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New wave, new threat; MP3: Students love it, the music industry fears it.

Kim sits in her college dorm late at night, tapping out a paper on her laptop computer and listening to Barenaked Ladies. When she tires of that band, she clicks her mouse, and the bark-rough voice of Dave Matthews fills the tiny room.

Kim has turned her computer into a digital jukebox. With a click, she can listen to more than 400 songs tucked away on her hard drive. When she heads to the library or to class, she totes her laptop and a pair of headphones. Her PC has become her Walkman, her radio, her stereo.

"It's easier when you're doing your work. You don't have to get up and fool with a stereo," says Kim, a Baltimorean who asked that her last name not be used lest her jukebox get her into hot water.

She's not being entirely paranoid. Campus networks and the Internet beyond are alive with the sound of music - much of it pirated - and the technology that makes this possible is scaring the daylights out of the recording industry. Predictably, the industry is fighting back with with lawsuits and promotional campaigns aimed at copyright violators.

But the pirates always seem to be one step ahead. As a result, after decades of distributing music through the same channels - at the same prices - record companies are realizing that they'd better learn how to sell music over the Internet - or be left behind.

The technology that college kids love and the record industry hates is called MPEG-1 layer 3, or MP3 for short. It's an audio compression scheme that can squeeze a digitally recorded song to one-twelfth of its original size and still produce near-CD quality.

With inexpensive software available on the World Wide Web, you can plop an Eric Clapton disc into your computer's CD-ROM drive, compress a song and copy it to your hard disk as an MP3 file. This is legal, as long as you use the song for your own pleasure.

But you can also send a digital duplicate to a friend over a standard, dialup Internet connection in 10 minutes or less, or post it on a Web site. On a high-speed network, the transfer takes only a few seconds. Unless you have the artist's permission, however, this is a copyright violation.

Because they can be passed around so easily, MP3 files have become a hot commodity on the Internet. In fact, a recent survey of online search engines found "MP3" to be the second most searched-for word on the Web. The first was "sex."

"I don't want CDs anymore," says Justin Doyle, a 20-year-old philosophy major at Princeton who owns more than 300 compact disks and converted many to MP3 format.

"CDs break. They get scratched. They're a pain " he explains. With MP3s, on the other hand, "You can play the songs in any order you want, you can instantly access them. They're also virtually unbreakable."

Some mechanically inclined music fans are finding ways to take their tunes on the road. Pop the trunk on Jason Lewis' 1987 vintage Oldsmobile Ninety-Eight and you'll find a Pentium PC loaded with more than 200 MP3 files by groups ranging from Sublime to Smashing Pumpkins.

The PC is wired to the car's Aiwa speakers and draws its power through the cigarette lighter. Lewis controls it with a Radio Shack keypad mounted on the dash.

"Its great for road trips," says the 20-year-old junior at Villa Julie College. "You have hours and hours of music with you in your trunk."

Lewis created a Web site (www.mp3car.com) to show others how to wire their cars and bought a vanity license plate for his cutting-edge cruiser: MP3 CAR.

"It's kind of funny when the computer is worth more than the car it's in," he chuckles.

Not everybody is amused by MP3 technology.

"MP3s are a big problem," says Christopher Young, president of Cyveillance in Alexandria, Va, which scours cyberspace for copyright violators on behalf of clients such as the Recording Industry Association of America (RIAA) and the American Society of Composers, Authors and Publishers (ASCAP).

"Based on what we've seen, there more people out there now who are violating copyrights than there are people who are doing it legitimately," Young says.

The recording industry has cranked up its attack on virtual bootleggers. Last year, the RIAA sued one Arizona college student and his Internet service provider after discovering 50 MP3 songs by Nine Inch Nails, the Cure and other artists on his Web site. Another pirate was found distributing the entire Beatles catalog - compressed using MP3 technology onto a single CD.

But many in the industry concede that policing the Net may ultimately be a losing battle. The problem: Even if the Web were cleansed of bootleg MP3 sites, how do you block millions of compact disks from being converted into digital music files and passed around privately?

Last month, the RIAA unveiled a plan to attack the copyright problem head on. Called the Secure Digital Music Initiative, the effort involves large labels such as BMG Entertainment and Sony Music Entertainment, as well as major Internet and electronics companies such as America Online, IBM, Intel and Microsoft. Its goal: to develop a secure and profitable way to deliver music over the Internet.

"The point is to create an open architecture that will support many different business models and competitive interests," said RIAA president Hilary Rosen.

Since college students with access to high-speed networks are MP3's most enthusiastic users, the recording industry has tried to persuade them that piracy is wrong and can land them in trouble. Last year, the RIAA targeted 10 universities (including the University of Maryland, College Park) in an effort to rid campus networks of MP3 files. The campaign (www.soundbyting.com) has succeeded in making students more careful about whom they swap MP3s with.

"Everybody's very, very paranoid here," says Princeton's Doyle. "Kids understand they don't want to be a distributor."

At College Park, grad student Zsolt Szabo says his friends have urged him not to download bootleg MP3s from the Web. "But in certain cases I make an exception," he says.

Szabo, who enjoys obscure European techno bands, says his favorite music can often be found only in MP3 format. "A lot of these songs, if I went to the store, I wouldn't be able to find," he says. "The way I see it, if it's unavailable, it's not piracy, because how else can I get it?"

This raises yet another issue. The industry is far from united in opposition to MP3 technology, and some innovative promoters are using Web sites with MP3s to bring new bands to the public.

"Eventually all music will be digital," says Michael Robertson, president of MP3.com, one of the Internet's most popular destinations for MP3 news and music. "For consumers, it means there's an incredible number of exciting ways they can buy music, use music."

Robertson argues that eliminating production and distribution costs for compact disks could make digitally distributed music cheaper for consumers and more profitable for musicians (one reason why companies don't like it). The technology is also changing the way bands reach out to fans and land record deals.

Record label talent scouts "aren't going to smoky clubs anymore to get record deals," Robertson says. "The smart ones are on the Net searching on sites like ours."

Consider the group Mukala, an alternative band based in Nashville. The group's first album, "Fiction," was released on an obscure label and could be found only on an obscure Web site.

When Mukala made a song available on MP3.com, it attracted 1,000 downloads a day and now the band gets letters from as far away as Japan and the Netherlands. The buzz eventually convinced industry heavyweight BMG to start distributing the record through its channels.

"It really gave us a great push," says Mukala manager Brian Boland. "I've been a big proponent of MP3 technology. If you lose one or two sales now, I believe the sales you'll get in the long run will make up for it."

Even mainstream artists are beginning to embrace the technology - sometimes without the blessing of their record companies. Last month, rocker Billy Idol decided to offer fans two MP3s from a forthcoming album. "I was looking for a way to get new music to my faithful fans in time for Christmas," Idol announced on MP3.com.

But days before the holiday, Capitol Records pulled the songs from cyberspace. The Beastie Boys and rapper Chuck D of Public Enemy have had similar scuffles with their labels over MP3 releases.

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