Analysts say Napster clones will first try to cash in on a traffic boost from disgruntled people who can no longer find their favorite songs on the famous music file-swapping site. But the services could later buckle if faced with music industry lawsuits charging them with copyright infringement.
"If they turn around and crank out a filtering system right now, they'll risk losing any popularity they might gain," senior Gartner analyst P.J. McNealy said. However, if they wait, they could be sued for damages, a move that could be a death knell for many fledgling companies, he added.
The record industry has been aggressively pursuing any site that it sees as a threat to its control over the distribution of music. In addition to targeting Napster, the labels filed suits against Internet music company MP3.com and peer-to-peer company Scour, which shut down because of financial pressure.
What's more, last week, the Recording Industry Association of America sent letters to about 50 Internet service providers, asking them to block access to OpenNap, an open-source version of Napster.
On Friday, Napster caved under threat of an injunction that could shut the site down and said it would begin blocking songs owned by the major music labels. During most of its legal proceedings, Napster said it didn't have the technical ability to filter out specific songs. But two weeks ago, a federal appeals court said the company must police "within the limits of the system."
Napster took steps to comply Friday, although a final order is still pending from the trial court that could force it to go further.
Despite Napster's legal setbacks, many peer-to-peer music-swapping sites continue to insist they aren't responsible for monitoring the people using their system. A representative for file-swapping site Aimster said it would be "absurd" to expect the company to monitor every transaction on its network.
Companies affected most by Napster's actions will be those that share a similar architecture--namely, those with central servers that help sort the files available on the network at any given time. Because those sites act as middlemen, they provide an easier target for record companies looking to crack down on pirates.
"Napster's taking a lead here and doing that filtering," said Kelly Truelove, chief executive of Clip2, a consulting group that studies peer-to-peer technologies. Other services "might feel the need to follow that lead."
Systems that aren't centralized, such as Gnutella, probably won't feel the same pressure, partly because it's virtually impossible to block transactions between two people via the services.
"It's harder to monitor and tell who's downloading what--much harder than Napster," Truelove said.
Still, Gnutella members may have a false sense of security when trading files, thinking that they're anonymous. Truelove said it's actually easy to trace the IP addresses of people who serve up files through Gnutella. Some analysts think Gnutella could be the RIAA's next target. The group could train its legal guns on a few individuals, making them examples in an attempt to discourage others from swapping files through the system.
Willful copyright infringement can carry damages of up to $150,000 per violation.
Meanwhile, peer-to-peer companies of all kinds are preparing for the fallout of Napster's plan. Many were swamped last July when a federal judge issued an order that would have shut down the site had it not been delayed by an appeals court. Napster has grown even more popular since then, claiming more than 64 million members.