The judge presiding over the legal action brought against Napster, the online song-swapping service, neatly summed up the feelings of record companies last month when she described it as "a monster".
Napster has come to represent the fears of an industry that faces enormous and inevitable change. Unlike many businesses where the threat of online competition was wildly over-estimated, the arrival of the internet could, if not controlled, tear the music business to shreds in a matter of years.
Figures released last month from the trade organisation, the International Federation of the Phonographic Industry, showed the first fall in worldwide recorded music sales since it began collating figures some 10 years ago. Worldwide sales fell by 1.3% in value to $36.9bn while unit sales dropped by 1.2% to 3.5bn.
The growth curve had been slowing for some years as the boom generated by consumers replacing their old vinyl collections died away, but there were clear indications that online piracy was making itself felt.
In the US, the most internet literate country in the world, the sale of CD singles, the market most likely to be hit by the internet, fell dramatically by 39%.
Napster, which has been the highest profile of the pirate services, is on its way to being tamed. After losing its court battle against the industry over breach of copyright, the Silicon Valley service founded by 21-year-old college drop-out Shawn Fanning has agreed to remove all protected songs, although the speed at which it is filtering them out has attracted further criticism.
BMG, the music business owned by German media group Bertelsmann, has taken a stake in Napster and hopes to turn it into a service with members paying fees, much to the chagrin of the song swapping service's 70m users.
MP3.com, which has already settled with the major music groups for breach of copyright, found itself the target of another £27m lawsuit last week from US musicians Tom Waits and Randy Newman.
The wider battle, however, is far from over. "We are in an environment where we are beginning to fight back and create an atmosphere where legitimate business models can be developed online," says Jay Berman, chairman of the IFPI. "But this is still an enormous problem. In the conventional marketplace, we have pirates trying to break in with copied CDs. In the online marketplace, the position is completely reversed. It's a totally pirate marketplace in which we are trying to work out a legitimate business model."
Over the past couple of years, each of the five major music companies, BMG, EMI, Sony, Universal and Warner has done individual deals with online firms to begin making tentative steps online.
EMI alone has invested millions of pounds in the past two years taking stakes in around 40 new media firms, from those specialising in secure delivery of content to video-on-demand groups. Most of the investments also involve strategic or content delivery agreements underlining that most basic internet rule that no deal is exclusive.
The latest was with a company called HitHive, which will allow distribution via portable devices such as mobile phones and PDAs for a fee.
But it is only in the past six weeks that the majors, previously more likely to see each other in a group action against the likes of Napster, have stopped fighting their rearguard action and teamed up to go on the offensive. Ironically, it has been Napster's success that has forced the industry to sit up and take notice of the internet. The big five recording companies have divided into two camps. Last month, AOL Time Warner, owner of Warner Music, Bertelsmann and EMI, announced the formation of MusicNet, an online venture with RealNetworks, the company that owns the streaming media software, RealPlayer. Each of the music companies owns 20% of the venture, while RealNetworks owns 40%.
The three recording companies will each license their music to MusicNet on a non-exclusive basis. MusicNet will then operate as a standalone company and will license its platform to others seeking to sell music online on a "private-label" basis - initially to AOL and RealNetworks, both of which intend to launch their own branded services later this year. It will include artists such as Madonna, Björk and the Backstreet Boys.
The other two, Sony and Universal, have joined forces to launch a service call Duet, announced days after MusicNet. The pair, whose artists include Jennifer Lopez and Elton John, have licensed the internet portal Yahoo! to market the online subscription service, again on a non-exclusive basis.
Others making their own way include the digital arm of MTV, which is launching a service allowing users to download songs for a fee from all the big five recording businesses. HMV and Virgin are both introducing kiosks where users can choose tracks from a library of 70,000 tracks held on a server, which can then be burnt onto CDs.
What no one quite knows at the moment is what the standard business model will be or how it will make money. Will it, for instance, be better to charge monthly subscription fees or per piece of music? Will it allow the music to be burned onto a CD or downloaded into a music player? Or will simply streaming music in particular genres be more popular? The next few years will no doubt see feverish levels of experimentation.
Tellingly, neither Duet nor MusicNet, which both hope to be up and running by the summer, have given details of how they will work.
The likelihood is that they will only redouble their focus on online distribution after EMI and BMG abandoned their merger two weeks ago. Eric Nicoli, EMI's chief executive, who has seen two potential deals fall through his hands because of the onerous demands of competition authorities, was clear in his assessment of the immediate future. It would, he says, be "extremely difficult if not impossible" for a merger of any of the big five music groups to get past Brussels and Washington in the current market. In an otherwise stagnant music market, that means the majors will be forced to look for growth elsewhere.
What everyone does appear to agree on is that online distribution, if harnessed, can have a significant impact. "This is about getting more music to more people in more ways than has ever before been possible and everyone recognises that opportunity," says Berman. According to some estimates only 10% of consumers currently actively purchase music.
Executives at Universal Music, the biggest recording industry company in the world, have made ambitious forecasts. They suggest that online distribution could return the music industry to dramatic growth, with a potential value of $90bn within five years. Other estimates are more modest but most industry pundits agree that online distribution is more likely to be a fruitful opportunity for the music industry than a threat.
In the meantime, the music companies have also recently unveiled their own not-so-secret weapon. Fanning is about to be edged out in the fame stakes by a younger model, 20-year-old Travis Hill. A former classical pianist from Utah, Hill has not come up with another way of evading the industry giants, he has developed software offering them a solution to the piracy issue. The software, Songbird, has been fully endorsed by the IFPI and can track the use of copyrighted material over Napster's peer-to-peer service allowing artists and publishers to remove their work.
