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I'm surprised that Napster is still in business. When an injunction threatened to shut it down last week, I didn't expect the company to get a stay. But the 3 a.m. deadline came and went, and all those Napster users acquainting themselves with other music-swapping services could return to their favorite vehicle for violating music copyrights.

Although Napster's days now appear numbered, there's little doubt about one thing: music distribution will never be the same. The music industry has won a split decision. A judge has said loudly and clearly that swapping copyrighted material is not permissible (that's the winning part). However, absent Napster, the music industry would face other song-swapping sites like Gnutella and Scour that lack Napster's central catalog and are thus tougher to regulate. Some of those sites, like Scour, allow users to exchange not only music files but video and still images as well. I sat in our campus technology center this week and watched several minutes of "Gladiator" via a pirated file on Scour. Not surprisingly, the movie industry recently sued the service.

So makers of entertainment media are left to face this music: they can continue business as usual and hope the legal net will hold, or find a way to capitalize on Napster-like technology. Here's a new twist on a cliché: even if you can beat 'em, you might learn a thing or two from 'em.

Months before federal judge Marilyn Patel's injunction against Napster last week (postponed on July 28 through at least mid-September), major record labels were moving toward digital distribution. Sony was first to offer a limited selection of downloadable tracks. Last month, EMI offered about 100 digital titles. Universal, home of Napster foe Metallica, announced plans to join in this month. BMG and Time-Warner will get in the game by year's end.

So how is all this different from Napster? The big change is that the labels will be charging users per download. Sony's original fee was in the range of $2.50 to $3.25 per file, for example.

Will Napster users adapt to a pay-as-you-go environment? That remains to be seen. Some, like a young man quoted in a national news story I heard this week, feel that if it's not free, it's not fun. For the confirmed thieves, learning to shop the honest way may be tough. (The notion that teens' wallets aren't deep enough to forego Napster is rubbish; studies consistently show that adolescents have more disposable income than most other age groups.)

Record labels will win digital customers by upping the ante with faster, higher quality files than Napster-standard MP3s. Windows Media Player, Microsoft's jukebox software released this week in version 7, boasts nearly double the compression of MP3 files (the Napster standard) and consequently should be quicker in transit. The Windows Media Audio format allows CD burning and will come bundled with Windows Millenium Edition this fall -- so we don't even have to download the software for retrieving files. DiscoverMusic.com, which supplies song previews to Internet music merchants, just announced that it will make 2.5 million files available in the WMA format. With improvement of WMA and similar technology, the slower, cruder free formats would be less desirable.

Improvements in digital rights management technology -- the technology that allows music companies to track downloads and charge customers -- will also facilitate the change to digital music. Companies have figured out how to sell downloadable software; music vendors can learn from their example, too. One service, iCAST, gets a band's permission to make free songs available and asks downloaders to insert any of the group's CDs into their computers to verify that they own some of the group's music. Some providers are considering subscription services: pay your fee, and download a certain number of files within a certain time period. This is easier for the provider than charging for every download.

If the technology and the copyright issues can be worked out, the digital music era could be great for consumers. Music lovers like me who live in out-of-the-way places could save a lot of gas and rubber. All of us could mix and match our songs onto custom CDs. Only an artist's hard-core fans might buy an entire recording. Sampling would help a consumer avoid buying a lemon and perhaps steer him or her toward unexpected treasures.

But the digital music era could bring about even more substantive and important change. If music buyers download music onto their own media, record companies would save substantially on the cost of materials -- CDs, tapes, jewel cases. Entire forests could be saved by eliminating liner notes. Say good-bye also to distribution costs -- no packaging, shipping, storing, or stocking. A person at a computer puts the file on the web site for download, and faster than you can say Bananarama, it's on the market. So music-for-download should be cheaper than the same music in a record mart. And that could prompt the most desirable change of all -- more money for the people who really deserve it -- the musicians themselves. If the process of music distribution can more nearly bypass record executives and distributors, now THAT is, as Hamlet said, "a consummation devoutly to be wished."

A frustration for anyone dealing with a creative product is the amount of money skimmed off the top to overhead. Even for top-40 artists, the cut-per-CD may be less than a dollar (of course, if your record goes platinum, that's still good income). In the academic book market, royalties vary between seven and twelve percent per hardback copy, less for paperback. Author Stephen King recently began selling his new novel, "The Plant," bypassing the traditional bookselling market. Readers will send him $1 a chapter, and King says that if 75 percent of downloaders don't pay, he'll simply stop writing the book. But if 75 percent of downloaders DO pay, King could take in a higher percentage of royalties for a few chapters than he'd get for the whole book in the traditional marketplace. And what are his overhead costs? For his web site, King says, he pays one assistant.

Such a strategy employed by a writer as successful as Stephen King reinforces the scope of the royalties problem. An artist wants to concentrate on the art and so sells off the production, distribution, and publicity to the highest bidder -- who subsequently rakes in the majority of the profit. The animosity generated by this inequity leads many Napster users to justify their actions. Check into any digital media forum online, and you'll find music freeloaders rationalizing that the big labels are making far more than they deserve anyway. Digital downloading could help to right the balance.

We know by now that change comes quickly in the digital arena. Before this year's freshmen graduate, we will choose between driving to the local movie house to see the latest theatrical release and downloading it at home instead. (And if you're thinking "I don't want to watch movies on my computer," remember that universal digital TV is just around the corner.) For all the abuses of Napster, founder Shawn Banning was clever enough -- or lucky enough -- to realize that the Internet is the entertainment distributor of the future. Napster pushed the recording industry toward the change which would inevitably have come anyway.

When Sony's Betamax hit the market in the early 1980s, the Motion Picture Association of America (MPAA) sued, arguing that the VCR would be the end of the traditional movie market. Jack Valenti, then-president of the MPAA, said, "The VCR is to the American film producer and the American public as the Boston Strangler is to the woman alone." The MPAA feared that if people could record their own films or buy them pre-recorded, they'd stop going to theatres. Also, said the MPAA, filmmakers' copyrights could be easily violated.

The courts eventually ruled that because time-swapping (taping a program for later viewing) appeared to be the most common use of VCR technology, the VCR had a "substantial non-(copyright) infringing purpose" and was thus "fair use." And even when we tape films, VCR owners, unlike Napster users, do pay SOME fee to SOMEONE -- usually the satellite or cable company, which has reached an agreement with the filmmaker and distributor. It's a more honest transaction, in other words.

Napster is relying heavily on the Betamax/MPAA lawsuit as a precedent for its current predicament. Napster's attorneys argue that its technology has a "substantial non-infringing use" (swapping non-copyrighted files).

Although there are some parallel issues in the Sony and Napster cases, the key distinction is critical: the VCR didn't change movie distribution. Napster, for all its ethical shortcomings, will change the distribution not only of music, but of entertainment media in general. Its power to put the music at fan's fingertips will prove to be both its downfall and its legacy.