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                                                                   EXHIBIT 10.59

                AMENDMENT NO. 1 TO OPTION AND PURCHASE AGREEMENT

                This AMENDMENT NO. 1, dated as of January 9, 2003 (the
"Amendment Effective Date"), to the Option and Purchase Agreement, dated as of
November 15, 2002 (as such agreement may be amended, modified or supplemented
from time to time, the "Option Agreement"), is entered into by and between
Liquid Audio, Inc., a corporation organized under the laws of the state of
Delaware ("Liquid"), and Universal Music Group, Inc., a corporation organized
under the laws of the state of California ("UMG"). Liquid and UMG are sometimes
referred to herein as the "Parties" and individually referred to as a "Party."
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Option Agreement.

                                   WITNESSTH:

                WHEREAS, on November 15, 2002, the Parties entered into the
Option Agreement setting forth the terms and conditions upon which UMG may
acquire certain tangible and intangible assets owned, leased or licensed by
Liquid:

                WHEREAS, the Parties wish to permit UMG to assign its rights and
obligations under the Option Agreement to Anderson Merchandisers, LP, a Texas
limited partnership with its principal place of business at 421 East 34th
Avenue, Amarillo, Texas 79103("Anderson"); and

                WHEREAS, Liquid has provided UMG with a Trigger Event Notice;
and

                WHEREAS, the Parties wish to extend the period during which UMG
or Anderson may exercise the Option.

                NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby confirmed and acknowledged, the parties
hereto agree as follows:

                1.      Permitted Assignment to Unaffiliated Third Party.
Section 22.5 of the Option Agreement is hereby deleted in its entirety and
replaced with the following:

                        "22.5   Assignment. Notwithstanding any other provision
        of this Option Agreement to the contrary, UMG may assign its rights
        under this Option Agreement to a UMG Affiliate or its rights and
        obligations under this Option Agreement to Anderson; provided that (i)
        no such assignment to a UMG Affiliate shall release UMG from its
        obligations hereunder, and (ii) an assignment to Anderson shall release
        UMG from its obligations hereunder, except for UMG's obligation to
        deliver the termination agreement under Section 2(b) of Amendment Number
        1 to the Option and Purchase Agreement and UMG's obligation under
        Section 5(c), and provided that Anderson agrees in writing to be bound
        by the obligations under the Agreement and assumes for the benefit of
        Liquid any such obligation. Anderson is hereby pre-approved as a third
        party to which UMG may

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        assign its rights hereunder. Liquid shall not assign its rights or
        obligations hereunder to any person without UMG's consent, which shall
        not unreasonably be withheld; provided that Liquid may transfer Service
        Assets to an Affiliate as set forth in Section 14 hereof."

                2.      Extension of Option Exercise Period.

                        (a)     Section 4 of the Option Agreement is hereby
                deleted in its entirety and replaced with the following:

                                "4.     Liquid's Trigger Event Notice and UMG's
                Exercise of the Option. Liquid shall give UMG prompt written
                notice of the occurrence of any Trigger Event (each, a "Trigger
                Event Notice"). For purposes of clarity, a Trigger Event Notice
                is not a condition precedent to UMG's exercise of its Option.
                Upon the delivery of the Trigger Event Notice dated January 3,
                2003, receipt of which is acknowledged by UMG as of January 6,
                2003, UMG shall have until 12:00 pm (Los Angeles time) on
                January 21, 2003 (the "Option Exercise Period") to exercise its
                Option. Any option exercise notice may be delivered by facsimile
                addressed to the attention of Jennifer Sylva at (650.549.2370)
                provided, however, that any notice delivered by fax shall also
                be delivered not later than one business day later either
                personally or via overnight courier in accordance with Section
                22.8."

                        (b)   In consideration of the agreements made herein the
                Parties agree:

                                (i)     that (A) if UMG (or its assignee)
                exercises its option under the Option Agreement, it will deliver
                at the Closing the Termination Agreement as required under
                Section 9.1.1 of the Option Agreement, and (B) if UMG or its
                assignee does not exercise the option by 12:00 p.m. on January
                21, 2003, the Parties will enter into the Termination Agreement
                as of such date (provided Liquid's obligations with respect to
                the Availability Payment as defined (and modified) under clause
                (ii) below shall survive); and

                                (ii)    with respect to the $100,000 amount due
                from Liquid to UMG under Section 3(a)(ii) of the Format
                Agreement (the "Availability Payment"). (A) the Availability
                Payment is reduced from $100,000 to $50,000 as of the Amendment
                Effective Date, and (B) the remaining Availability Payment shall
                be reduced on the Closing date to $0 if the Closing occurs under
                the Option Agreement and otherwise shall be payable by Liquid to
                UMG not later than April 2, 2003.

                3.      Disclosure to Third Party. UMG and Liquid hereby
expressly agree that the Option Agreement and this Amendment may be disclosed to
Anderson, which may become an assignee of UMG's rights under the Option
Agreement, provided in each instance that Anderson agrees to maintain the
confidentiality of such information in accordance with section 22.15 of the
Option Agreement.

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                4.      No Other Changes. Except as expressly set forth above,
all of the provisions of the Option Agreement shall remain unchanged and in full
force and effect.

                5.      Miscellaneous.

                        (a)     This Amendment shall be governed by and
        construed in accordance with the laws of the State of California.

                        (b)     This Amendment may be executed in any number of
        counterparts, each of which shall be deemed an original and all of which
        taken together shall constitute one and the same Amendment.

                  [Remainder of Page Intentionally Left Blank]

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                IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Amendment as of the Amendment Effective Date.


                                    LIQUID AUDIO, INC.

                                    By: /s/ Raymond A. Doig
                                       --------------------------------------
                                       Name: Raymond A. Doig
                                             --------------------------------
                                       Title: CEO

                                    UNIVERSAL MUSIC GROUP, INC.

                                    By: /s/ David L. Ring
                                       --------------------------------------
                                       Name: David L. Ring
                                             --------------------------------
                                       Title: VP Bus Dev & Bus Affairs, eLabs
                                              -------------------------------