Prospectus

Document date:  Wed 01 Dec 1999
Published:  Wed 01 Dec 1999 00:00:00
Document No:  197204
Document part:  B
Market Flag:  N
Classification: 

CHAOSMUSIC LIMITED                            1999-12-01  ASX-SIGNAL-G

HOMEX - Sydney                                                        

+++++++++++++++++++++++++
CHAIRMAN'S LETTER

It is my pleasure to offer you the opportunity to become a
shareholder of ChaosMusic, a leading Australian online music company.

The Internet is ideally suited to music retailing for a number of
reasons. The Internet enables significant amounts of information to
be rapidly transmitted to c0
ustomers. This is especially suited to the
information intensive nature of music purchasing decisions
(particularly with regard to pricing and selection). In addition,
music purchasing decisions are non-tactile in nature. Going forward,
digital download technology is expected to further increase online
music sales by providing customers with the ability to download
single tracks for purchase.

The business of ChaosMusic was established in 1995, with the
objective of utilising0
 the Internet to deliver music and
entertainment more efficiently and cost effectively to consumers.
Registered members to the Company's Website have grown at an average
of 27% each month in calendar 1999. Monthly page impressions for
ChaosMusic for September 1999 totalled 455,839 compared to 57,493 
12 months ago and the ChaosMusic Website regularly appears amongst
Australia's top 100 most visited Websites.

ChaosMusic's online catalogue contains over 380,000 CDs and related0

products as well as extensive and up to date content on music,
artists, news and upcoming events. This content is important in
attracting and retaining members.

The Company's future strategy is to maintain chaosmusic.com as a
leading Australian retail Website around which a network of
specialist music Websites will be developed. This network is intended
to provide the Company with wide reach across both niche and
mainstream audiences.

The Company has entered into an agreem0
ent to acquire Gaslight Music,
a prominent Australian music retailer. This is expected to provide
local fulfilment capability with lower delivery times and costs as
well as access to additional music titles thereby increasing the
catalogue to over 700,000 CDs and related products.

ChaosMusic intends to remain at the forefront of commercialising
digital technology, having entered into a number of relationships
with key players including OzEmail, Web Central and Microsoft.

Th0
e Offer under this Prospectus as set out in Section 2, is being
conducted by way of a public and institutional bookbuild. Under this
Offer, both public and institutional investors are invited to bid for
shares, the former through an online facility if desired. Under this
Prospectus, $15 million will be raised and the Company will have a
market capitalisation of approximately $32 million, based upon the
minimum Application Price. Full details of the Offer structure are
set out0
 in Section 2.

This Prospectus contains detailed information about ChaosMusic, the
basis of the Directors' Projections and the risks of an investment in
the Company. I urge you to read it carefully before making your
investment decision. On behalf of the Board, I look forward to
welcoming you as a shareholder of the Company.



D Coe
CHAIRMAN


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