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The continuing legal attacks on Napsterhttp://www.napster.com/">Napster;, the free file-sharing software, and on MP3.comhttp://www.mp3.com/">MP3.com;, the downloadable music site, have spooked investors, according to the financial press. MP3.com's stock got hammered hard, dropping by about 40% almost immediately in the wake of a recent">http://www.stereophile.com/news/10737/">recent decision by US District Court judge Jed S. Rakoff in favor of the Recording">http://www.riaa.com/">Recording Industry Association of America's copyright-violation complaint against the Internet startup.

MP3 may be under constant attack by audiophiles, and by music-industry attorneys in the courts, but the format shows no indication of disappearing. Santa Clara, CA–based S3http://www.s3.com/">S3;, maker of the Rio portable audio player, has reason to believe that MP3 has plenty of growth potential. The company is going after licensees for the Rio to make knockoffs, and has plans to produce Rio-type players for home and car audio this summer.

In early June, Toshibahttp://www.toshiba.com/">Toshiba; will institute a new retailing program that embraces the Internet but favors traditional retailers. The electronics manufacturing giant will have "a defined group of Internet retailers" that will be built on a base of traditional retailers, according to an announcement made in late April. Later, the program will be expanded in stages to include Internet-only retailers. The announcement follows an">http://www.stereophile.com/news/10662/">an announcement by Sony Corp. late in January that Sony would begin direct Internet sales this year.

It's mating season for entertainment-industry giants. Sony">http://www.sonymusic.com/">Sony Music Entertainment and Universal">http://www.umusic.com/">Universal Music Group are in talks to develop a jointly operated subscription music service for the Internet, according to a report the two companies issued in the first week of May. The news followed by only a week an announcement of a possible">http://www.stereophile.com/news/10729/">possible merger between record clubs Columbia House and BMG Music Club.

Jonathan Scull thinks he has uncoverd the hot audiophile topic for the new millennium—e-commerce. He lays out the situation in "Fine">http://www.stereophile.com//finetunes/224/">"Fine Tunes" #19. Find out what various manufacturers are up to, and why.

The roller-coaster fortunes of MP3.comhttp://www.mp3.com/">MP3.com; took a downturn April 28, when US district judge Jed S. Rakoff found in favor of the Recording">http://www.riaa.com/">Recording Industry Association of America in its copyright-violation suit against Internet music site MP3.com. Investors in the once–high-flying startup immediately began unloading shares of the company's stock, which had dropped 40% by the end of the trading day.

It's been an up-and-down week for consumer-electronics companies, as revealed by recent earnings reports surfacing around the globe. First, the bad news: Sonyhttp://www.sony.com">Sony; reports that its profits fell 32% in the latest fiscal year, and cites the strong yen for depressing the value of the consumer-electronics and entertainment company's overseas earnings.