Net Doesn't Have to Threaten Record Labels.

THE Internet is often praised as a boon to all mankind But to the music recording industry, it's beginning to look more like a wolf in sheep's clothing.

It's not hard to see why. The number of Americans who listen to music delivered over the Internet is growing exponentially. According to one recent study, there are now more than 4 million users of digital music in U.S. households, up from just a few hundred thousand a year earlier.

Many of these people are accustomed to getting this music free of charge, and they're strongly opposed to any effort to make them pay for even a little of it. Moreover, a lot of Internet music users are highly critical of the recording industry for alleged ripoffs of recording artists.

An oft-cited example is the Goo Goo Dolls, who sold over a million copies of a recently released album but reportedly wound up owing their record company money for marketing expenses. For their part, the record companies argue that they can hardly be expected to continue producing music if they have to give it away.

Is there any room for compromise on this issue? As one who is heavily involved in "streaming media" - the delivery of audio and video over the Internet - I'm convinced there is.

Let's start with the fact that getting music for free is nothing new; music has been given away to consumers for decades. It doesn't cost a cent to sit and listen for hours to music, new or old, on the radio.

In fact, record companies go out of their way to promote new albums by encouraging disc jockeys to play singles from them. That prompts listeners to go out and buy the whole album, to the satisfaction of the record company that produced it and the artists who recorded it. MTV has taken this content a step beyond radio, adding video.

The record companies realize that this practice of authorized sampling doesn't cannibalize sales of their music through existing channels; to the contrary, it increases awareness of and demand for their products.

There's no reason the same concept couldn't work on the Internet, for producers of audio and video alike. The record companies could release a single song from an album for free distribution over the Internet.

Fortunately, a technology-based solution is currently being developed that would stimulate consumer trial and sampling of music or video while protecting those who own copyrights on the properties.

This new technology, called Digital Rights Management, will allow free use of designated portions of audio or video, or free use for a limited time of entire albums. A database running on a central server computer tracks the downloading and distribution of audio and video content, notifying the copyright holders and billing those who choose to consume more than the designated free content.

Already, there are signs of progress toward the compromise I've suggested. Sticking its toe into the Internet waters, Time Warner's Music Group announced that it will soon let consumers download a single track from certain albums.

And Garageband.com, an Internet start-up company, is seeking to bridge the gap between online digital music and the recording industry with a unique arrangement: It will permit musicians to upload recordings that will be rated by music enthusiasts on the Web, and next year it will start awarding a recording contract for the most popular music each month.

The Garageband.com venture is but one early indication of what should be of greater concern to the record companies than "free" music. Their greatest competition in the future is likely to be new labels (including Internet service providers and portals such as Yahoo), and the sooner they act to face this threat, the more likely they will be to survive.

Jan Brzeski is chairman and chief executive of STV Communications Inc. based in Santa Monica.