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Since January, a secretive Tennessee company has been quietly positioning itself as an alternative to Napster. Now that a federal court has ordered Napster to filter out copyrighted songs, MusicCity.com has seen its traffic skyrocket, and along with it hopes of emerging a financially viable survivor of the online music shake-out.

Wednesday morning, music fans who logged in to any of MusicCity's 30 servers had access to 8.2 million recordings on the hard disks of fellow users. Meanwhile, a Napster loyalist would have seen a much more limited universe of less than half a million MP3 files.

While Napster alternatives such as AIMster and GNUtella may have received more media attention, MusicCity is quietly emerging as the strongest peer-to-peer music contender, according to Matt Bailey, an analyst with digital entertainment research firm Webnoize.

"It's a great system. Already, the choice available on MusicCity is actually larger than on Napster prior to Napster putting the filter in place," said Bailey.

Besides being unhindered by a court-ordered file blockade, searches on MusicCity produce more results in part because of a technical advantage of its servers, which, like Napster's, act as a directory service. Although Napster boasted over 80 million users at its peak, dwarfing MusicCity's estimated 30,000 users, the big song-swapping service restricts Napster fans to searching only the files of the roughly 10,000 users assigned to a single server. MusicCity, on the other hand, has chained its 30 servers together and allows users to scour simultaneously the entire MusicCity user base.

OBSTACLES AHEAD

In recent weeks, many disgruntled Napster users have discovered this MusicCity advantage, and word is spreading rapidly through newsgroups and even Napster's own message boards. One big attraction of the MusicCity service is that users can still rely on their familiar Napster client software to search for and download files from MusicCity users. But to do so, they must install a helper program called Napigator, which provides a real-time list of all servers in the OpenNap Network, of which MusicCity is the largest provider. For users willing to try a different interface, MusicCity recommends a powerful freeware program called FileShare, which connects directly to MusicCity's servers.

Dannielle Romano, a music analyst with Jupiter Research, says the extra steps involved in using MusicCity will prevent most Napster users, despite their frustration with the company's legal woes, from switching.

"I see certain types of the savvier, most experienced, more hell-bent-on-finding-free-music user migrating, but will the huge, amazing fan base of typical music users interested in discovering music online go there? No," said Romano.

Nor is MusicCity insulated from the very legal challenges that have gutted Napster in recent weeks. Jonathan A. Friedman, an expert in online copyright law with Willkie Farr & Gallagher, said MusicCity, like Napster, will be unable to find a safe harbor under the Digital Millennium Copyright Act.

"To the extent that they are just Napster in another form, they are vulnerable to being sued. If their facilities are being utilized to facilitate this type of file swapping, that would make them vulnerable," said Friedman.

Indeed, MusicCity's Internet service provider, Interactive Telecom Network Inc. of Sherman Oaks, California, is believed to be among the list of 100 ISPs which last month received requests from the Recording Industry Association of America to shut down any OpenNap servers on their systems. Representatives of ITN, which also hosts dozens of pornography sites, didn't respond to interview requests. Doug Curry, a spokesperson for the RIAA, declined to confirm or deny whether ITN was sent a letter, but he said most of the ISPs contacted have complied with the request.

NOT JUST COLLEGE KIDS

Next month, MusicCity will attempt to parlay its rising popularity as a free, P2P file service into a profitable business. A source close to the company said MusicCity expects to announce both free and advertising-supported services that "apply the terrestrial radio model to a peer-to-peer streaming environment." The company also intends to compensate artists and copyright holders, according to the source.

Whether it can pull off this transition and gain traction in an already competitive online radio market remains to be seen. Romano of Jupiter says the space already has strong brands in NetRadio and SonicNet, with efforts from radio giants ClearChannel and Infinity on the way. "I find it hard to believe that MusicCity would be able to carve out a niche for themselves," said Romano.

But unlike most other Napster alternatives and even Napster itself, MusicCity was launched not by programmers working from a college dormitory room but by seasoned music and radio business people. Chairman Steve Griffin is a Nashville-based music agent who has founded two small Christian music labels, Pathstone and Infinity Music. President Michael Weiss, previously helped to launch WebRadio.com. Both declined to be quoted for this story.

And should a legal battle be all that stands in the way of MusicCity's new venture, look for the company to go to the mat. In the early 1980s, Weiss helped to found the Video Retailers Association of America and successfully beat back attempts by the Motion Picture Association of America to block the rise of video rental stores.

That combative spirit appears alive 20 years later. In an email last month to a fellow OpenNap operator, a copy of which was obtained by InternetNews, Weiss wrote, "If the movie studios had their way they would have killed the video industry before it ever had a chance to take off, like the record labels are trying to do with music on the net today ... And just like I did back in the video industry ... we have a real once in a lifetime opportunity to change the course of history."