Kazaa's lead on rivals has been sliding for more than a year - at least since the Recording Industry Association of America (RIAA) started filing lawsuits against individual file swappers, with a focus on the Kazaa network. But many observers say Kazaa simply hasn't kept up with the technological times.
BayTSP Chief Executive Mark Ishikawa said: "We've known that trend was coming. It was just a matter of time. eDonkey is a much better protocol for large files."
Kazaa's slide, along with eDonkey's rise, has marked a slow generational shift in the file-swapping world, analogous to the explosion of Napster alternatives when that original song-trading service went offline.
The spread of broadband networks, DVD burners and increasingly powerful compression technology has helped boost online demand for videos, including full-length movies. Previously, the vast majority of file-swapping traffic had been focused on MP3-formatted music.
Several of the new file-trading software packages, including eDonkey, have created their technology in order to speed the transfer of large files of this kind. Kazaa's core technology, by contrast, is now several years old.
Another video-friendly technology, called BitTorrent, also has quickly gained users but does not have a simple way of measuring how many people are online at any given time. Net-monitoring company CacheLogic found last summer that Kazaa had fallen far behind BitTorrent in terms of bulk traffic sent over the internet.
According to BayTSP, eDonkey averaged 2.54 million users a day in September, while Kazaa averaged 2.48 million users a day. Those figures have fluctuated for weeks, but this was the first month-long sample in which eDonkey had retained the lead, Ishikawa said.
A US spokesman for Australia-based Sharman Networks, Kazaa's parent, had no immediate comment on the news.