It had all the makings of another shoot-out at the OK Corral. Bill Gates, Microsoft's chairman and chief technology officer, standing in front of hundreds of college students at Carnegie Mellon University. Would he dare to speak about peer-to-peer file sharing and illegal downloads?

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After an hour on stage, he hadn't brought up the legal issues, but he had touched on how technology would continue to make strides in multimedia and elsewhere -- and he even showed the crowd a prototype device that he called the Portable Media Center.

The device is a handheld appliance with a built-in LCD screen that could hook up to your PC to download your favorite movies and songs. He proudly announced that you'll be seeing such devices this fall in the $300 to $500 range. That's barely more than many MP3 recording devices that provide audio only.

I heard a couple of hushed "oohs" and "ahs" in the crowd. Perhaps a couple of people even pulled out their Personal Digital Assistants to check their bank accounts to make sure they would have enough money to plunk down on this new technology. It's still cool to be the first owner on your block.

But the real test came in the question-and-answer session after Gates' main presentation. Brian, an information systems major, stepped to the microphone to ask, "What plans do you have about peer-to-peer file sharing, and do you have any plans to hold that back?"

Some members of the crowd braced for a battle. The question was asked politely, but the undercurrent still seemed to be one of, "Please don't take my free downloads away.'' Peer-to-peer file sharing, which led to hundreds of lawsuits by the music industry against ordinary citizens who used file-sharing networks to download music illegally, has been criticized for letting individuals get something for free that should require payment.

One might have expected the Microsoft chairman to be somewhat uneasy about addressing the question. But he was not.

With barely a second thought, Gates talked about the great legitimate uses of peer-to-peer file sharing, and stated unequivocally that Microsoft will be working and contributing to those uses.

He didn't specify the extent to which his company is furthering the causes of electronic copyright protection known as digital rights management (DRM), but he said he believes the incentive structure that pays artists works well.

Nor did he mention that his company (and almost every software company) has a vested interest in developing digital rights management solutions -- because DRM can prevent copyright theft of software programs as well as movies and music.

"Our position is: How do we allow people to very easily license things and yet have the flexibility that digital networks should provide to them."

He did slap the hands of music executives by suggesting they should have been among the first to create simple licensing models, thereby pre-emptively creating habits in which listeners pay small amounts for music instead of bootlegging their favorite selections. Gates also told the crowd that the movie industry must move to make its titles available so people don't go to unlicensed sources first.

In short, Bill Gates made it clear that Microsoft would participate in the protection of copyrighted works as well as in the development of ways to get them into people's hands easily and inexpensively.

There was no uproar from the mostly student crowd. They understood. Perhaps they even agreed. After all, many of them would soon be making their livings in software development, and would have much to gain from copyright protection.

But just as much, this non-fight should be seen as a significant accomplishment of the university's administrators, who have been clear about their policies related to peer-to-peer downloads and copyright infringement. I hope the mood is similar on other college campuses.