Last week's announcement by German media giant Bertelsmann AG that it would partner with Napster Inc. ignited something of a firestorm in local music industry circles.

Many industry executives cautiously celebrated what they viewed as Napster finally being reined in by the music industry.

But Michael Greene, president and CEO of the National Recording Academy, was fuming.

"I hate it that this Napster bunch of thieves are now asking forgiveness for building the business," Greene said. "That's the part of it that really irks me. Instead of treating these people like the thieves they are, we are now basically going into business with the enemy."

On the other side of the debate is Phil Hwang, one of the estimated 38 million Napster users worldwide. The 25-year-old software development professional from West L.A. said he has downloaded an estimated 550 songs from Napster.

If Napster doesn't remain a free application, Hwang plans to find another Web location to get free downloads rather than paying for music.

"What I would pay for is some value-added services," Hwang said, suggesting that a file-sharing application that would put selected songs on a CD might be enough to separate him from a couple of bucks a month.

Even though billions of dollars of revenue could hang in the balance, no one seemed quite sure what will happen next as Napster and Bertelsmann merge and try to develop a workable system for selling music over the Internet an effort that has thus far failed miserably.

"If anyone tells you they know what's going to happen, they're either lying or delusional," said Jeremy Helfgot, 26, of Hollywood.

Helfgot is a former manager of special projects at mp3.com, a precursor of sorts to Napster with its own legal problems, and a member of the online community Pho, a loose coalition of L.A. folks interested in digital music.

One thing on which record labels and artists appear to concur is that establishing some type of subscription-based Internet music service is a critical first step toward satisfying consumer desire to download digital music while protecting the labels' copyrights and musicians' intellectual property.

Launched in spring 1999, Napster's popularity quickly exploded, and the company today claims to be the world's leading file-sharing community.

That practice prompted the Recording Industry Association of America and the big five record companies, including Bertelsmann division BMG Entertainment, to sue Napster for copyright infringement.

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