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MP3, Instantly

Time tends to be an issue with MP3. Encoding a CD into MP3 format takes several minutes per track, and downloading an MP3 file can take 20 minutes or more over a dial-up modem connection.

MP3.com's slick My.MP3.com service eliminates both waits. If you buy a CD from one of MP3.com's partners, you can go to My.MP3.com and start listening to the CD within seconds of submitting your Web order.

Even better, you can listen to MP3 files of CDs you already own by using MP3.com's free Beam-It utility. Insert the CD into your PC's CD-ROM drive, launch Beam-It, and click a button. Within seconds, a list of the CD's tracks appears in your browser window, where you can then listen to them and create playlists.

By beaming and buying, you can build a library of online music and listen to it anywhere. Your tunes will become even more accessible as Internet audio extends to devices such as personal digital assistants, cell phones, and Internet radio appliances.

There's no tech secret behind MP3.com's speedy encoding. The company maintains a database of some 80,000 CDs that it has purchased and encoded into MP3 format. If the CD you buy or beam is among these, MP3.com can make its tracks available to you immediately.

That's why the Recording Industry Association of America has sued MP3.com. Copyright law permits consumers to duplicate their own CDs for personal use, but it doesn't permit third parties such as MP3.com to make copies. "It's a textbook case of copyright infringement," says Robert Kohn, founder and chairman of EMusic--the industry's largest network of music sites--and author of the definitive Kohn on Music Licensing.

MP3.com chairman and founder Michael Robertson counters that the record industry should be thanking him instead of suing him. MP3.com "keeps CDs an integral part of the system, and it encourages people to buy more CDs," he says.

It's true that you need a physical CD to use part of the My.MP3.com service, but nothing prevents a group of friends from passing around one CD so that each can beam it to the site.

Robertson argues that since music is streamed rather than downloaded to users, tracks can't be copied. Also true--to a point. With a few steps, I circumvented MP3.com's streaming and copied and downloaded tracks from beamed CDs. Again, so much for copy protection.

Napster: Dream or Nightmare?

The RIAA is also suing Napster, which publishes a free utility of the same name. Napster doesn't provide the immediate gratification of My.MP3. com--you have to download files--but it makes finding illegal MP3s enticingly easy.

Napster turns your PC into an MP3 server. You can make a directory of MP3 tracks on your hard drive accessible to other Napster users, and all such users have access to each other's shared directories. Type the name of an artist or song into Napster's search box, and you get a list of every currently connected Napster user who has the goods. From there, a double-click transfers the site from one pirate's drive to yours.

Napster's Web site stresses that its software is intended to be used only to trade "legal" MP3s and warns that users are responsible for respecting copyrights. But that disclaimer may not protect the company in court, according to Lon Sobel, editor of the Entertainment Law Reporter. Napster could be held liable for "vicarious copyright infringement," Sobel says.

Napster has become so popular at some colleges that it's bringing networks to their knees. Already, some 200 campuses are blocking the use of Napster's utility. A cross-country organization of college students has launched a campaign demanding an end to the blockade.

Despite the legal hassles, an AOL subsidiary, Nullsoft, also planned to get into the MP3-swapping game. But skittish AOL pulled the plug on Nullsoft's Gnutella, a downloadable application that, unlike the centralized Napster, relies on users contacting each other to form a private network. The future of the software is currently uncertain.

A Loud New World

Secure music technologies such as Sony's OpenMG are overly restrictive, and unprotected technologies such as MP3 are prone to abuse. Solving this dilemma, some say, means the music business will have to reinvent itself, perhaps giving away music in order to sell concert tickets and T-shirts. But in the recording business, says Sobel, "those arguments are never going to fall on receptive ears."

Even in its embryonic stage, digital distribution is changing the landscape. A recent proposed merger between Warner Records and EMI reflects the growing momentum of smaller, independent labels, says EMusic's Robert Kohn. He doesn't think the proposed AOL­Time Warner merger puts AOL in the musical catbird's seat. "AOL is buying a shrinking piece of the market," he says.

Sales of CDs are up since 1998, so perhaps the industry still has time to figure out how to do business in the Internet age. But the longer it waits, the more its future will be defined by the Net and by computer companies.