THE four brothers Frattasio were doing very nicely down in Naples. They had even gone ''legitimate'' recently, opening a mega music store near he railway station, where they could sell over the counter their vast supply of CDs and casettes with the well-known Erry label, which denoted their products.

Unfortunately, this whitewashing operation was not enough to save them from the long arm of the law. Naples police had had their eye on the family for a long time.

Last week, they closed in to arrest Enrico, Angelo, Claudio, and Giuseppe, aged between 34 and 25, on suspicion of forgery and fraud.

Enrico, the eldest, was famed in Naples as ''the CD king''. For years, he had been running a highly successful business, selling counterfeit hits by famous artists on the market stalls of the Italian south.

The Frattasio organisation included recording studios where popular CDs were duplicated, printing works that churned out perfect reproductions of the covers, and ''talent scouts'' who attended the big Italian music festivals, to flash back information on up-and-coming artists.

The illicit business pursuits of the Frattasio brothers may seem small beer compared with certain dubious activities run by other better known - and much more dangerous - Italian criminal organisations. However, music piracy is a serious problem in Italy, causing estimated annual losses of 155 billion lira (#37m) for artists, authors, and record companies in unpaid rights.

The issue is considered so important that a three-day anti-piracy campaign was held recently in Rome, attended by executives of some of the Western world's major recording industries, like BMG, Warner, and EMI.

''Italy has the highest piracy rate in Europe,'' said Rudolf Gassner, head of BGM Entertainment International. ''We estimate that 22% of total Italian sales are unauthorised recordings.'' The company markets more than 200 BMG and joint venture music labels in more than 50 countries, promoting artists like Annie Lennox, the Chieftains, Lisa Stansfield, Scatman John, and Eros Ramazzotti.

Luciano Vaudeville Bideri, president of the Italian Society of Authors and Editors (SAIE), stressed that the new sophisticated technology now available was making the problem worse by the minute.

Forgers, he said, were now able to produce almost perfect duplicates of originals: ''Police sequestered 1,283,000 pirate recordings since 1996. Following one of our tip-offs recently, they stopped a lorry at the Brenner Pass with a load of 150,000 unauthorised Sting CDs, manufactured in Bulgaria and identical in every way to the original product. These counterfeits end up in regular music shops and are sold at normal prices.''

Music and video piracy has a more sinister side. It is an ideal way of laundering dirty money and it is therefore closely linked to the drug and racket circuit. The SAIE's vigilance costs it dearly. Over the past few months, the Milan headquarters have received a number of ''warnings'' in the form of property damage and some of its executives live under police protection.

The legitimate retail market for recorded music in Italy was worth #236m in 1996. Export earnings run to nine figures, with the current international success of artists like Luciano Pavarotti and Andrea Bocelli, plus pop stars like Eros Ramazzotti, Laura Pasini, and Zucchero.

The Italian music industry, however, proudly points out that it invests about 15% of its annual turnover in developing new and unknown artists. ''This is considerably more than the 9% the pharmaceutical industry invests in research,'' said Girolamo Dominioni, president of Warner Music Italy.

The campaign closed with an appeal for stiffer penalties for pirates and a spectacular protest action in which 150,000 fake CDs and tapes were broken up in Rome's Villa Borghese gardens, during a rally attended by Italian pop singers and personalities.

The scrunching of plastic cases under the caterpillar tracks of the specially-hired vehicle must have been music indeed to their ears.