Research company Gartner has warned record companies that they will hurt only themselves by pursuing Napster, the music sharing website.
San Francisco-based District Judge Marilyn Patel last Wednesday issued a preliminary injunction against Napster, and in favour of the Recording Industry Association of America (RIAA) which sued Napster earlier this year for alleged copyright piracy.
Napster executives said that complying with Judge Patel's injunction would mean that they would have to close the service down, because it cannot filter copyrighted material from that in the public domain.
However, late on Friday a panel of two appeal judges granted Napster a stay of execution, allowing it to remain in business at least until its appeal is heard, probably in September.
Robert Labatt, research director for Gartner's ebusiness services, said: "The record industry faces the real threat of alienating the very audience they are trying to sell to. Napster technology is all about the shift in power from the recording industry to the consumer."
Stephen Bradley, another Gartner analyst, said: "There is no doubt that users are illegally copying music, but the record companies should be careful about what they ask for."
Bradley said record companies' "short-sighted desire" to shut down the popular Napster music site will make it nearly impossible for the industry to control the online trading of music.
With Napster potentially shut down, the record companies have no one to negotiate with as distributed trading architectures such as Gnutella have no management team, facilities or place of business, he said.
"The smartest thing the RIAA could do right now would be to temporarily stay the injunction themselves. They have finally been given a huge hammer. Now they should hold on to it, but not use it yet," Bradley added.
"The RIAA will never be in a better position than right now to drive meaningful negotiations. If they follow through with the injunction, the music downloading community will immediately move to far more anarchistic alternatives. The RIAA will have lost its leverage, but not its fundamental challenge."
At the same time, new research shows that the Napster client actually generated more data downloads than the Netscape Navigator web browser between Wednesday and Friday last week.
Users rushed to swap MP3 music files before the site threatened close down.
Research published today by internet home use monitoring firm Net Value said that Napster was responsible for more data being downloaded than Netscape Navigator and was only "a little behind" rival browser Microsoft Internet Explorer.
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