But just as the demise of Napster's service nearly a year ago created some inconvenience for music downloaders, Audiogalaxy's shutdown should have little lasting effect on the future of sharing.

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Audiogalaxy, which has consistently ranked among the most popular applications at Download.com, capitulated to demands from the Recording Industry Association of America, which sued the company last month for copyright infringement. The company's decision may be a victory for the RIAA -- but it's not really a big one, according to parties on all sides.

Audiogalaxy ran a type of centralized server, which means the company had some control over the types of files on its system. During the landmark Napster case initiated by the RIAA in 1999, Ninth Circuit U.S. District Court Judge Marilyn Hall Patel ruled that such systems could be held accountable for infringing materials on their systems.

Shutting that service down required little more than a lawsuit. However, the big test still looms in Los Angeles. That's where the music trade group is suing the makers of Kazaa and Morpheus, two decentralized file-trading services in which each user connected to the network acts as a server, creating a web. To shut down the network, each user must be removed.

The Audiogalaxy settlement is ominous because it shows the power of a legal ruling against a technology company. But it does little to stymie the millions of users connected to decentralized systems like Kazaa and Morpheus.

"This is a sign that we realize we understand we have to pursue these suits one at a time," said Cary Sherman, RIAA president. "We feel like we have no choice but to pursue these cases so that we can turn the Internet into a place where legitimate business can flourish. For that, the case against Kazaa remains important to establish the law with regards to different forms of (peer-to-peer) systems."

Now that Napster is headed to bankruptcy court, Kazaa is one of three cases, along with ReplayTV and MP3Board, that will help shape the future of digital information exchange.

ReplayTV, a digital video recorder, continues to battle the Motion Picture Association of America over functions that allow people to skip commercials and e-mail 15 people copies of recorded television programming.

MP3Board, a website that allows people to search for music and movies on the decentralized Gnutella file-trading network, is fighting for its life against the RIAA.

The settlement has barely rated as news in Washington, where the music labels, movie studios and consumer electronics manufacturers eager to grab the ears of key congressional members are waging suffocating lobbying efforts in anticipation of legislation expected to be drafted in 2004.

"There probably aren't 12 people in Washington who have even heard of Audiogalaxy," said Philip Corwin, a partner at Washington law firm Butera and Andrews, who works for both Centerspan Communications and Sharman Networks. "The (Motion Picture Academy of America) has struck fear into the hearts of companies with the Hollings' bill. Now, (everyone) is playing down their markers for the next Congress.

Washington increasingly appears to be the next major battleground, where legislators have floated ideas ranging from compulsory licenses imposed on the companies, to digital rights management laws that would allow the entertainment industry to keep a stranglehold on music and movies.

One of the most interesting ideas has come from Senate Commerce Committee chairman Fritz Hollings (D-South Carolina), who crafted legislation that would force consumer electronics manufacturers to include digital rights management systems in all new products, something consumers and the electronics industry have long opposed.