Will This Genie Ever Go Back In The Bottle?
Sorry, I realise this goes on for a while: It took me a while to figure out what the deal was with these suits. I mean, were I a record executive interested in going after infringment of intellectual property rights, I would go after a few of the people on Napster who had a few gigs of MP3s online. As the people who are storing the MP3s are clearly in the wrong(legally) you could nail a few of them to the wall to warn others off.
However, they chose to go after the distributors, where the law is much more ambigious. I couldn't figure out why they did this until I realised, they basically could give a fsck about pirate MP3s. They're really no differant from when my sister makes a mix tape of her favorite britany spears crap to give to her friends, which has been going on forever.
What they do care quite a lot about, however, is the fact that MP3s, and moreover digital distribution represent the last link in the chain from musician to consumer. Cheap electronics have made it possible to set up a studio for 1/100th of what it used to cost. Musicians I know have cut CDs with only a day or so of commerical studio time, because most of what they need they have at home. This kills the recording industry's ability to control the creative end.
What they're left with is the production and distribution end, and the final genesis of the revolution that MP3.com and Napster have started would be a set of competing online services providing for pay songs online. Moreover, the fact that the Internet lowers cost of information makes advertising less important. This leaves the recording industry in a bad position, and they are acutely aware of it.
They can't tell musicians not to buy cheap recording equipment, and they can't tell consumers that the only thing they can buy is CDs. So they have to take a page from the Microsoft playbook and attempt to keep the distribution protocols proprietary. Looking back at technologies like DAT and to a lesser extent CDRs (which they're still pushing to have a tax on) they have only very rarely gone after anyone who was actually infringing on copywrite. It has always been about keeping their methods on top.
So, in closing, they realise that you will always be able to get pirate MP3s on the Internet. If it's kept underground, it doesn't harm them (in fact it may be helping them). However, if you try to compete with them in a credible way, they will go after you with everything they have.