The renaissance of legal digital music distribution services is opening up new opportunities for entrepreneurs in a phase of activity on the face of it similar to the early years of the dot-com boom.

In one move former Napster CEO Shawn Fanning has made the classic transition from poacher to gamekeeper, announcing Snocap.

Formed with several of the early developers and investors of Napster 1.0, Snocap is building code that will be able to identify tracks traded on peer-to-peer networks and to attach a price tag to those tracks. Users will then have to pay to download those tracks.

CNet reports that "several record industry executives believe the idea sounds promising", warning that Fanning will also need to secure support form the peer-to-peer networks themselves.

In another move that shows the extent of creative energy being thrown at the new emerging business, Wired News yesterday discussed RipDigital, a company that will convert US music fans' CD collections into high-quality MP3s for a fee.

To use the service – which the company reportedly plans extending into other markets – consumers choose their preferred digital music format, and choose whether to have their encoded tunes ripped to DVD or an external hard drive supplied by the company. They then ship their CD collections to the company for ripping.

US copyright law means the company cannot archive the tunes, but must rip them each time from the original legally-acquired discs. The company charges $129 for 100 CDs.

Dick Adams, one of the company's three co-founders, told Wired the service has been growing in popularity since its launch in December: "We've been overwhelmed with orders and scrambling to keep up," he said. "It's been fabulous."

With the online music market anticipated to reach values in excess of $3 billion by 2008, entrepreneurs have recognized the value that may exists in creating services for the emerging breed of music fan.