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Robert Schwartz, a lawyer for some of the studios and record companies, compared Altnet's role to that of people who hand out fliers at swap meets organized to trade bootlegged copies of movies and music. "It may or may not be illegal," Mr. Schwartz said, "but it seems like a crummy way to make a buck."

Microsoft, for instance, paid Altnet $5,000 to list the trailer for a Lions Gate film, "The Rules of Attraction," at the top of certain searches for 30 days when the film was released last month.

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Lions Gate, an independent studio, wanted to reach KaZaA's large audience of college students because it thought that many would be interested in the film. Microsoft wanted to showcase its Windows Media software, which lets entertainment companies distribute material securely over the Internet with high-quality sound and video. When users download the trailer video, they are prompted to upgrade to the new version of the Microsoft software.

"We'll never spend as much as Sony, but this is one way we can compete with the big boys," said Tom Deluca, vice president for new media at Lions Gate, who added that after his trailer promotion, he had received several expressions of support, tinged with envy, from counterparts at Hollywood studios.

Microsoft also paid Altnet $12,500 last month for a 60-day promotion of a video for Tony Hawk's "Boom Boom HuckJam," a multimedia punk-rock tour. By Hollywood standards, the promotions were small, and Microsoft executives maintained that there was nothing inherently wrong with peer-to-peer technology like KaZaA's.

"Microsoft clearly does not promote or support piracy of any kind," said Erin Cullen, product manager for Microsoft's digital media division. "But in terms of looking at new ways to reach an audience in a secure way, this may be an avenue that will become useful."

It is far from clear whether people who come to a site intending to get free stuff can be induced to pay with a gold icon that promises a high-quality file, and the numbers so far are probably too small to draw a firm conclusion.

But AtomShockwave, an independent film and software distributor, said that 400 people had bought its PhotoJam software in the last month as a direct result of its promotion on KaZaA. The firm distributes a free version on the network; people can buy it for $35 to get more features.

Trymedia Systems distributes the first few levels of some video games over KaZaA and Gnutella, another peer-to-peer system, and prompts users to buy the software if they want to finish the game. The company says that with some products, like Beach Head 2002, a shooting game, as many as 10 percent of those who download the hobbled version from peer-to-peer networks go on to buy the software.

Of the three independent artists — Barrington Levy, Brooke Allison and Johnny Virgil — promoted by Altnet in search results in the last three weeks, about 20 people a day are paying 49 cents for a song when they are prompted to after a week of listening to it free. Soon, Altnet said, it will allow people to pay via their phone bills or with prepaid telephone cards.

Unless Hollywood companies begin paying to distribute mainstream material, analysts say it is difficult to imagine people turning to KaZaA primarily to buy digital media, rather than getting copyright works for free. And if a court orders that the software begin blocking copyright works, the market for legitimate material may quickly evaporate.

For now, however, the two continue to coexist. A recent search on KaZaA for Lions Gate's "Rules of Attraction" found several copies of the trailer available for downloading — as well as the full movie, which is still playing in theaters.