NEW YORK (Fortune Magazine) - The idea of distributing music over the Internet is now pretty much accepted, even by the record companies. In the digital world, music is just another stream of bits, and the Internet is far more efficient at distributing bits than any other carrier.

Music is bits. So is software. So are album covers and other art. So are reference manuals and radio broadcasts and telephone ring tones.

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Which brings us to two intriguing announcements today, one involving online distribution of computer software, the other wireless shopping for music through a mobile handset.

(For you old-timers out there, a mobile handset, or "piece," is the modern version of what used to be known in the 20th century as the "cellphone.")

Let's start with the mobile handset. AT&T Wireless says it will be among the first companies to offer a complete digital music store for mobile handset users. This goes beyond ring-tone downloads, which are already quite popular, into the realm of full-scale digital music and Internet radio services.

Old way: You're bopping down the street in your car, yakking on your piece, when a catchy new tune comes on the stereo. Assume for a moment that the radio deejay actually announces the name of the artist and the title of the song. (Yes, I know it's highly unlikely.) You tuck the piece between your shoulder and ear and fumble for a pen and piece of paper -- that old Burger King napkin on the floor will work just fine -- WATCH OUT! You nearly creamed that old lady on the sidewalk! -- and scribble the song title.

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Although you intend to stop by the music store on your way home from work, you forget. Later you mistake the paper for trash and throw it out.

New way: You keep driving, call up the AT&T Wireless Digital Music Store, search for the artist or song title, preview 15 seconds of the song to make sure it1s the same one you heard on the radio, and click to buy the song. The cost of the song goes on your AT&T Wireless bill, and the song is stashed in your online music locker. Later, when you get out of the hospital after having driven up on the sidewalk and plowed through a row of parked Harleys, you can log in on your home or office PC, download the song, burn it to a CD, transfer it to a portable music player, or whatever.

Loudeye, Microsoft, and AT&T Wireless today revealed plans to launch a new music download service, based on the Loudeye Digital Music Store, that will enable AT&T mMode subscribers to search for, preview, buy, and download songs via their AT&T Wireless mMode phones.

Don't get too excited yet. The companies declined today to reveal exactly when the AT&T music service will open for business (sometime in 2004) or how much it will cost (it had better not be more than 99 cents per tune).

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Nor did AT&T say which digital music formats will be supported, but because Microsoft is a partner, you can bet that the songs will be distributed in Windows Media Audio format.

We can expect other wireless phone companies to come up with similar plans, now that Number Portability is the law of the land. Phone companies are scrambling to offer their subscribers all sorts of new services now that it's easier for consumers to switch carriers while keeping their current phone numbers. The AT&T mMode digital music service is a prime example.

Meanwhile, CompUSA announced plans to begin selling software electronically at its stores, beginning later this month in Dallas, San Francisco, and Seattle, and expanding to other cities in the coming year.

Here's how it works: You go to a kiosk at a CompUSA store, sort of like an ATM machine, only in this case you withdraw bits instead of dollars. You search for the software title you want, swipe your credit card, push a few buttons, and the title is downloaded and burned onto a custom CD along with packaging and documentation. The kiosk spits out the CD and you're on your way.

CompUSA likes the idea because software boxes take up a lot of valuable shelf space. Stores often stock only a small percentage of the many available titles, and competition for shelf space is ferocious. By going to electronic distribution, CompUSA can increase its inventory significantly without adding physical space to the stores.

The electronic software delivery system, called SoftwareToGo, was devised by Protocall Technologies Inc. of Commack, New York. According to Protocall, the terminals will also be able to show product demos. Protocall says some 200 software publishers have put up a total of 1,000 titles on the SoftwareToGo system, including titles from five of the top 10 software makers. (CompUSA did not respond immediately to a request for the names of the top five, so we don't know at this point whether one can buy Windows XP and OS X Panther and Adobe Creative Suite, or whether it's stuff like games and cheap utilities and other bargain-bin software.)

This would be a lot more exciting, of course, if consumers could download the software at home. But considering the number of times I've driven to CompUSA to get a particular piece of software, only to find that it isn't in stock, SoftwareToGo is a step in the right direction.

Now if only I could download an iPod and a Treo 600...

If you're in one of the test cities, try it out and let us know how it works. I'll test the system next month when I'm in Dallas and San Francisco.

The Loudcloud Digital Music Store prominently supports the Windows Media Audio (WMA) music format, which Microsoft developed as an alternative to the more widely used MP3 format.

As several readers have pointed out, my recent Fortune magazine review of the new Dell Digital Jukebox portable music player incorrectly stated that the Apple iPod plays all the same formats as the Dell device plus some others. The iPod does not -- repeat, does not -- play Windows Media Audio files.

I knew that. But I got sloppy in trying to condense a paragraph.

For the record, the iPod supports the following formats: Mac: AAC, MP3 (Constant and Variable Bit Rates), WAV, AIFF, and Audible. Windows: MP3 (Constant and Variable Bit Rates), WAV, and Audible. NOTE: No WMA.

The Dell DJ supports: MP3 (Constant and Variable Bit Rates), WMA (versions 7, 8, and 9), WAV, and Mono.

And in the same issue I wrote, "Eastman Kodak announced recently that it is ending long-term R&D for film and henceforth will focus its consumer photo business on making prints."

Gerard Meuchner, Director of Corporate Media Relations for Eastman Kodak, wrote to set the record straight:

"On Sept. 25, when the company discussed its strategy with investors in New York City, we said we would accelerate our efforts to build diversified digital businesses in part by reallocating resources from our traditional businesses," he wrote. "As proof, we said that by 2006, the company's allocation of R&D dollars would be 78 percent digital and 22 percent film, compared with about 66 percent digital and 34 percent film currently. That 22 percent allocation in 2006, of course, means that we are not ending long-term R&D for film, as the column states."

"Kodak remains committed to film -- including R&D involving film," Meuchner said.

Doh! It appears I have greatly exaggerated the demise of film R&D at Kodak. Apologies for the error.