I've been following the Napster case with great interest. It doesn't surprise me that the mega-record companies have won so far. I'm sure a young enterprise like Napster doesn't have nearly enough resources to successfully challenge the high-priced legal whores employed by the record giants. 
   I think, however, that the record companies are concealing what they truly fear about a site like Napster. They look at Napster and they see the future - a future which they will not be able to control in the way they have controlled the music industry for so long. For example, they won't have as much say over who does or doesn't become a successful recording artist. In the old days the record companies could excercise control by owning nearly all the recording studios and deciding who got on vinyl and who didn't. When independent recording studios began to make a dent in that control, the record giants shifted to tighter control of the airwaves - using huge cash payoffs to radio stations to play the music they wanted played - and to largely ignore the rest. By the time the courts put a stop to the payola rackets the record companies had again shifted their focus by encouraging pre-formatted radio stations - with seriously limited play lists. Today's DJs have little freedom to decide what will be played - they have to stick to the list. Didn't you ever wonder why even on the "oldies" stations you only hear certain songs by the artists? For example - The Who - there are about 3-4 hits of theirs that one hears - Baba O'Reilly, We Don't Get Fooled Again, maybe Who Are You. When was the last time you heard Pictures of Lily - or Happy Jack - which were also big hits? I'm not sure exactly why they play only certain songs - but they do. 
   Computer technology and home recording studios, however, have severely compromised the ability of record companies to maintain control. With a computer and internet access you can choose to listen to almost any radio station in the world - some of which are independent and not controlled by the mega-corporations. On the other hand with increasingly sophisticated and affordable recording equipment available an aspiring recording artist need not necessarily go groveling to the record labels to beg for a chance to be heard. With a modest home recording studio and MIDI computer interface any artist can produce a doggone good quality CD - and with websites like NAPSTER an artist can make his/her music available to the listening public without involving the record companies at all. Shifting back to the music consumer - listeners are far more likely to try an "unknown" artist if they don't have to shell out hard-earned bucks to do it. That presents a real threat to the record labels - the listening public just may not be much interested in their star creations. 
   Let me explain what I mean by that. In virtually every commercially viable music genre there are moguls in suits and ties that make decisions about what the public wants to hear. These decisions, alas, are not always based on knowledge of what the public enjoys. More often than not they are based on the mogul's opinion of what the public wants. Country music is perhaps the classic example of this. There is a relatively small but fiercely loyal market for "true" country music. As with other genres the number waxes and wanes periodically in response to trends or fads (like line-dancing). The record label moguls in Nashville, however, are not happy with that and are constantly trying to "repackage" country music in such a way as to grab a larger market share. Unfortunately they seem to think the way to do this is to, in a word, take the country out of it and make it sound more like pop. As a result legitimate country artists often lose their record deals - or are passed over in the first place - for the crime of being "too country!" 
   Websites like Napster make it possible for the castoffs and rejects to submit their music directly to the public and let the public decide what it wants to hear. That, I think, terrifies the record industry far more than the few pennies they might lose because someone downloads a copyrighted song. I believe that also explains why the record companies refused any offer of compromise from Napster - because copyright infringement wasn't really the main issue. Of course it had to be the main issue in the court case because they couldn't very well argue that Napster had to be shut down for allowing independent artists to make their music available to the public. 
   In the end, I agree with bartcop - the technology is irrepresible - there will be an endless chain of Napsters - but the record companies have succeeded in a small way. The successors to Napster will most likely not be as well designed or as easy to use. Napster built itself as a permanent website. Its replacements will probably be designed for stealth - knowing that the record companies will be coming for them. They will probably cut corners and pay less attention to providing a quality service - in the realization that they will probably only last a short while. And the independent artists? Well, they too have been dealt a blow - there will be other opportunities but the record giants have certainly thrown up an obstacle.