The Recording Industry Association of America has filed a federal suit against Web site MP3.com, alleging copyright violations tied to the site's newest personalization features. If proven, the charges could cost the maverick music site billions of dollars in damage awards.

The suit, filed Friday (1/21) in U.S. District Court in New York City, alleges that two recent features on the site create an "unauthorized digital archive" which violate the copyrights of the RIAA's member record companies. MP3.com has vowed to fight the suit, claiming that the RIAA is "against consumers' rights, against new technologies, and against expansion of artists' revenues."

At issue are MP3.com's "Instant Listening Service" and "Beam-It," which were launched on Jan. 12.

"Instant Listening Service" allows listeners to buy a CD from three online music retailers (Junglejeff.com, Duffelbag.com or Cheap-CDs.com) and then listen to a streaming version of the disc before a physical CD arrives in the mail. The service is meant to appeal to listeners who want to hear their purchases immediately.

"Beam-It" allows a user to listen to a CD he or she already owns from any computer with a Net connection. To use the service, the user "registers" a disc by first putting it into a computer's CD-ROM drive; the "Beam-It" system then reads a code on the disc, which is matched to a database of CDs that MP3.com has purchased. MP3.com will then stream the music to any computer, after the listener has logged in with a password. The company said that its database includes 40,000 CDs, and "tens of thousands" have used the streaming technology since it launched.

''Beam-It'' could eventually be useful to listeners who want to hear their music collections through portable devices with Internet access, but at present, it is mainly a novelty, given the unreliability of connections and the need for a listener to be near a computer to listen to the music. (Most current computer systems have the ability to play CDs.)

The RIAA claims that MP3.com has no license to distribute recordings in this way and is not paying performing, songwriter or publishing rights for the music streamed to users.

"It is not legal to compile a vast database of our member's [sic] sound recordings with no permission and no license," wrote RIAA president and CEO Hillary Rosen in an open letter to Michael Robertson, MP3.com's CEO.

"[Y]ou are not free to take protected works simply because you want them," she continued. "Nor can you credibly claim that there was no point in asking for a license. Our member companies.. have participated in many creative deals that create new uses of music on-line, and on a regular basis they are engaged in business discussions with scores of technology partners. The difference, of course, is those partners realize intellectual property must be licensed."

Robertson responded to the strongly worded letter with a public missive that defended the development of the company's new technology. He called "Beam-It" a "virtual CD player" that only plays music that users have purchased, and he argued that music companies should not have control of content after users have bought it.

"Only the person who buys the CD is entitled to listen to that music through our service. That's it," he wrote. "Your argument is that technology companies cannot facilitate that use. Why? Because you apparently believe that you have the right to control the content even after the user buys it. We disagree."

The question of whether MP3.com is acting as a fair-use playback system or as a broadcaster will be crucial in the case. A second important issue surrounds the platform itself: Does MP3.com's streaming system keep the music secure and provide it only to those who purchased it, or does the system allow unauthorized copying of the music?

MP3.com's case may partly include the argument that a streaming system is an anti-piracy system, because the music is not available for download in the unencrypted MP3 file-format. In an separate case, a federal judge in Seattle issued a preliminary ruling last week in a lawsuit between streaming software maker RealNetworks and streaming media site Streambox that validated the streaming system as a form of technology that keeps music files from being pirated.

The trickier legal problem concerns whether a copy of music that one party owns (a recording in MP3.com's database, for example) can be substituted for a CD that the user owns, either in the user's physical collection or by virtue of an online transaction.

And there may be challenges to MP3.com's claim that its platform is secure. The "Beam-It" program can apparently allow a user a to get a CD into an online collection without owning it first (by registering a disc in a friend's collection, for example). It is also theoretically possible to use the prohibited program Streambox VCR to copy a stream and convert it into a file that can be permanently stored on a hard-drive, thus circumventing the assumed security benefits of streaming.

Other observers state that the legal challenges to Web music technology show a widening gulf between copyright law and new technology.

"The laws on the books aren't offering protection to copyright holders from all of these very diverse, sly business models," said Joanne Marino, editor-in-chief of Webnoize News, a digital music industry Web site. "Whether it's sharing music or helping consumers get advanced delivery of what they've bought, these technologies are splitting hairs in the fine language of the law. And the law hasn't caught up yet.

"It's a frustrating time for artists who want to get compensation from their work," said Marino. "And frankly, the industry has got to learn to deal with that, because casual piracy fuels the Net."

In his response to the RIAA's Rosen, Robertson tried to show that artist-empowerment was a guiding principle in his company's dealings. "We believe that the artists will benefit far more by having Internet technologies [which] give them the ability to.. ultimately receive revenue on a pay-per-listen basis," he wrote.

But he did not say if artists whose music was streamed through the "Beam-It" service would get paid for this additional, digital distribution. The service is currently free to users, although the company has suggested that it could become a subscription service in the future.