Websites like Napster.com and MP3.com have turned the music industry on its ear over the past year. Their success has been fuelled by the fact that the recording industry failed to see the significance of mp3 when it first hit the market.

The recording industry has tried to halt the success of these sites with lawsuits for copyright infringements but as any one who has witnessed recent developments knows, you can't stop the power of technology.

The strenghth of mp3 is that it allows the music from CDs or radio to be copied into a digital audio compression format without any perceptible loss in quality. The mp3 file can then be played using any of the various mp3 players on the market.

There are both virtual mp3 players that can be downloaded for free onto your computer and physical players like the Rio, that fits into the palm of your hand and can be purchased on and off line.

If your computer has a CD writer some of the new virtual players also have the capability of taking mp3 files and burning them onto CD. This makes it easy to create CDs from mp3 files.

Because it can be copied so easily without a loss in quality, mp3 has become the format of choice for music lovers trading and downloading music over the Internet.

Individuals like Napster's Shawn Fanning and MP3.com chairman Michael Robertson saw the potential of mp3 music and were able to build successful online businesses in spite of the music industry.

MP3.com was sued by the recording industry earlier this year because of a service offered on its site called My.mp3.com. It allows music lovers the ability to create personal music libraries from CDs that they already own.

By connecting to the MP3.com site and inserting a CD into their computer drive, MP3.com is able to read the contents of the CD and verify that the individual owns that particular CD. Once that is established, they are then able to listen to the CD in digital format from the MP3.com site.

Larry Neumeister of Associated Press reported "MP3.com chief executive Michael Robertson testified that the company went to great lengths to develop software that would require customers to prove they already own CDs before they were permitted to hear their favorite tunes over the Internet."

Judge Jed Rakoff ruled in April that the service infringed on the record companies' copyrights. MP3.com suspended the service May 10.

By August Reuters reported that MP3.com had made out of court settlements with Time Warner Inc.'s Warner Brothers music group, Sony Music Entertainment, BMG, the music unit of Bertelsmann AG and EMI Group Plc. The deal allowed MP3.com to use the companies' music in their My.Mp3.com database. The settlements were reported to have been $20 million each.

Universal Music Group Inc. refused to settle. Sam Costello of IDG reported in late September that after taking MP3.com to court, Universal Music Group Inc. won damages that could eventually cost MP3.com $118 million.

Associated Press reported that MP3.com plans to appeal, and the case is likely to reach the U.S. Supreme Court.

Because MP3.com had made out of court settlements with the other recording companies it was able to resume the MyMP3.com service.

Neumeister quoted Michael Rhodes, MP3.com's lawyer as saying that "despite the settlements, as many as half of the CDs in MP3.com's collection may not be covered by the deals, meaning that a large ruling for Universal could prompt a wave of fresh lawsuits against MP3.com".

Legislation has since been proposed to make the MP3.com service legal. On September 25, representative Rick Boucher (D-VA) announced that he and Representative Richard Burr (R-NC), Ray La Hood (R-IL) and Fred Upton (R-MI) had introduced legislation to reform U.S. copyright laws, which would allow consumers Internet access to music they already owned.

The legislation, the Music Owners' Listening Rights Act of 2000, would allow consumers who have purchased CDs to place them at a location on the Internet and access that music from any location. The legislation would make services like MyMP3.com legal.

In a letter to Congress from the representatives supporting the bill it was quoted as saying that a 'new poll conducted by Luntz research found that 79% of frequent Internet users believe that "copyright laws should not infringe on an individual's access to the music that they have legally purchased."'

In an article by Gary Gentile of the Associated Press, Boucher supported the proposed legislation "the kind of technology developed by MP3.com and made legal by his bill would allow music buyers to listen to their stored songs in their car after satellite Internet access is perfected, in their office or from a friend's computer.

The bill would only apply to music that is sent, or "streamed," not music that is downloaded. Boucher said his bill will not be considered before Congress recesses in several weeks but he will reintroduce it when the next session convenes in January."

In a press release on October 3, the Digital Future Coalition (DFC) announced its support of the legislation. The group consists of forty-two national organizations representing educators, computer and telecommunications industry associations, libraries, artists, software and hardware producers, archivists and scientists.

The press release reported that the "DFC is committed to striking an appropriate balance in law and public policy between protecting intellectual property rights and affording public access to it."

MP3.com is supporting the proposed legislation from its site asking users to join in their Million Email March by emailing elected officials and friends about it.

Napster has also been making headway in its fight against the recording industry. The site provides a service that enables users to swap mp3 music files by accessing each other's hard drives.

On July 28 the site had been granted a reprieve when an appeals court blocked an injunction that would have temporarily shut down the music-swapping service.

Ron Harris of the Associated Press reported on Oct. 2 that three federal appeals judges put the onus on the recording industry to prove why a lower court's injunction against Napster Inc. should be reinstated and the site shut down.

Harris reported that the hearing was part of the continuing legal battle between Napster and the Recording Industry Association of America (RIAA), which alleges that Napster contributes to copyright infringement by allowing millions of users to search for music with its MusicShare directory.

The recording industry considers this case critical in its fight against online piracy. No decision has yet been made in the Napster case.

However, Ben Charny, reported in ZDNET News on October 31, that an out of court deal had been reached with one of the five recording companies that had sued Napster. As a result Napster isn't going to be a free service for much longer. He reported that Napster CEO Hank Barry said that "38 million Napster users will soon have to pay 'monthly dues' of, perhaps, $4.95 to access each other's hard drives... "

The monthly dues are a result of a deal Napster reached with Bertelsmann AG. Charny further reported that " Bertelsmann will own a piece of Napster and will loan money to the company to enact the changes to the file swapping service... It will also make its catalog of songs available to Napster users."

It remains to be seen if the remaining recording companies will follow suit.

Meanwhile there is evidence to indicate that online music sites are not affecting the sales of CDs. In an article in Reuters in late August it was reported that shipments of full length compact discs had reached an all time high in the US during the first half of 2000. RIAA reported that is was up 6 percent from the same time last year.

The trend is the same in Canada. In an article edited by Jonathan Cohen in July for Billboard and BPI Communications Inc it was reported that "Toronto based Solutions Research Group, found that 15% of all Canadian Internet users 12 years of age and older, approximately 1.8 million people, have used Napster at least once to download MP3 files. While the average user downloaded seven MP3 files in the last week, 73% purchased four or more CDs in the past six months."

Musicians seem to have mixed feelings about the online services.

In August ABCNEWS quoted Prince as saying that, services like those offered by Napster are "exciting". ' "There does not seem 2 b anything the old record companies can do about preventing this evolution from happening."

Prince cites Napster as an illustration of "the growing frustration over how much the record companies control what music people get to hear."'

In a special to ABCNEWS Fred Moody raises the point that "record companies should still beware. The real danger to their hegemony comes from the ability of the Internet to connect artists directly with audiences.

Already, bands with niche appeal who cannot get major label contracts because record companies are increasingly prone to sign only bands with potential mass appeal are discovering that they can survive relatively well by showcasing and selling their music over the Internet directly to fans, cutting out the evil middlemen. Control of distribution has always been the weapon companies have used to keep artists in line.... "

Brian Hiatt of Sonicnet reported the Smashing Pumpkins and Hole had taken their music online. He reported that the Pumpkins released what they said was their final album, MACHINA II /friends and enemies of modern music, by pressing 25 vinyl copies of it and encouraging music lovers to distribute it free over the Internet.

Hole had made more than 60 previously unreleased recordings - available for free on their Web site (hole.com).

The band Offspring had originally decided to release its album Conspiracy of One online but a standoff with its label group Sony Music put an end to the decision.

Gil Kaufman and Teri vanHorn of Sonicnet.com reported "Sony Music, which owns the Offspring's label, Columbia, had planned to seek an injunction against the band and a temporary restraining order.

Meanwhile, the Offspring had prepared a breach of contract countersuit." In the end the band decided not to release the album online.