interesting you say “Napster has at least 700,000 subscribers” and use that as if it’s a success. It’s not when you consider something like 500,000 of them are required subscribers. That is, they did not choose to sign up. Instead, they are university students, signed up to the service by their educational institute, which is afraid of being hit by more time consuming litigation of dubious worth. Worse, I’d guess maybe 50,000 of the subscribers to Napster couldn’t even use the service if they wanted, due to incompatable formats.
The industry doesn’t care where people go, as long as they get their money. They want illegal downloads to stop, they just have to move on, as they did with radio, with player pianos, with cassettes. Every time they cried foul, and sounded the death knoll, it didn’t happen then, and won’t happen now.