<PAGE>  21
                                  Exhibit: 10.2


     CONSENT  dated as of March 13,  2000  (this  "Consent"),  in respect of the
Guarantee  and  Collateral  Agreement  (the  "Security  Agreement")  dated as of
January 21, 2000,  made by CDnow,  Inc. (the  "Borrower")  and the other parties
identified  therein,  in favor of Time Warner Inc.,  as Security  Agent (in such
capacity,  the "Security  Agent") for Time Warner Inc.  ("Time Warner") and Sony
Music Entertainment Inc. (together with "Time Warner",  the "Lenders") under the
Convertible Loan Agreement dated as of July 12, 1999, among the Borrower and the
Lenders (the "Convertible Loan Agreement").


     WHEREAS the Borrower and the Lenders have entered into the Convertible Loan
Agreement;

     WHEREAS, in connection with the Convertible Loan Agreement the Borrower and
the other parties  identified  therein have made the Security Agreement in favor
of the Security Agent;

     WHEREAS the Borrower has requested  that the Lenders and the Security Agent
(i)  consent to the sale of all shares of common  stock of, and all  warrants to
acquire shares of common stock of, Liquid Audio,  Inc. (the "Shares") to a third
party that is not a subsidiary of, or in any way  affiliated  with, the Borrower
(the "Sale") for a purchase price that is equal to the fair market value of such
shares or  warrants,  as the case may be, and (ii) release from the lien created
pursuant to the Security Agreement all of the Shares that are sold in a Sale;

     WHEREAS  the  Lenders  and the  Security  Agent are  willing  to grant such
consent on the terms, and subject to the conditions, and to the extent set forth
in, this Consent.

     NOW,  THEREFORE,  in  consideration  of  the  premises,   mutual  promises,
representations, warranties and covenants contained in this Consent, the parties
hereto hereby agree:

     SECTION 1.  Consent and  Release.  (a) Each of the Lenders and the Security
Agent hereby consents to the Sale of the Shares on the terms, and subject to the
conditions, set forth in this Consent.

     (b) Each of the Lenders hereby releases, and hereby authorizes the Security
Agent to  execute  any and all  further  documents  necessary  or  desirable  to
evidence the release,  from the lien created pursuant to the Security  Agreement
any and all Shares that are sold in a Sale,  effective upon consummation of such
Sale.

     SECTION 2.  Representations and Warranties.  To induce the other parties to
this Consent to enter into this  Consent,  the Borrower  hereby  represents  and
warrants to each of the Lenders and the Security Agent that (i) the Borrower has
all requisite power and authority to execute and deliver this Consent,  (ii) the
execution and delivery by the Borrower of this Consent have been duly authorized
by all necessary action on the part of the Borrower, (iii) the Borrower has duly

<PAGE>  22

executed and  delivered  this  Consent,  and,  assuming  the due  authorization,
execution and delivery by each person other than the Borrower party hereto, this
Consent constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms and (iv) the  representations and warranties set
forth in the Section 4 of the Convertible Loan Agreement are true and correct in
all material respects on and as of the date of this Consent with the same effect
as  though  made  on  and as of the  date  hereof,  except  to the  extent  such
representations and warranties expressly relate to an earlier date.

     SECTION  3.  Conditions.  On the  date  on  which  any  Sale of  Shares  is
consummated,

     (i) the  representations  and  warranties set forth in the Section 4 of the
Convertible Loan Agreement shall be true and correct in all material respects on
and as of such date with the same  effect as though made on and as of such date,
except to the extent such  representations and warranties expressly relate to an
earlier date and (ii) no Default (as defined in the Convertible  Loan Agreement)
or Event of Default (as defined in the Convertible  Loan  Agreement)  shall have
occurred or be continuing.

     SECTION 4. Effectiveness of Consent. This Consent shall become effective as
of the date first  written  above when the  Security  Agent shall have  received
counterparts of this Consent that,  when taken together,  bear the signatures of
the Borrower, the Security Agent and the Lenders.

     SECTION 5. Governing Law, Submission to Jurisdiction.  (a) THIS CONSENT AND
THE RIGHTS AND  OBLIGATIONS  OF THE  PARTIES  HEREUNDER  SHALL BE  CONSTRUED  IN
ACCORDANCE  WITH AND BE GOVERNED  BY THE LAWS OF THE STATE OF NEW YORK  (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).

     (b) Any legal  action or  proceeding  with  respect to this Consent and any
action for  enforcement  of any judgment in respect hereof may be brought in the
courts of the State of New York in New York  County or of the  United  States of
America for the Southern District of New York, and, by execution and delivery of
this  Consent,  the  Borrower  hereby  accepts  for itself and in respect of its
property,  generally and unconditionally,  the non-exclusive jurisdiction of the
aforesaid courts and appellate courts from any thereof. The Borrower irrevocably
consents to the service of process  out of any of the  aforementioned  courts in
any such action or proceeding by the mailing of copies  thereof by registered or
certified  mail,  postage  prepaid,  to the Borrower at its address set forth in
Section 10.3 of the Convertible Loan Agreement.  The Borrower hereby irrevocably
waives any objection  which it may now or hereafter  have to the laying of venue
of any of the aforesaid  actions or proceedings  arising out of or in connection
with this  Consent  brought in the courts  referred to above and hereby  further
irrevocably  waives  and agrees not to plead or claim in any such court that any
such  action or  proceeding  brought  in any such  court has been  brought in an
inconvenient forum.  Nothing herein shall affect the right of the Lenders or any
holder of a Note (as defined in the Convertible  Loan Agreement) or the Security
Agent to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.

     SECTION 6.  Counterparts.  This  Consent  may be  executed in any number of
counterparts and by the different parties hereto on separate counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall together constitute one and the same instrument.


<PAGE>  23

     SECTION 7. Headings  Descriptive.  The headings of the several  Sections of
this Consent are inserted for  convenience  only and shall not in any way affect
the meaning or construction of any provision of this Consent.

     SECTION 8. Waiver of Trial by Jury.  TO THE EXTENT  PERMITTED BY APPLICABLE
LAW, EACH OF THE BORROWER, EACH LENDER AND THE SECURITY AGENT HEREBY IRREVOCABLY
WAIVES  ALL RIGHT OF TRIAL BY JURY IN ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM
ARISING OUT OF OR IN CONNECTION  WITH THIS CONSENT OR ANY OTHER LOAN DOCUMENT OR
ANY MATTER ARISING HEREUNDER OR THEREUNDER.

     SECTION 9. Full Force and  Effect.  Except as  expressly  set forth in this
Consent,  this Consent  shall not by  implication  or otherwise  limit,  impair,
constitute  a waiver of, or  otherwise  affect the  rights and  remedies  of the
Lenders,  the  Security  Agent  or  the  Borrower  under  the  Convertible  Loan
Agreement,  the Security Agreement or any other Loan Document (as defined in the
Convertible Loan Agreement),  and shall not alter,  modify,  amend or in any way
affect  any of the  terms,  conditions,  obligations,  covenants  or  agreements
contained in the Convertible Loan Agreement, the Security Agreement or any other
Loan Document,  all of which are ratified and affirmed in all respects and shall
continue in full force and effect.  Nothing  contained in this Consent  shall be
deemed  to  entitle  the  Borrower  to a consent  to,  or a  waiver,  amendment,
modification  or other  change of, any of the  terms,  conditions,  obligations,
covenants  or  agreements  contained  in the  Convertible  Loan  Agreement,  the
Security   Agreement  or  any  other  Loan  Document  in  similar  or  different
circumstances.  This Consent shall constitute a "Loan Document" for all purposes
of the Convertible Loan Agreement and the other Loan Documents.


<PAGE>  24

     IN WITNESS  WHEREOF,  each of the parties  hereto have duly  executed  this
Consent, all as of the date first written above.


                                                                    CDNOW, INC.,

                                                               by /s/ Jason Olim
                                                    ----------------------------
                                                               Name:  Jason Olim
                                                          Title: President & CEO

                                                  SONY MUSIC ENTERTAINMENT INC.,

                                                         by /s/ Thomas C. Tyrrel
                                                    ----------------------------
                                                         Name:  Thomas C. Tyrrel
                                                    Title: Senior Vice President
                                                             and General Counsel

                                 TIME WARNER INC., as Lender and Security Agent,

                                                         by /s/ Spencer B. Hayes
                                                    ----------------------------
                                                         Name:  Spencer B. Hayes
                                                       Title: Vice President and
                                                          Deputy General Counsel