RIAA Changing Its Tactics -- An Economic Decision

It was reported by the Wall Street Journal, AP and other news sources today that the RIAA plans to stops its mass lawsuits against consumers.  Instead, the music-industry group is forging agreements with ISP's that will send notices to heavy uploaders asking them to stop.  If they don't stop, then the ISP's will presumably take action, such as slowing down the abuser's connection or possibly discontinuing service all together.

The presumed rationale for this change in strategy is that mass litigation wasn't getting the right results, and that it was alienating consumers.  First, we should get one thing straight.  The RIAA has never been particularly concerned about alienating consumers, and I'm sure that attitude hasn't changed.  They didn't suddenly "see the light" and get the urge to be perceived as a kinder, gentler enforcement agency.

This is about the money.  Litigation is very expensive, and the RIAA has not won every time it's been pushed to the wall by a defendant.  A couple of high profile losses (such as the Foster case in 2006) probably emboldened some defendants.  That means that the RIAA actually has to go to court and prove their case sometimes, and that gets very expensive.  In a pure cost-benefit analysis, the RIAA (and its member labels) probably realized that the aggressive tactics simply aren't economically efficient.

Also, the ISP's are apparently more willing now than in the past to cooperate with the RIAA.   The ISP's traditionally had no interest in alienating their customers in order to help the music industry.  The DMCA protects ISP's from liability for infringement by their users.  So, why would they do more than what is legally required?

One possible answer is that ISP's are expanding beyond being simple data pipelines and instead more actively participating in content distribution.  I imagine their plan is to somehow convert the illegal music traffic into legal music traffic from which they can extract a profit.  It's even possible that some new models for content distribution could emerge as a result.  

Ultimately, perhaps there is a way to monetize P2P activity.  That's been talked about for years; maybe this is the first step in getting serious about doing it.  With social networking being so prevalent and increasingly important in the digital landscape, it makes sense to integrate legal content distribution models into online communities.  ISP's might be in a good position to do that.

Bottom line -- the RIAA is changing tactics because the member labels don't want to keep paying for lawsuits.  Under these economic conditions, absolutely everyone is looking to cut every cost possible.  But this belt-tightening might ultimately lead to better distribution models and perhaps even more revenues and profits.  

Sometimes people don't do what's good for them until they're forced to.  Tough economic times may create a new wave of innovation and efficency  -- especially in the digitial media industry where the cost of distribution is potentially so inexpensive.  If every consumer is also a distributor, and the content owners are getting paid, I would call that a very efficient distribution model.