diff --git a/README.md b/README.md
index 385c1ca..699996b 100644
--- a/README.md
+++ b/README.md
@@ -11,7 +11,8 @@ A writable stream to save HLS playlists/segments as local files
 ## Features
 * Being used with other [`hlx`](https://github.com/hlxjs) objects, it provides a functionality to write every HLS related data (playlist and segments) to your local filesystem.
 * It determines the local path for each files based on the `uri` described in the HLS playlist.
-* The hostname contained in the `uri` will be ignored (e.g. "https://foo.bar/abc/def.m3u8" is translated into "{rootPath}/abc/def.m3u8")
+* The hostname contained in the `uri` will be ignored (e.g. "https://foo.bar/abc/def.m3u8" is translated into "{outputDir}/abc/def.m3u8")
+* If the `uri` is a file url, users can specify a root directory (`inputDir`) from which the file should be read (e.g. "file://path/to/abc/def.m3u8", inputDir="/path/to", is translated into "{outputDir}/abc/def.m3u8")
 
 ## Install
 [![NPM](https://nodei.co/npm/hlx-file-writer.png?mini=true)](https://nodei.co/npm/hlx-file-writer/)
@@ -27,7 +28,7 @@ const {createTerminator} = require('hlx-terminator')
 const src = createReadStream('https://foo.bar/sample.m3u8');
 const rewrite = createUrlRewriter();
 const save = createWriteStream({
-  rootPath: '/var/www/media/',
+  outputDir: '/var/www/media/',
   storePlaylist: true
 });
 const dest = createTerminator();
@@ -52,7 +53,8 @@ Creates a new `TransformStream` object.
 #### options
 | Name        | Type   | Default | Description                       |
 | ----------- | ------ | ------- | --------------------------------- |
-| rootPath | string | process.CWD()     | The root directory in which all the files are stored |
+| inputDir | string | / | The root directory from which all the files are read (This option is only used in case of file urls) |
+| outputDir | string | process.CWD()     | The root directory to which all the files are written |
 | storePlaylist | boolean | false   | If true, the playlist files are also stored as local files |
 
 #### return value
diff --git a/file.js b/file.js
index 50cb7b3..62d11b3 100644
--- a/file.js
+++ b/file.js
@@ -1,28 +1,38 @@
 const fs = require('fs');
 const path = require('path');
-
+const {URL} = require('url');
+const debug = require('debug');
 const {tryCatch, mkdirP} = require('hlx-util');
 
-function storeData({uri, data}, rootPath) {
+const print = debug('hlx-file-writer');
+
+function storeData({uri, parentUri, data}, {inputDir, outputDir}) {
   if (!data) {
     return Promise.reject(new Error('No segment data'));
   }
 
-  if (!path.isAbsolute(rootPath)) {
-    rootPath = path.join(process.cwd(), rootPath);
+  if (!path.isAbsolute(outputDir)) {
+    outputDir = path.join(process.cwd(), outputDir);
   }
 
   let localPath;
 
+  print(`storeData: uri=${uri}, parentUri=${parentUri}, inputDir=${inputDir}, outputDir=${outputDir}`);
+
   if (path.isAbsolute(uri)) {
-    localPath = path.join(rootPath, uri);
+    localPath = path.join(outputDir, uri);
   } else {
     const obj = tryCatch(
       () => new URL(uri),
-      () => new URL(uri, rootPath),
+      () => new URL(uri, parentUri),
       () => null
     );
-    localPath = path.join(rootPath, obj ? obj.pathname : uri);
+    if (obj) {
+      localPath = path.join(outputDir, obj.pathname);
+    } else {
+      const pathname = path.relative(inputDir, path.join(parentUri, uri));
+      localPath = path.join(outputDir, pathname);
+    }
   }
 
   // Create directory
diff --git a/test/spec/file.spec.js b/test/spec/file.spec.js
index 07df3c6..b316313 100644
--- a/test/spec/file.spec.js
+++ b/test/spec/file.spec.js
@@ -23,7 +23,7 @@ test.cb('file.storeData.Buffer', t => {
   const {storeData} = proxyquire('../../file', {fs: mockFs, 'hlx-util': mockUtil});
   const spyWriteFile = sinon.spy(mockFs, 'writeFile');
 
-  storeData({uri: 'ghi.mp4', data: Buffer.alloc(10)}, '/abc/def/')
+  storeData({uri: 'ghi.mp4', parentUri: 'http://foo.bar.com/main.m3u8', data: Buffer.alloc(10)}, {inputDir: '/does/not/matter', outputDir: '/abc/def/'})
   .then(destPath => {
     t.is(destPath, '/abc/def/ghi.mp4');
     t.is(spyWriteFile.callCount, 1);
@@ -51,9 +51,9 @@ test.cb('file.storeData.Buffer.path', t => {
   const {storeData} = proxyquire('../../file', {fs: mockFs, 'hlx-util': mockUtil});
   const spyWriteFile = sinon.spy(mockFs, 'writeFile');
 
-  storeData({uri: '/abc/def/ghi/jkl.mp4', data: Buffer.alloc(10)}, '/path/to/')
+  storeData({uri: '/abc/def/ghi/jkl.mp4', parentUri: 'file:///path/to/main.m3u8', data: Buffer.alloc(10)}, {inputDir: '/path/to', outputDir: '/root/dir/'})
   .then(destPath => {
-    t.is(destPath, '/path/to/abc/def/ghi/jkl.mp4');
+    t.is(destPath, '/root/dir/abc/def/ghi/jkl.mp4');
     t.is(spyWriteFile.callCount, 1);
     t.end();
   });
@@ -92,9 +92,9 @@ test.cb('file.storeData.Stream', t => {
     }
   };
 
-  storeData({uri: 'ghi.mp4', data}, '/abc/def/')
+  storeData({uri: 'ghi.mp4', parentUri: 'file:///path/to/main.m3u8', data}, {inputDir: '/', outputDir: '/abc/def/'})
   .then(destPath => {
-    t.is(destPath, '/abc/def/ghi.mp4');
+    t.is(destPath, '/abc/def/path/to/ghi.mp4');
     t.is(spyCreateWriteStream.callCount, 1);
     t.end();
   });
diff --git a/test/spec/writable.spec.js b/test/spec/writable.spec.js
index 99fce66..a4cc8fd 100644
--- a/test/spec/writable.spec.js
+++ b/test/spec/writable.spec.js
@@ -129,7 +129,7 @@ test.cb('writeStream.onlySegments', t => {
   const spyWriteFile = sinon.spy(mockFs, 'writeFile');
 
   const src = new MockReadStream();
-  const fileOutput = new WriteStream({rootPath: '/var/foo/'});
+  const fileOutput = new WriteStream({outputDir: '/var/foo/'});
   const dest = new NullWriteStream();
   src.pipe(fileOutput).pipe(dest)
   .on('finish', () => {
@@ -160,7 +160,7 @@ test.cb('writeStream.all', t => {
   const spyWriteFile = sinon.spy(mockFs, 'writeFile');
 
   const src = new MockReadStream();
-  const fileOutput = new WriteStream({rootPath: '/var/foo/', storePlaylist: true});
+  const fileOutput = new WriteStream({outputDir: '/var/foo/', storePlaylist: true});
   const dest = new NullWriteStream();
   src.pipe(fileOutput).pipe(dest)
   .on('finish', () => {
diff --git a/writable.js b/writable.js
index 759bdb7..c333da2 100644
--- a/writable.js
+++ b/writable.js
@@ -9,7 +9,8 @@ const print = debug('hlx-file-writer');
 class WriteStream extends stream.Transform {
   constructor(options) {
     super({objectMode: true});
-    this.rootPath = options.rootPath || process.cwd();
+    this.outputDir = options.outputDir || process.cwd();
+    this.outputDir = options.inputDir || '/';
     this.shouldStorePlaylist = Boolean(options.storePlaylist);
   }
 
@@ -22,10 +23,10 @@ class WriteStream extends stream.Transform {
     let params = data;
 
     if (data.type === 'playlist') {
-      params = {uri: data.uri, data: HLS.stringify(data)};
+      params = {uri: data.uri, parentUri: data.parentUri, data: HLS.stringify(data)};
     }
 
-    storeData(params, this.rootPath)
+    storeData(params, this)
     .then(path => {
       print(`The data is written to ${path}`);
       this.push(data);