TALLINN, Estonia - When Swedish software developer Niklas Zennstrom cast about for help in writing the Kazaa file-sharing software, colleagues raised eyebrows when he chose three youths from little-known Estonia.

And jaws dropped when the program that Ahti Heinla, Priit Kasesalu and Jaan Tallinn wrote from their spartan, two-room office quickly became the leading software download on the Internet; CNET's Download.com distributes millions of copies a month.

Mr. Zennstrom knew what he wanted Kazaa to do when he hired the shy, twentysomething Estonians, who favor faded jeans and T-shirts. He wanted to let any two computers trade files seamlessly, without going through a central server. He just didn't know how to do it.

"It was the Estonians - the three of them, not a full research department - who came up with the programming code," Mr. Zennstrom said. "That was the key."

The 36-year-old, lanky Swede said the software, pounded out in four months and first posted online in late 2001, worked almost glitch-free from the start. And it set usage records within the year.

"It was amazing. They are very skilled," Mr. Zennstrom said in an interview during a business trip to this former Soviet republic, a 45-minute flight from Stockholm.

"Were we surprised at how successful Kazaa's been?" asked Mr. Heinla, his blond, disheveled hair flowing to his shoulders. "Yes, really surprised."

That the breakthrough - which has led to litigation and accusations of thievery from the music industry - occurred in this ex-communist state of just 1.4 million people was no fluke, Mr. Zennstrom said.

This Baltic state, once known more for pulp and paper exports, has leapfrogged older technologies with investment help from nearby Finland - the home of Nokia Corp. As it has embraced the Internet, it has earned the nickname "E-stonia." The Estonian programmers who wrote Kazaa still work from the same modest premises at their company, Bluemoon Interactive, sharing two or three computers.

A U.S. court recently tried to force the programmers to give depositions in a copyright lawsuit filed by the entertainment industry. But a Tallinn judge said they didn't have to comply because the request was vague.

In an interview, the programmers defended their work.

"We didn't see ourselves as creating vehicles for pirates, but as creating vehicles for the music industry itself and others like them," Mr. Heinla said.

Most Estonians are proud that their countrymen have provoked such a global fuss.

"People are very impressed," said Kristjan Ostmann, an editor at Estonia's Postimees newspaper. "Their work is brilliant."

Last week, the U.S. recording industry tapped into two Internet file-swapping services and flashed messages to music traders, warning them they were breaking the law and that "you risk legal penalties."

The industry is collecting the user names of people suspected of offering copyrighted material with file-sharing services like Kazaa, but it doesn't intend to pursue legal action, said Recording Industry Association of America President Cary Sherman.

The tactic is the latest in the industry's battle to curb the illegal duplication of copyright works, which it blames for a drop in CD sales.

Last month, the industry lost a court battle against file-sharing services after a judge ruled that two file-sharing software makers are not responsible for file swapping by their users. A similar lawsuit against Kazaa is pending.

Unlike Napster, the pioneer file-sharing service ordered shut by U.S. courts, companies like Kazaa say they only provide software and technical assistance, rather than actually maintaining an index of all copyrighted material available.

The RIAA was able to find the screen names of people using Kazaa and Grokster - based on the Caribbean island of Nevis - through a computer application designed to work with the peer-to-peer software that allows automated searches of 100 to 200 of the most popular or most traded song titles on the services.

The message the RIAA sent warns users that they are not anonymous, can be identified and are at risk for legal penalties. It suggests the user disable the file-swapping software.