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A Ploy Named Sue

Just when you thought it was safe to fire up your peer-to-peer file-sharing program of choice and troll for pirated MP3 song files, the Recording Industry Association of America (RIAA) is back.

The trade group representing the five major labels filed 41 new lawsuits yesterday, targeting individual users who were making tracks available for others to download. How can a sector that is still limping manage to shoot itself in the foot?

Yes, file-trading traffic has faded since the RIAA began to get serious about going after the consumer. But because this hasn't been accompanied by a commensurate spike in the sales of prerecorded CDs, the move may be educating the end user about copyright laws at the expense of waning popularity in music.

The record companies continue to scramble. Sony (NYSE: SNE  ) , BMG, Time Warner (NYSE: TWX  ) , EMI, and Vivendi (NYSE: V  ) represent the five main players in the beleaguered music sector, but that may not be for long. Consolidation is starting to sound more like retrenchment than a call for reinforcements.

Embracing digital distribution, the way the labels have done through ambitious online delivery services offered by the likes of Apple (Nasdaq: AAPL  ) and Roxio (Nasdaq: ROXI  ) , may help the music makers achieve a streamlined model of sustainable profitability. However, sooner or later, it's going to have to learn to win back an audience that has devalued the perceived worth of recorded music. Intimidation breeds apprehension and aversion -- not loyalty.

Can a computer company and its popular iTunes store really serve as salvation for the struggling music industry? Can a company set on moving iPod music players have a more determined interest in the future of digital distribution than the record companies themselves? All this and more -- on the Apple discussion board. Only on Fool.com.


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Rick Munarriz
TMFBreakerRick

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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