By Lisa Baertlein

PALO ALTO (Reuters) - Sure, they download free songs via the Internet, a couple of Midwestern university roommates say, but that doesn't make them crooks.

They are, nevertheless, seen as part of the MTV demographic that music company executives blame for contributing to the demise of their business.

Students Lora Michaelides and Lindsey McCollow, sophomores at Marquette University in Milwaukee, Wisconsin, say the executives have got it all wrong.

"I buy more CDs now. I want to keep the music business up," said Michaelides, who noted that while she has probably downloaded as many as 13,000 songs in her life, she also has lost count of how many CDs she owns.

Just last week, she says she purchased three new titles to add to her music collection.

"I was introduced to a lot of new music last year and I went to more concerts this summer than before I started downloading," said McCollow.

The 19-year-old roommates said they use free, MP3 music downloads as a way to get a taste of what's out there.

"I think it exposes more people to tons more music. I hear something, and if I like it, I want the whole CD," said McCollow, insisting she'd rather own a CD she likes than download it.

Take Dave Matthews Band, McCollow's favorite group.

While she has downloaded only a handful of the band's hard-to-find live recordings, she owns every CD the group has cut.

IS IT SHARING OR STEALING?

Music companies, who got the courts to shut down the popular free music-swapping site Napster, are now waging a copyright infringement war against its offspring Morpheus, Grokster and Kazaa.

The battle also rages on other fronts.

They have hired companies to send out empty or malfunctioning "decoy" music files to thwart downloaders; prompted Washington lawmakers to propose legislation that would, among other things, allow them to sabotage Napster-style networks; and, they have not ruled out suing individual users.

The problem, entertainment executives say, is that teens don't see swapping as stealing.

Fox Entertainment Group FOX.N Chief Executive Peter Chernin -- who has a 17-year-old son -- said at a recent technology conference in Aspen, Colorado, that the topic is an "ongoing source of conversation between us."

"He's got friends who do nothing but share files. He, unfortunately for him, has a cranky old man who gives him lectures," said Chernin, whose company has the No. 1 television network in the United States and is behind such movies as "Moulin Rouge" and "Star Wars: Episode II--Attack of the Clones."

While long download times have helped insulate the movie industry from online swapping, that is changing rapidly as more homes are getting plugged in to high-speed Internet services.

Another thing that has helped, Chernin said, is that film makers can offer their audience a choice of ways to see movies -- they can view them in the theater, rent them, or buy them.

Music companies, he said, are much less flexible.

"It's hard to buy one song. You're forced to buy the CD," he said.

I WANT MY MP3S!

The record industry recently said CD sales in the first half of 2002 were down 7 percent versus a year ago and blamed file-sharing Web sites for the drop.

But not everyone agrees with that assessment.

It is not correct to assume that every time a copy is made, a sale is lost, said Gary Shapiro, a spokesman for the Consumer Electronics Association.

And, he also pointed out that many of the companies he represents, which make computers and other gadgets that enable people to copy music or download MP3s, have seen their sales fall much more sharply.

While some would agree that swapping songs is not great for recording company revenues, there are those who say the music industry it partly to blame for its current woes.

Those critics say music companies have been playing catch-up and fighting to maintain the status quo rather than asserting themselves as leaders on the Internet, which already is altering the way they do business.

Many call on recording industry leaders -- who lately have been signing deals with fee-based music swapping sites like Listen.com -- to come up with something that's "better than free" to lure people away from file-sharing sites like Kazaa and Morpheus.

"I'd like to introduce the recording industry to something called bottled water," Jonathan Potter, executive director of Digital Media Association, said in a recent interview with Reuters. His lobbying group represents music sites that are trying to promote and sell music over the Internet.

Michaelides said she feels caught in between the two sides of the swapping/stealing debate.

"It's just amazing that we have this accessibility to music, but I do think its wrong that a lot of students substitute it for CD buying," she said.

Michaelides and McCollow said they won't be doing much downloading this school year. That's because Marquette blocked access to swapping sites after students clogged the school's Ethernet connection with music downloads.

Nevertheless, they said, many others still enjoy unfettered access to free music -- including their dads, who download as well as buy lots of CDs.