No room for the little guys

There isn't much money to be made yet, Price says: 'We're having to make our hay while the sun shines. The Internet is not a particularly big goldmine and once the bodies start stepping down on the activity it will be the big guys who are left.'

Everyone is nervous about the impact of licensing regulations. 'They will have to start making massive examples of people,' says Price. King adds: 'No-one wants to be the first person to be in the test case. It will take up lots of money and it will take years.

'We're saying to the likes of PRS that we're trying to develop a market before we can give them any money. Record companies and licensing companies are confused because they are up against a huge number of people and can't keep track of everything.'

Andrew Beck, broadcasting technology officer at PRS, is responsible for tracking music activity on the Internet. 'My job is to go out and see what's there,' he says. 'I spend my whole day looking to find what music sites there are and note them down for future reference when we have worked out licensing regulations.

'At the moment, we are still looking into licensing music on the Internet. It is covered under current legislation, under Cable Programme Services in the Copyright & Patents Act 1988. People who don't have a licence are in theory breaking the law but no-one has been taken to court and sued yet. It's also difficult to trace where the site is because we can't license servers outside the UK, although we have associated bodies elsewhere.'

PRS is also talking to service providers about paying the licence fee and the body has approached Demon Internet, an established music content host. Demon currently offers two free RealAudio streams to all its ú10 per month customers to enhance their pages.

The next step is digital distribution. Many sites have sound files or samples which can be downloaded for free but those such as the Cerberus Digital Jukebox will download a track for around 60p. The company isn't making much profit yet but it expects the market to take off in the next couple of years and has licensing agreements prepared.

Record companies may move the same way. 'A lot of record companies are already setting up their own sites and offering their music over the Web and that could be our biggest threat,' says Music Stop's Pincott. 'But they won't push it too far because it would upset too many record shops and they'd restrict shop space.'

Internet music may be restricted to marketing for now, but the industry looks set to blossom when the quality of audio over the Internet improves. Licensing issues are the cloud on the horizon but the potential for profit over the next two years is there - and that will be music to everyone's ears.