In less than 10 months, MPEG Layer 3 (MP3) has rocketed to prominence as the premier audio format on the Web. And it's no wonder: The sound quality is excellent, the downloads are relatively quick, and the variety of music available is astonishing in its breadth. The intense competition between RealAudio and Macromedia's Shockwave in the online audio war has suddenly been upstaged by the now-ubiquitous MP3. It's such a magnet for search queries that adult sites now add it to their meta tags to draw hits.

Why is it so hot? Simple: It's a superior format. It boasts a 12-to-1 compression rate, so a 36-megabyte .wav file sounds great in stereo as a 3-megabyte MP3. Standards for multimedia on the Web are largely driven by their devotees, and MP3 has them in droves. So just like that, we have a powerful new standard.

The MP3's superior digital audio-compression format draws on over 15 years of psycho-acoustic research. It makes big files really small, but keeps them sounding great by stripping out overlapping waveforms. That way, compression is achieved while sustaining perceived sound quality.

If you put on the headphones and compare a compact disc to an MP3, you'll hear that the MP3 has a certain amount of "hollowness." But it still sounds pretty great, and it's this level of sound quality that's made it the clear format of choice as an Internet standard. Shockwave and RealAudio sound far inferior and run all the associated risks of streaming audio (like the transmission breaking down due to high network traffic), whereas MP3s are downloaded first and play quite reliably.

For some, the MP3 format is a dream come true. But for others, it's a nightmare of epic proportions.

In the third part of this series, Nate will explain the nuts-and-bolts of MP3s. As you'll see, it's pretty easy to create and distribute MP3s - and fun, too! So that means it's time for you to encode all your REO Speedwagon records into MP3s and upload them for the good of humanity, right? Wrong. Unless you're officially representing the band, you risk running afoul of the law.

You see, despite the wild popularity of MP3s these days, the harsh reality is that almost all of this activity is patently illegal. Any time you distribute music that you don't own - and this includes posting "Ridin' the Storm Out" to your homepage - you're breaking copyright laws.

The bottom line: It's a civil offense, punishable by fine, if you distribute music that you don't own the rights to. It's a criminal offense to copy music illegally and then redistribute it for financial gain. You can go to jail for that. There is a great deal of uncertainty about how copyright laws should function in the digital world, but the laws themselves are clear.

MP3s make it extraordinarily easy to be a bootlegger - so easy, in fact, that many people may not realize that they're breaking the law. A bootlegger interferes with the fiscal chain by copying a work of art, distributing it, and keeping the money if it's sold. This means that none of the people who were involved with the production of the piece - the producer, songwriter, musicians, engineers, graphic designers - get paid. There has always been bootlegging of varying degrees of seriousness - printing and distributing vinyl bootlegs to be sold in stores, for example, is in a different category than home recording for personal use, but they're both illegal. With MP3s, these two types of bootlegging are seamlessly welded by anyone moving these files around the Web, many of them unaware that they're not only bootleggers but distributors.

Sure, people have been making tapes of their friends' records since the '70s, so it's easy to pooh-pooh the whole thing. They never caught us then, right? Well, whether you knew it or not, the recording industry took a bath on that one. The economics of the entire system actually collapsed, and was only revived by the forced implementation of an entirely new audio format, the compact disc. A tax on all blank tapes and taping mechanisms was created in accordance with the 1992 Home Recording Act to offset lost revenues incurred by those taping records and CDs for home use. And sales are still not what they were in the '70s (some argue that the dearth of albums of such colossal genius as Pink Floyd's Dark Side of the Moon is responsible for this, and not the advent of home cassette recorders, but I digress).

With MP3s, it's the home-taping nightmare all over again, magnified 100,000 times, and this is why the industry is panicking. The difference between personal use and distribution is now only an FTP session away, the format itself is legal although most of its uses are not, the players and encoders are free and have already been widely distributed, and, maybe worst of all, the whole thing is turning into a fad among students with free access to the Internet and huge amounts of storage space.

The recording industry's view is that MP3s are a threat to their very way of life, and so they are declaring war, using their battalions of lawyers to systematically shut down hosts of MP3 sites. They're going after those thieves with a vengeance. Let's get them rustlers!

Whichever slant you prefer to sympathize with, one thing's for sure: If you're using MP3s illegally, there are powerful people who have hired lawyers to take legal action against you.

The whole thing really blew up on 9 October 1998, when the RIAA filed for a temporary restraining order to prevent San Jose-based Diamond Multimedia from selling their new MP3 player. Called the "Rio," this player retails for $199 and is essentially a Walkman for MP3 files.

Sure, all those sites offering illegal MP3s are breaking the law, but what did the makers of the Rio do wrong?

I spoke with Ken Wirt, Diamond Multimedia spokesman, just after the initial suit was filed. "The RIAA's whole economic business model depends on controlling distribution," he said. "With the Internet, smaller artists can bypass them. Instead of 10-15 percent of sales per unit, an artist can get 25-35 percent by selling directly to their fans because there are no manufacturing costs. That gives music fans more options - it's a win for consumers and a win for artists."

The RIAA's legal beef with Diamond Multimedia is that the Rio doesn't support Serial Copy Management Standards (SCMS), a way to prevent playback of illegal pirated MP3 files. "They're waving the flag of privacy, but Diamond doesn't condone or endorse piracy in any way," Wirt explained. "Look at MP3.com - well over four million downloads of legitimate, copyrighted, licensed material. The Rio has no recording functionality. It's just a player."

Despite Diamond Multimedia's desire to maintain neutrality, software already exists that converts the Rio into a conduit, enabling users to upload MP3s back to a PC from the portable player. It looks like the makers of the Rio will never be far from the tug of this legal whirlpool.

The RIAA must also be concerned about how the Rio could potentially popularize MP3 use - the player's ease of use, portability, and gee-whiz gadgetry puts MP3s in the hands of the masses. The Rio is small, lightweight, and, unlike CD players, won't skip while you're jogging or skiing. It weighs less than two ounces and is smaller than a deck of cards. A single AA battery lasts about 12 hours, and you can load it up with an hour of music (at "standard" quality).

1. Recorded works to which you personally own the copyrights.
2. Recorded works in the public domain.

It's not like you need to print this out or anything. If you didn't write it, you don't own it - plain and simple. While online regulation is a murky issue, the copyright law is very clear. It is legal to download an MP3 to your hard drive and keep it there for 24 hours, but after that, the law says you must remove it.

Nervous? Before you break out into a cold sweat and start erasing everything, ask yourself this: What purpose does your MP3 directory serve? If it's on your hard drive, for your own personal use, and not on any servers anywhere, then you're not a distributor. Maybe you have some MP3s that you paid for? Then relax. That MC Hammer single is all legit. A little cash went to the people who created the song that gives you so much pleasure, and you won't be getting any nasty cease-and-desist letters in the mail. As long as you keep your MP3s in the privacy of your own hard drive and not on the Web, you are very hard to catch and relatively harmless.

Keep your servers clean and you'll have a clean conscience as well. You probably won't get caught, but there's always the chance you'll be busted for possession and an "intent to distribute" charge, and that means you'll have to go downtown.