment services to Internet retailers on behalf of its affiliate, amplified.com. The Company operates facilities in seven states with primary distribution facilities in Louisville, KY, and Woodland, CA, where its corporate headquarters are located. Additional information concerning Valley Media is available at www.valley-media.com.

This press release contains forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by words such as "will," "expects," "anticipates," "plans," or "intends" and by other descriptions of future circumstances or conditions. Actual results may differ materially from those projected in these forward-looking statements. Factors that could affect Valley Media's actual results include, without limitation, risks and uncertainties related to the following factors: intense competition, customer concentration, increased fixed costs, declining growth rates of Internet sales, and tighter labor markets. More information about these and other factors that could negatively affect Valley Media's financial performance and the value of its common stock is contained in Valley Media's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and quarterly reports on Form 10-Q. Readers of the 10-K and 10-Qs should pay particular attention to the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Factors Affecting Operating Results."