MP3, the little file format that has caused so much trouble, came a long way in 1999. From terrifying the whole music industry and generating predictions of the death of the record label its influence has caused a major paradigm shift in music industry thinking. Almost every major label has by now in some way committed to a digital future. Whether online music distribution will utilise the MP3 format, an alternative such as Liquid Audio or a format yet to be devised is unclear. What is beyond doubt is that our music-buying habits will be undergoing some major changes in the next few years. In addition to the proliferation of online music stores, bricks-and-mortar outlets are tapping into the power of the Web to streamline their customers' musical purchases. In the US Virgin Megastores have introduced Digital on Demand kiosks that allow customers to search for music and download it to CDs, DVDs or MiniDiscs; the other major retailers all have similar plans. However the major players in the music industry still have reservations about digitising their back catalogues before the SDMI's (Secure Digital Music Initiative) proposals are in place. And with the Initiative looking increasingly fragile, there is no guarantee of when this will be. One thing is for sure -- 2000 is going to be a very interesting year for digital music. MS Audio 4 will eat MP3 The year started as it would finish, with Microsoft offering its own challenge to the MP3 format. In April it launched version 4.0 of its Windows Media Audio format. Industry experts were impressed both by its compact size and its high quality but admitted that it would have an uphill struggle to compete against the massive installed base of MP3 users. MP3 tops the Web (better than sex) The popularity of MP3 was proved beyond dispute in May, when it officially became the most searched for word on the Internet, beating even that perennial Web favourite "sex". Report confirms MP3 is here to stay The conclusion of a major report on MP3 from Jupiter Communications was that MP3 isn't going away any time soon. The report went on to slam the major record companies for ignoring the format and warned that they did so at their own peril. Diamond and RIAA agree to drop lawsuits In August the Recording Industry Association of America finally dropped its lawsuit against Diamond, manufacturers of the Rio MP3 player. The RIAA's original suit claimed that the Rio would promote the pirating of copyrighted music. SDMI looking frail Following several reports this year of dissent within SDMI, one industry insider claimed that its members were expecting it to fail. With members including content owners, computer manufacturers and consumer electronics companies all pursuing their own agenda, experts agreed that the group was in real danger of failing to reach a conclusion. Music industry plans attack on illegal MP3s The International Federation of the Phonographic Industry (IFPI) in October decided it had had enough of MP3 and announced a co-ordinated attack on Internet piracy. This saw it taking action against MP3 sites in over 20 countries. Microsoft trumpets MP3 alternative With the SDMI edging ever closer to settling on an official format, Microsoft came out with guns blazing to push its alternative to MP3, Windows Media Audio. Comdex saw a host of deals and partnerships with content providers and major manufacturers, including Sony and Diamond, which put WMA in a far stronger position against MP3. Student sentenced for MP3 distribution The music industry's war on MP3 claimed its first victim as the year drew to a close. A student at the University of Oregon became the fist person to be penalised for the illegal distribution of MP3 files. He was found to have posted £43,505 worth of pirated music on his Web site. Check out the new MP3 Newsroom for product and Web site reviews and the latest news.