Anna Melville-James looks at the latest musical technology online

Once upon a time, downloading music from computers was strictly for anoraks and net-nerds. But, as is the way of the world, what was once decidedly naff is now the hippest way to check out those "new choons".

For anyone still buying CDs (or, perish the thought, vinyl), MP3 is the white-hot technology sweeping cyberspace. With special software, CDs can be compressed to a twelfth of their size in a slimline MP3 file by cutting out sounds inaudible to the human ear.

The music can then be listened to via an MP3 or branded player such as Windows Media.

You can even e-mail MP3 downloads of the latest CD to friends so they can try before they buy not that you would of course, it being illegal and all (hello officer!). When MP3 exploded on to the cyberscene in 1999, music pirates were dancing in the streets at an unlimited opportunity to plunder music's high-seas. Music label executives were perturbed at their profits disappearing down the phone lines and initiated a large clamp-down on illegal downloads.

But the Internet's genuine revolutionary potential continues to fire imagination, with record companies, large and small, moving on-line.

It's something Tim Parker, chief executive of the UK's first on-line record company, mudhut.co.uk, knows all about. The company, based near Watlington, was founded two years ago by Parker, who gave up farming to devote his energy to tending bands rather than crops. "We're essentially an independent record label which saw an opportunity to market music on a global scale using the Net," he says.

Internet democracy can bring bands to public attention in an instant and offers an unprecedented marketing tool for anyone wanting to make music.

At Mudhut, fledgling bands are offered exclusive or non-exclusive contracts involving a free download of one single on the company website, with other work for sale as MP3 downloads.

The 30 bands signed to Mudhut are a mix of new and established outfits, including indie kids Dodgy and gravel-larynxed Sam Brown.

Mudhut is also spreading its wings with its first simultaneous online and physical release, Dodgy's new album "Dodgy's Didgy Disc" this month, on mudhut.co.uk and Mud Hut Records.

"Eventually we want to establish an on-line and off-line brand, but things won't happen immediately," says Parker. Five independent labels are also represented by mudhut.co.uk, including Acid Jazz Records, whose catalogue includes Jamiroquai and The Brand New Heavies.

"Industry download sales aren't high at the moment, but they generate incredible physical sales, " he enthuses. Yet his passion is tempered with steadying e-cautiousness.

"The most important thing with Internet business is that you have to know how you're going to make money. In the US they're very clued up on how e-revenue works. You can jump a year in learning by talking to their business people. "

Mudhut may have its feet on the ground, but its ambition is sky-high. Parker aims for the business to be the biggest independent UK label in five years' time.

Big plans from a man who a year ago hadn't even sent an e-mail. "When I found out about the Net I thought, 'Why didn't someone tell me?' It's taken over my life!"

As Bob Dylan once said, the times they are a-changing.