Long before the Napster controversy captured the headlines, Michael Robertson was being portrayed as the music industry's public enemy number one. Although the chief executive of MP3.com achieved a large degree of legitimacy for his company when he settled copyright- infringement lawsuits with the five major record labels (at a cost of $225m), his battles, legal and otherwise, appear to be far from over. On Monday, a US district judge declined to approve class-action status for a copyright suit brought against MP3.com by 1,000 independent labels, but Judge Margaret Morrow said she would reconsider the ruling if the plaintiffs refiled within 45 days. MP3.com also faces lawsuits from other independent labels, including Britney Spears' Zomba Recording.

Yet 34-year-old Mr Robertson remains confident his company has the technology and the business model (not to mention the legal team) to become the leading player in online music. "We're a technology company," he says. "We build technology that works with music, so, in that regard, we are a music company. But what makes us unique is that we're very good at delivering digital music. That's what we do."

In less than five years, the San Diego-based entrepreneur has built MP3.com into a multi-million-dollar concern. Though the dot.com bubble has burst, he remains very wealthy, on paper at least. In the mid-Nineties, the graduate from the University of California was running a software company and realised that MP3 kept cropping up on search engines.

"It was a great brand, it had user recognition. Consumers were definitely aware of it. So I bought the domain name MP3.com for $1,000 from the guy who had registered it and gave him, some friends and family shares in the company. He did OK. That thousand dollars has paid off for sure. But I didn't really have a vision, it was more of an evolution. It was just looking to see where the future was going to go. If all music was available digitally, what would that be like? I was sort of taking those baby steps. MP3.com was the first music website that actually had full songs. That sounds silly today, but, at the time, everybody had pictures and stories about bands but no actual music."

Last month, MP3.com had an average of 880,000 unique users per day, with some 144,300 performers and 926,500 songs available on its MyMP3.com website. Through its Payback for Playback programme, the company distributes $1m per month directly to artists, from Madonna to the smallest garage band. Mr Robertson likes to boast that last year two performers earned $100,000 from the programme, and a further 97 reached $10,000 and 250 collected $5,000. "More than 90 per cent of them have come to their Web account to manage their music. They get precise statistics to assess what's going on with their music online."

Up to now, MP3.com has provided the Payback for Playback service free to artists. But now it has announced that, as of 1 April, artists will still be able to put their music on MP3.com free, but they will have to pay $19.99 a month to participate in the revenue- sharing programme. Madonna won't have any trouble covering the fee, but less-well-known musicians will struggle to cover their costs. Most artists with music on MP3.com earn less than $240 per year from the programme.

Unsurprisingly, many are angry at being charged. "I think that it sucks that MP3.com was [created] for the unknown artist and now, unless you are rich enough, there is just no way of making it," wrote one on the MP3.com message boards.

Tens of thousands of artists are in the programme, but the introduction of the fee is not expected to improve MP3.com's bottom line. Instead, the fees will help cover the administrative costs of tracking music downloads and determining payments.

"Eventually, all music will be stored digitally, not just back catalogue but your own personal collection," says Mr Robertson. "I just spent a week travelling around Europe. In London, I stayed at the Lanesborough Hotel and they have an internet-enabled TV in your room. So I went to My.MP3.com, logged in and I had my music collection at my disposal, 7,000 miles from my home. That's what My.MP3.com is all about."

Mr Robertson is keen to stress the difference between MP3.com and Napster. "Theirs is an anarchist approach where all music is free. We don't advocate that methodology. We have a very calculated approach. Our goal is to create more revenue from music for everybody. That's the power of the digital opportunity. It's not about cutting an existing pie into smaller pieces, it's about creating a bigger pie. I got a big piece because I got a big pie that I'm making bigger." Michael Robertson's wholesome, boy-next-door looks match his enthusiasm, though they didn't help when the major record companies sued MP3.com last year. Having settled with BMG Entertainment, EMI, Sony Music Entertainment and Warner Music Group for $170m, Universal Music Group held out and was eventually awarded $53m by the US courts.

"I'm an optimist," says Mr Robertson. "I didn't think we were in big trouble, but I couldn't allow the litigation to drag on. The argument was: how do we reconcile this copyright law with the internet age? There's no mechanical copyright on the internet, it's all digital. And you can't charge people again for music they've already bought. The technology we built for loading CDs into your music account, My.MP3.com, is good for the industry. They now know that. But we had to do a lot of work to get My.MP3.com back up [the site was shut for more than seven months last year during the litigation].

"It was a lot of work because now we have to track each song, publisher and record label to make royalty payments. It's a huge job." Still, he says the dispute has had positive consequences. "The record labels used to think they could build everything themselves, but now they realise they need technology partners. We need each other to fully achieve our goals."

Yes, but how does MP3.com intend to achieve those goals and actually make money? "One of the values that we're building is data," says Mr Robertson. "When somebody buys a CD, I know they're buying a Madonna CD and I have the ability to contact them later. This is the first time that's been possible. How many CDs has Madonna sold, 100 million? Maybe more. And how many e-mail addresses do [record companies] have of those fans that they can reach out and touch? Zero. Why? Because the record company goes to the distributor which goes to the retailer and there's no connection to the consumer."

Mr Robertson uses several of his favourite analogies to convey his message to potential MP3.com users, and perhaps to reassure investors, that his business is based on solid principles. "What we've built with MP3.com is like a refrigerator, but for music. The refrigerator had a great impact on the food industry because you could store your food and you could access it any time. It changed what foods you ate and how much you ate. It's the same with music. We're giving you a central place to put all your music, but, because we built the refrigerator, we know what goes in and what goes out. And we have the ability to advertise exclusively in the refrigerator.

"We have data. We don't own any of the music or the copyrights. We own the data, this is how we make money. So when somebody says, `What is your business?' Well, it's data, we have subscriptions, we do have a lot of people coming to look for music and there's classic advertising and then, going forward, the future will be about the delivery of that music as well."

Over the past year, MP3.com's share price has nosedived, from $33.50 to $2.41 on Monday (the company floated on Nasdaq in July 1999 at $28). "I don't pay much attention to the share price. I focus more attention on building a profitable company. We will be profitable this year and that will be a big achievement."

Sasha Zurovic, equity analyst at Robertson Stephens, says: "We predict profitability for the last quarter, mainly because of the deal MP3.com struck with the French company Groupe Arnaud, which guarantees a committed investment of $50m this year. We feel good about that.

"MP3.com are undervalued. We have the stock tagged as `long-term attractive', that's one notch below buy. Michael Robertson started off with huge chutzpah but now he's coming into his own. MP3.com is a compelling investment, I advise people to nibble at it." Earlier this month Credit Suisse First Boston also reiterated its "buy" recommendation for MP3.com

Michael Robertson has big plans. "We rolled out French, German and Spanish versions of MP3.com in November. We already were the eighth most popular European entertainment site before we launched these. We've got big ideas about Europe."