In the virtual chess halls of the Internet, the gambit gladiators emerge at night, brandishing their slick graphical interfaces and flexing their high ratings in "shouts" to other members. It's a nightly ritual: the search for a high-stakes match that can bump the rating of a player past the 2200 mark and into the esteemed company of the masters.

Less ambitious players crowd around a particular game to observe two experts squaring off, or huddle in one of the many talk channels to gossip or chat about such weighty matters as the weaknesses of the Sicilian Defense. To the uninitiated, this could be mistaken for unabashed geekdom. But to the thousands of enthusiasts on the Internet, online chess has revolutionized the game.

Where else can a novice in Los Angeles get advice from an expert in Denmark? How else could a die-hard in New York swap opening strategies with a grandmaster from Russia? For many Netters, Internet chess is nothing less than a way of life.

Which goes a long way toward explaining how, on March 1, 1995, the online chess world was thrown into chaos. That was when the Internet Chess Server (ICS) -- the premier chess site on the Net -- suddenly announced it would become the Internet Chess Club (ICC) and begin charging members $49 a year.

In the resulting uproar, players lost their tempers and were exiled from the server, opposition groups were formed, lawsuits were threatened, ICC administrators were harassed, and plans to erect alternative servers were formed. A new type of chess match was started among Internet players -- one that has yet to end. Its commercial ramifications may portend the future of the Internet itself.

Daniel Sleator, a professor of computer science at Carnegie-Mellon University, first involved himself with the Internet Chess Server in the fall of 1992. "When I first found it," he says, "it was being run by a couple of undergraduate students at CMU." Sleator's first contribution to the server's code was to have it restore a certain amount of time to a player's game clock to compensate for transmission time. That change led to many others. "After I had familiarized myself with the code, I saw a vast number of other problems with it," Sleator says. "Things ranging from false checkmates to games where you could have two kings running around the board until time ran out."

He took control of the ICS and, over the next two-and-a-half years, gradually worked to rewrite the system. He also recruited volunteer administrators to help run the server, and implemented suggestions from members to improve different aspects of the game.

During that time the total number of accounts on the server exploded, from about 2,000 in 1993 to 10,000 in January 1995. As membership grew, ICS moved to different sites until it came to rest at its current location, chess.lm.com 5000, a commercial site in Pittsburgh capable of maintaining the higher load. The cost was $300 a month, which came directly from Sleator's pocket.

In the fall of 1994, Sleator copyrighted the Internet Chess Server under his own name. Around that time, he started receiving offers from outside parties to buy the server. These bidders all planned to charge extraordinary fees for membership, including registration charges and hourly rates. The members, Sleator knew, would not be pleased.

But Sleator was tired of devoting his time, effort, and money to the ICS for no compensation. He started talking to other ICS administrators about the possibility of making the service commercial themselves. Two of them agreed to form a partnership with Sleator and his wife Lilya. First they consulted with a lawyer about the legality of commercializing a server that was, technically, created by someone else. Then they got down to business. Expenses and profits were to be divided on a sliding scale, with Sleator standing to take the most risk and reap the most revenue.

The partnership is the model of a virtual business -- comprised of four people based in three different cities, who communicate mostly through e-mail and over the phone. As partners do in any successful business, the four determined their costs and plotted potential revenues.

"We made various estimates of how many members would stay, how many new people would join, and decided that even in the most pessimistic projections it would be worth doing," says one of the partners, Eric Peterson, a research geophysicist from Dallas.

The partners decided to charge $49 a year for registered members. Unregistered players could continue to log in to the server, but would not be able to keep a rating or have full access to ICS capabilities. There would be a grace period for all members, equal to the time they had been members of the ICS, for up to six months.

The 45 members whom Sleator identified as having made a significant contribution to the ICS were given free accounts. They included users like Andy McFarland, a computer programmer from Kentucky who developed a widely used graphical interface. In addition, grandmasters and all administrators were given free membership.

The partners also planned additional services, such as scheduled grandmaster speeches and games, tournaments and lessons, discounts on chess merchandise, a program to reduce time lag, and introductory disks to be sent directly to new members.

On March 1, players telnetting to the ICS received this message: "Important announcement for all members: Today, ICS has become the Internet Chess Club (ICC). Please type 'help announce' for all the details." Michael Gradman, a computer science and math major at the New Mexico Institute of Mining and Technology, joined the ICS in August 1994. In the following six months, he managed to play more than 600 games of online chess -- about three games per day.

When the March 1 announcement appeared on his screen, Gradman, like many other ICSers, was surprised. "We were given little warning. It was a total shock to us all," he said furiously. So he and his cohorts took to channel 2 -- an ICS chat room that was cordoned off for discussion of the changes. An air of tumult reigned. Administrators attempting to field questions were overwhelmed.

"The world of chess has been dealt a severe blow," complained one user.

"What is the Internet becoming?" asked another member. "Now we have to pay extra for a game of chess? When will this stop?"

A few players went overboard and began harassing the administrators. Partner Eric Peterson estimates that eight members were banned for becoming "verbally abusive in a personal manner toward us." Because the users could simply reenter the club under different handles, the administrators decided to "filter" their sites for several days -- in effect, preventing anyone from accessing the chess service from those Internet locales.

The debate over the commercialization of the chess server also spilled into Usenet newsgroups. Rec.games.chess, a usually soporific bulletin board where Netters discuss the latest news from the chess world, began receiving an average of 100 messages a day.

In this forum, opposition to the ICS's commercialization was most clearly elucidated. Many members simply thought the fees were too high, especially for college students who comprised a large part of the user base. One player compared the fee to that of the United States Chess Federation (USCF), which charges members $40 a year. "For that membership we get a magazine and the right to play nationally rated tournament chess," he argued. "Can the benefits of the ICC honestly be considered greater than the USCF?"

Some people said they were offended by the so-called "cash-grab" by Sleator and his partners, who admitted online that their site cost only $300 a month. One poster wondered why they didn't just ask for donations. "Many users would have been happy to help Sleator cover his expenses, but now feel completely offended by an attempt to reap an unreasonably large profit."

Other users complained that many players had contributed their expertise and guidance to the ICS but that one small group was now capitalizing on it. "The ICS was developed by people who volunteered their time and effort. It was intended that this forever be the status of ICS," a player argued.

On the ICC, the administrators listened to the uproar. One week after the initial announcement was made, a discount of 50 percent was offered to all students. But that didn't mollify members like Michael Gradman. He was helping to start an e-mail list for disgruntled users who had decided they would fight the ICC by launching a chess server of their own.

Henrik Gram, a computer science student at the University of Aarhus in Denmark, had helped code the ICS. For his efforts, he was among those who received a complimentary ICC account.

But Gram was opposed to the commercialization of chess on the Net. He felt the community, which he described as the "good and friendly spirit," would be destroyed by user fees. "Many people come to play a bit of chess and talk," he said. "They will not pay for that. Only the elite will willingly pay."

So Gram and a group of like-minded programmers revived an old rival chess server and found a home for it with Chris Petroff, a fellow ex-ICSer and network analyst for Oklahoma's State Regents for Higher Education. Petroff arranged to have the new server installed on his department's network (chess.onenet.net 5000), and Gram started recruiting other experts who were unhappy with the commercial ICC.

It took only a few days to put the team together, and Gram expressed optimism at their prospects. He estimated it would take a month for the new server's code to catch up with the ICC's. "Sleator isn't the only one who can program a chess server," he said.

Gram, Petroff, and their team also had help from some of the former administrators of the ICS. Aviv Freidman, a chess teacher in Teaneck, N.J., was among them. Freidman first joined the ICS in September 1993, serving as what he described as an "online manager" who settled disputes, brought in masters, and made sure members played honestly.

When Sleator began planning to take the ICS commercial, he made an offer to Freidman -- one that ended up creating a rift instead of a new partner. "Not only was the offer low," said Freidman, "but I think he was showing a lot of greed. I wasn't planning to become rich. I really loved the place."

After failing to negotiate a higher stake for himself, Freidman declined to join the partnership. The resulting exchange of e-mail grew increasingly unfriendly and culminated in a message from Sleator asking Freidman to promise not to sue or to damage the server in any way. Freidman responded by saying he had no intention of harming the server, but he reserved his right to press legal action -- something he has not yet decided to attempt. In March, Freidman was relieved of his position as an administrator on the ICC. He then assumed the same unpaid position for the new server, dubbed the FICS (Free Internet Chess Server).

Henrik Gram, meanwhile, has high hopes for the FICS. He wants to divide it into U.S. and European servers, thus reducing the lag for overseas players who have to connect to U.S. sites.

And because the FICS -- unlike the ICC -- publishes its code on the Net, anyone can copy it and start their own free service. Gram hopes to make it possible for members of all the free servers to play one another. And he plans to establish a central ratings database so members can maintain the same rating wherever they play.

That, he says, should make the FICS just as attractive as the ICC -- and $49 a year less expensive. In August, when the six-month grace period ends for long-time members of the ICS, the FICS administrators expect to take 75 percent of them away from Sleator's site.

The ICC partners say they aren't worried by the efforts of the FICS programmers. They express the belief that the servers can coexist. "I think there is room for both free and commercial chess on the Net," says Sleator. "There are things we will do that no free service can."

Sleator brushes aside the accusation that he was greedy. "The quality of the service people were getting from my server was at the level that I felt they should be willing to pay for it. We've spent a lot of time working on this," he argues.

Responding to the charge that a $49 fee was excessive, Sleator makes no excuses. "This is not a nonprofit organization," he says. "It's a little unfair to establish criteria that treat it differently [than other businesses]."

Only when addressing the tenacity of the opposition does Sleator begin to sound frustrated. About the students who protest a $24.50 yearly fee, he says, "If they would spend just six hours working at McDonalds they would make that money. Instead, they are spending six hours every day complaining on the Internet."

Looking ahead, Sleator and his partners have much in store for the ICC. They will begin aggressively recruiting new members by advertising in chess magazines, chess books, and at tournaments. They also plan to begin bringing advertisers onto the ICC -- in a nonintrusive and innocuous manner, Sleator promises. And they hope to establish a presence on the forthcoming online network of the United States Chess Federation.

As for the users who don't send in checks once their grace period ends, they will cease to be members of the ICC. Sleator thinks the inevitable outcome will be that part of the community, most likely the less serious players, will migrate to the free server. He is confident that his business will flourish regardless.

These days, all is quiet on the former battlefields of the Internet chess war. The ranks of the ICC have swelled to more than 11,000 -- although many of the ICS accounts have yet to expire, and not all are active. On the FICS, Gram, Petroff, and their core of programmers continue to plug away at improving the free server. They have 1,500 registered players and more than 500 log in each day.

The online criticism of Sleator and his partners has slowed to barely a trickle. The argument that has most significance for the renegade ICS players is the objection, put forth by numerous members, that in commercializing a free server that once operated under a cooperative principle, Sleator violated the spirit of the Internet community.

Sleator argues that there never was any such principle involved. He notes that the efforts of the members who contributed to the ICS were purely voluntary, and employs the metaphor of a textbook. "Almost every textbook has benefited from extensive comments by those using preliminary versions of it. Usually the author acknowledges their contribution in the book, and perhaps gives them a free copy, but does not share royalties with them."

But his critics say the Internet itself is a shared commodity -- developed by people who give to the larger community and take from it. Robert Hyatt, a professor of computer science at the University of Alabama at Birmingham, says, "Most of the Internet facilities are developed by people like us. We provide free routing for TCP/IP packets, we provide free newsfeeds for Usenet news at many sites. There are dozens of archive sites, providing gigabytes of free file storage. If you use these facilities, you are honor bound to offer services to the group yourself."

Sleator says this is an unrealistic assumption. "Some people have given a lot more than others," he notes. And his partner, Eric Peterson, says, "I think some general traffic on the Internet should never be charged for, but end nodes that are privately funded should be allowed to charge a fee for entry into their systems."

Thus, the skirmish over Internet chess highlights two widely different visions of the Net's future: a district of private clubs vs. a row of Amish houses where all the citizens pound in nails and paint the walls together.

Joel Maloff, an Internet consultant based in Ann Arbor, Mich., thinks the Internet's exponential growth will force many once-free online sites to charge fees. "Some of the things that were done in volunteer fashion when the Net was just a small community may no longer be possible," he says. "These services will have to go commercial to be maintained under their increasing loads."

For proponents of a free Internet, that movement will mean checkmate to their hopes.