Funding to Support Expansion

Internet Music & Media PLC
27 March 2001






Date:        27 March 2001

Contacts:    Nicholas Cowan
             Internet Music & Media plc  020 7352 4448

             John East
             David Worlidge
             Simon Clements
             John East & Partners        020 7628 2200
             Limited

             David Bick
             Holborn Public Relations    020 7929 5599
                                         [e-mail]



             INTERNET MUSIC & MEDIA PLC ('IMM' or 'the Company')

                   Additional Funding to Support Expansion

The Directors of Internet Music & Media plc announced in January 2001 that its
subsidiary, Groovetech LLC, had launched Groovetech Radio London, an on-line
dance music radio station. The station broadcasts for eight hours per day,
five days a week and features well known dance DJs such as Mixmaster Morris,
Colin Dale, Matthew Herbert and DJ C1. This is Groovetech's third on-line
radio station, joining Groovetech Radio Seattle and Groovetech Radio San
Francisco.

The Directors are also pleased to announce that a London facility has been
established by IMM's UK subsidiary Groovetech Limited, in line with the
Company's objectives set out in the prospectus dated 24th March, 2000. This
facility is fully operational and this, in addition to a recording studio and
the Internet radio station has given the Company a warehousing and
distribution centre from which to service the UK and continental Europe. Prior
to the establishment of the London distribution centre, its music products
were despatched from Seattle, which was costly and slow. Product can now be
supplied more cheaply and more quickly.

The Company has recently launched its redesigned website, a feature of which
is the ability to list different prices and fulfilment costs for UK and
European customers and the Directors believe that this will increase sales in
these markets. Sales have been rising steadily since November last year and
early evidence shows that the impact of the new website has increased sales in
the USA. Furthermore, the new UK and Europe section of the website is
generating sales for the first time.

The Company's new record label is now operational. In May and June, 2001, it
is intended to release two compilation albums on CD and vinyl and two 12 inch
vinyl singles. IMM has signed a global terrestrial distribution agreement with
a well-established independent distributor.

This progress has involved higher costs and longer development times than
originally budgeted and, consequently, the Company has raised additional
equity and short term funds totalling approximately £1 million.

The Company has today allotted 631,579 new Ordinary Shares, in aggregate, to
The Strawberry Fund Limited, Highland Investment Fund Limited, Highland
Specialist fund Limited and Brookspey Limited for cash at 38p per share,
raising £240,000, pursuant to the authority granted at the extraordinary
general meeting held on 18th April, 2000. Application will be made for these
shares to be admitted to trading on the Alternative Investment Market. It is
expected that dealings will commence in these shares on 2nd April, 2001.

Additional loans have been provided as follows:


  * Unsecured loans of £395,000 from Nicholas Cowan, Chairman of the
    Company; and

  * Unsecured loans of £120,000, in aggregate, from The Strawberry Fund
    Limited, Highland Capital Holdings Limited, Highland Specialist Fund
    Limited (companies which are managed by Highland Fund Advisors Limited)
    and Brookspey Limited.

The principal terms of the loans are as follows:


  * Interest, payable on the repayment of the loan calculated at 7.75 per
    cent. per annum; and

  * Redemption on the earlier of 30th June, 2001 and the date of any
    pre-emptive issue of Ordinary Shares.

It is intended that the Company will repay such loans out of the proceeds of a
pre-emptive issue to shareholders in the near future. At such time the above
lenders have agreed to be placees to the extent of their loans, subject to
clawback by shareholders, with the result that the loans will be effectively
capitalised.

Corvus Capital Inc, a related party of IMM by virtue of it being an associate
of Highland Fund Advisors Limited, has today provided the Company with a loan
of £250,000 for working capital purposes. The principal terms of the loan are
as follows:


  * Interest, payable on the repayment of the loan calculated at 7.75 per
    cent. per annum;

  * A commitment fee of £50,000, to be satisfied by the issue of Ordinary
    Shares in the Company or in cash, at the Company's option payable on the
    repayment of the loan; and

  * Repayment on the earlier of 31st May, 2001 and the date of completion of
    any pre-emptive issue.

The Directors consider, having consulted with John East & Partners Limited,
its nominated adviser, that the terms of the above loans are fair and
reasonable insofar as IMM ordinary shareholders are concerned.

                                   - ENDS -