Filed by Liquid Audio, Inc.
                           Pursuant to Rule 425 under the Securities Act of 1933
                      and deemed filed pursuant to Rule 13e-4(c) and Rule 14a-12
                                                under the Securities Act of 1934
                                                                   July 25, 2002

                                  Subject Company:  Alliance Entertainment Corp.
                                                   Commission File No. 001-13054




                              [LIQUID AUDIO LOGO]

MEDIA CONTACTS:
Roy Winnick                         Kimberly Strop
Kekst and Company                   Liquid Audio, Inc.
(212) 521-4842                      (650) 549-2194
roy-winnick@kekst.com               kstrop@liquidaudio.com


FOR IMMEDIATE RELEASE

                    COURT RULES IN FAVOR OF LIQUID AUDIO;
   PERMITS LIQUID AUDIO STOCKHOLDERS TO VOTE ON DIRECTORS AND ALLIANCE MERGER
                      AT THE SEPTEMBER 26TH ANNUAL MEETING


            LIQUID AUDIO COMMENTS ON LATEST MUSICMAKER.COM LAWSUIT

REDWOOD CITY, Calif. (July 25, 2002) -- Liquid Audio, Inc. (Nasdaq: LQID) today
announced that the Delaware Chancery Court has again ruled in its favor by
agreeing that Liquid Audio stockholders may consider and vote on both the
election of directors and the issuance of Liquid Audio stock in connection with
the proposed merger with Alliance Entertainment Corp. at the September 26th
Annual Meeting.  The court rejected a request by musicmaker.com, Inc. to
schedule two separate meetings for these votes.

musicmaker.com also filed a separate complaint in the Delaware Chancery Court
seeking to enjoin the consummation of the Alliance merger and the self-tender
offer.

Gerald Kearby, President and CEO of Liquid Audio, Inc., said: "We are pleased
by the court's decision reaffirming our right to hold both our Annual Meeting
and the special stockholders' meeting to vote on the merger with Alliance
Entertainment Corp. on September 26th."

Mr. Kearby added: "As for the lawsuit filed by musicmaker.com, we believe it is
just the latest in a series of self-serving legal manuevers by musicmaker.com,
designed to keep our stockholders from voting on a transaction with Alliance
that we believe will deliver maximum value to all Liquid Audio stockholders.
We intend to vigorously oppose this frivolous and meritless lawsuit, and we
fully expect to prevail."

LIQUID AUDIO, INC.
Liquid Audio, Inc. is a leading provider of software, infrastructure and
services for the secure digital delivery of media over the Internet. The Liquid
Audio solution gives content owners, Web sites and companies the ability to
publish, syndicate and securely sell digital media online with copy protection
and copyright management. Using the Liquid(TM) Player software, available for
free download at www.liquidaudio.com, consumers can preview and purchase
downloadable music from hundreds of affiliate Web sites in the Liquid Music
Network(TM).
                                       ###


 Liquid, Liquid Audio, Liquid Player, Liquid Music Network and the Liquid Audio
                    logo are trademarks of Liquid Audio, Inc.

FOR MORE INFORMATION, PRESS ONLY:
Kim Strop, Liquid Audio, Inc., (650) 549-2194, email: kstrop@liquidaudio.com

FORWARD-LOOKING STATEMENTS
--------------------------
All statements made in this release, other than statements of historical fact,
are forward-looking statements. The words "anticipate," "believe," "estimate,"
"expect," "intend," "will," "guidance" and similar expressions typically are
used to identify forward-looking statements. Forward-looking statements are
based on the then-current expectations, beliefs, assumptions, estimates and
forecasts about the businesses of Liquid Audio and Alliance Entertainment Corp.
and the industries and markets in which the companies operate. Those statements
are not guarantees of future performance and involve risks, uncertainties and
assumptions that will be difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or implied by those
forward-looking statements. Factors that may affect Liquid Audio's and Alliance
Entertainment's businesses, financial condition and operating results include
the effects of changes in the economy, consumer spending, the stock market and
the industries in which they operate generally, changes affecting the Internet
and e-commerce, the ability of the companies to maintain relationships with
strategic partners and suppliers, the ability of the companies to timely and
successfully develop, maintain and protect their technology and product and
service offerings and execute operationally and the ability of the companies to
attract and retain qualified personnel. These factors may also include, but are
not limited to, general market conditions, our ability to develop new products
to meet market demand, our ability to successfully combine two geographically
dispersed businesses, our ability to realize synergies of the merger; our
ability to maintain cost controls; the mix of products and services our
customers require and the effects of natural disasters, international conflicts
and other events beyond our control. More information about potential factors
that could affect Liquid Audio can be found in its most recent Form 10-K, Form
10-Q and other reports and statements filed by Liquid Audio with the Securities
and Exchange Commission ("SEC"). Each of Liquid Audio and Alliance Entertainment
expressly disclaims any intent or obligation to update those forward-looking
statements, except as otherwise specifically stated by it.

ADDITIONAL INFORMATION AND WHERE TO FIND IT
-------------------------------------------
Liquid Audio has filed a Registration Statement on SEC Form S-4 in connection
with the merger and plans to file a Tender Offer Statement on Schedule TO in
connection with the offer. Investors and stockholders of Liquid Audio and
Alliance Entertainment are urged to read the Registration Statement and the
Tender Offer Statement carefully when it is available. The Registration
Statement contains important information about the companies, the merger and
related matters. Investors and stockholders will be able to obtain free copies
of these documents through the web site maintained by the SEC at
http://www.sec.gov. Free copies of the Registration Statement and these other
documents may also be obtained from Liquid Audio by directing a request through
the Liquid Audio Web site at http://www.liquidaudio.com or by mail to Liquid
Audio, Inc., Attention: Investor Relations.

In addition to the Registration Statement and the Tender Offer Statement, Liquid
Audio files annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information filed by Liquid Audio at the SEC's public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at any of the SEC's other public
reference rooms in New York and Chicago. Please call the SEC at 1-800-SEC-0330



for further information on the public reference rooms. Liquid Audio's filings
with the SEC are also available to the public from commercial document-retrieval
services and at the Web site maintained by the SEC at http://www.sec.gov.

INTERESTS OF CERTAIN PERSONS IN THE MERGER
------------------------------------------
The directors and executive officers of Liquid Audio and Alliance Entertainment
have interests in the merger, some of which may differ from, or may be in
addition to, those of the stockholders of Liquid Audio and Alliance
Entertainment generally. A description of the interests that the directors and
executive officers of the companies have in the merger is available in the
Registration Statement.

SOLICITATION OF PROXIES
-----------------------
Liquid Audio and Alliance Entertainment, their respective directors, executive
officers and certain other members of their management and employees may be
soliciting proxies from stockholders of Liquid Audio and Alliance Entertainment
in favor of the merger. Information concerning the participants is set forth in
the Registration Statement filed with the SEC.