Digital Music Group Announces the Sale of Physical Distribution Rights to Its Green Linnet Catalog to Compass Records

Sacramento (California), USA – /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 it has sold the physical distribution rights for the Green Linnet Records catalog and its affiliated world music label, Xenophile, to Compass Records.

Under the terms of the sale, DMGI will continue to own the master recordings, including the digital rights, of the Green Linnet catalog but has sold its physical distribution rights to Compass Records.

DMGI previously announced the close of their acquisition of Green Linnet Records on May 10, 2006. Compass Records expects strong synergy between the Green Linnet brand and Compass Record’s burgeoning roster of Celtic artists. “Green Linnet is the best known brand in Celtic music and over its 30-year history, the label has cultivated and educated several generations of Celtic music fans,” said Compass Records co-founder Garry West. “We look forward to carrying that torch into the future and, with our two catalogs, becoming the go-to point for Celtic music CDs.”

The sale supports DMGI’s strategic focus on the acquisition of digital rights of sound recordings. “As a company focused on the digital music market, this makes perfect sense for our business model,” said Mitchell Koulouris, Chief Executive Officer of Digital Music Group. “We are pleased that Compass Records, an internationally recognized expert in Celtic music, has contracted with us to handle the physical CD sales of this rich catalog. We believe this provides the best of both worlds for the artists and the consumers.”

About Compass Records

Compass Records, co-founded in 1994 by musicians Alison Brown and Garry West, is a new breed of roots-music label: eclectic, sophisticated, and artist-friendly. With a catalog of over 200 releases, Compass Records has been described by Billboard Magazine as “one of the greatest independent labels to emerge in the last decade.” In a relatively short time, Compass Records has developed a stellar roster of Celtic artists including Solas, Paul Brady, LĂșnasa, Kate Rusby, Liz Carroll, Sharon Shannon and Mick Moloney.

Other notable Compass releases include projects from Colin Hay, Beth Nielsen Chapman, Victor Wooten, Glenn Tilbrook, The Waifs and Alison Brown.

For more information, visit www.compassrecords.com.

About Green Linnet

Founded over 30 years ago, the Green Linnet catalog includes over 2,400 tracks and has been the home of leading Celtic artists such as Niamh Parsons, Old Blind Dogs, LĂșnasa,Patrick Street, and Tannahill Weavers.

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, visit www.digitalmusicgroupinc.com.

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