Pitchfork has a great article on the RIAA lawsuits against their own customers.

I think Steve Gordon is far too kind, if anything, to record industry executives with his suggestion that they have some worth to music biz. Well, maybe I'm going too far here. They have some worth in terms of promotion, but that worth is nowhere near the compensation they receive.

Gordon is dead-on, though, in his argument about the willingness-to-pay of customers and the prevalence of risk assessment, however subconscious. For instance, putting ethical issues aside, most people don't shoplift because there's a, say, 50% or greater chance that they'll get caught. If caught, they'll have not just the public shame to deal with, but the costs associated with reimbursement, court costs, lost work, and so on. It's not only that it's wrong; it's potentially very expensive to try to swipe that new Wilco album from one of the (disappearing) big box stores. With P2P file sharing, though, the potential of being caught - the risk - is far less. The RIAA has quite a bit of hassle to go through just to get your name once they've identified you as a person with music files on your computer (which is apparently the gold standard, as the RIAA now seems to believe that all ripping and burning violates fair use). However, some people are being caught and the RIAA is asking for a settlement that would be cheaper for the defendant than court costs. On the user end, the number of legal downloads are up significantly (although not enough to cover the drop in record sales). This shows that despite the low risk of being caught illegally downloading music, people will use legal sources if the price is right. Clearly, a high-quality, low-cost alternative to illegal downloads would be successful if the price is right, but it is just a clear that the RIAA would rather pretend that they are the mafia and it's 1954 than attempting to come up with such an alternative.

Gordon also nails the reason behind this: the RIAA is concerned that legal downloading is not as profitable to the executives, promotional departments, and other music biz leeches (wanna meet these bozos? Come to SXSW). Although this means greater profits for the artists themselves,* who gives a shit about those people?

Thus, the RIAA's current strategy is deplorable. When faced with the crisis of shifting paradigms (see how I use the biz talk correctly?), the only incorrect stances are digging in one's heels and attacking one's own reluctant supporters.

* Excluding Metallica (natch) and/or the other multi-gazillionaire artists who are the ~1% that actually profit from the current record industry.