An eight-month old web company that refuses to reveal the size of its customer list has been courted by not one but two of the world's largest internet companies in the past few months, during which it has been valued at an estimated $200m (£133m).

Amid the fear and loathing stalking dot.com land, online music companies are still partying like it's 1999, or at least like it was before the dark days of April gave everyone a hangover.

In spite of a raft of lawsuits from an irate recording industry claiming billions of dollars in damages, analysts and industry executives are still talking about the internet eclipsing the radio and turning us all into broad- casters. Who needs an indie music channel or for that matter Classic FM, when you can just stream the music of your choice into your car? Or onto your phone or your Palm Pilot?

In the face of such enthusiasm, record industry executives have behaved in the same way that many media honchos did as recently as a year ago. They simply ignored the phenomenon or abused it as a passing fad for greasy-haired geeks wearing black T-shirts in college campus basements. Does anyone remember the reaction of traditional media companies at the start of the online assault on print?

The antipathy of the recording industry in general - and the five major record labels in particular - towards dedicated online rivals has been far more passionate than that of many other industries, however, because of the added problems of ownership.

The industry reaction to date has been characterised by high-profile lawsuits launched by major record companies wary of the ease with which fans could send digital sound files to each other without restrictions on copying or distribution. Witness the legal attacks by the Recording Industry Association of America on Napster, a popular music swapping service, and MyMP3.com, which offers a free music collection.

But there are signs that large companies are waking up to how attractive new technologies are, rather in the same way that media groups from Time Warner to News Corporation did last year.

This interest is partly sparked by the expected rate of growth of online music. In the US, it attracts more than the odd dweller of Wayne's World. It has become so popular among students - jocks and cheerleaders as well as the nerds - that many university campuses in the US have banned the use of sites such as Napster. A survey by Webnoize, a research group based in Cambridge, Massachusetts, found that more than 70% of all college students in the north-east of America were downloading files from Napster alone, a service which has already been described as the most rapidly adopted software in the history of the internet.

Jupiter, a New York-based internet consultancy, has forecast that sales of digitally distributed music will reach $147m by 2003 as well as helping to drive the $2.6bn music market.

Given these statistics and the history of new media to date, it is perhaps not surprising that companies such as Yahoo, one of the world's most popular portals, and America Online, the world's largest internet service provider, were the first to realise that although legal rights should be protected, they cannot be used to stop a rising tide. Both groups have talked to several online music companies as well as industry giants from Sony to Seagram about possible allegiances. They are also both interested in Myplay.com, the eight-month-old music company that is attractive largely because it claims to be doing something legal as well as popular.

The California-based Myplay offers a "virtual locker" which lets users download, manage and play music on any device, anywhere in the world. The company claims to police these compilations so that they do not fall foul of copyright laws and, more importantly, to pay royalties for the songs used.

How it makes money from doing this has to do with the usefulness of the information it compiles. Any user willing to sign up for regular emails of desirable services or new offers is a dollar sign for Myplay.

This base note of legality has attracted the likes of Yahoo and AOL. The former has talked to the company about a possible takeover while the latter signed its own alliance with Myplay earlier this year.

There are signs that the rest of the online music business is also keen to become legitimate, with the recent legal MP3.com settlement.

Controls over online music are more complicated than those of the print media: the need for the old guard to understand the importance of the new is not. Interest in upstart music companies shows that for the recording industry, the times are still a'changing.