By Christine Y. Chen

(FORTUNE Magazine) – If you think record companies want nothing to do with Napster clones such as Morpheus and Kazaa--or with the listeners who download free music off the web--well, you're wrong. With help from BigChampagne, a market research startup that tracks file-sharing sites, record labels have found a silver lining in music theft.

BigChampagne, with offices in Atlanta and L.A., can gather a slew of raw customer feedback by hanging out on the highways that make up peer-to-peer networks. Record labels then buy that data to learn whether, say, Eminem or Faith Hill is hotter this week, which single off Ja Rule's album might be the next runaway hit, or whether a little-known artist is more popular than predicted. BigChampagne, which is already profitable, can also break down the information geographically and demographically.

While it's an open secret in the music industry that most of the major labels use BigChampagne--some spending millions a year--none will fess up (at least not on the record). "The prevailing attitude at the labels is an ostrich mentality when it comes to downloading," explains David Adelson, executive editor of Hits Magazine. "BigChampagne supplies a nonpartisan vision of what the downloading community is doing. It's incredibly valuable information, whether you believe they are your friends or your enemies." --Christine Y. Chen