It's another pyrrhic victory for the music industry.

The Recording Industry Association of America (RIAA) won another battle against music piracy this week, and by won I naturally mean lost.

Awarded $1.92 million in a case against a 32-year-old mother who presumably downloaded and shared 24 different songs, the RIAA is toast. It knows it can't collect the money from the woman of modest means, and all this case does is make more music fans turn against the major record labels.

Come on: $80,000 per track, for making a Richard Marx song available on peer-to-peer trading site KaZaA? Are you guys out of your mind?

The music industry will argue that it's sending a message. You don't have to be a power user, swapping countless MP3s or BitTorrents, to be nailed for piracy. Unfortunately, that message will get drowned out by the wider perception that the music industry is just greedy and out of touch.

No torch and pitchfork for me, thanks
I'm not one of those RIAA haters. I fully grasp that pirated music, movies, and software are illegal. I would like to think that the same person who downloads the new Green Day album or the latest James Bond flick would never walk into a store and swipe a CD or a DVD.

I was young once. I was in a band signed to Sony's (NYSE:SNE) Columbia Records. I respect the time and effort it takes to write, rehearse, and record music. Unfortunately, the music industry also assumes that someone who would illegally download a track for free would otherwise pay for it.

That is what the four major labels -- Universal, EMI, Sony, and Warner Music Group (NYSE:WMG) -- don't get. Illegal downloading isn't what doomed the industry. It's the greater presence of the Internet that has made the labels less relevant.

Cyberspace killed the radio star
The Internet armed garage bands with the tools to reach the masses. An unsigned band from Austria can set up a free page on News Corp.'s (NASDAQ:NWS) MySpace Music in minutes, and an hour later, it can make a new fan in Des Moines. Some of the more popular channels on Google's (NASDAQ:GOOG) YouTube similarly belong to acoustic guitar-strumming vocalists.

It's not just the Internet that leveled the playing field, of course.

  • Home-computing cats like Apple (NASDAQ:AAPL) have turned quality home-recording software into a reasonably cheap art form. There's no longer a need to spend five or six figures in a recording studio, so bands no longer need to be bankrolled by a major.
  • Terrestrial radio used to own the eardrums, and labels had an easy time influencing music directors' playlists. These days, you have commercial-free options such as Sirius XM Radio (NASDAQ:SIRI) that can dig deeper into music genres, as well as an infinite number of smaller Internet-radio startups.
  • Even established artists are embracing what the likes of Live Nation (NYSE:LYV) offer. A recording contract is valuable only if it's lumped together with revenue sharing on the merchandising and performance fronts, and cheap direct distribution helps artists achieve those more complete solutions.

Clueless, the soundtrack
Maybe the RIAA and its labels were high-fiving on their way out of the courtroom this week. Maybe they also don't realize that in their ideal world, where not a single label-owned track would ever be pirated, their artists would be even less relevant than they are now. Music fans would just move on to smaller, more accessible bands that realize that the Web and free digital distribution are promotional tools, and more than just a standalone business model.

Nice going, RIAA. You're the Kobe Bryant of the music industry. You may have won it all this month, but that just means that even more people despise you now than you'll ever know.

Other ways to rock the RIAA:

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Longtime Fool contributor Rick Munarriz has been a music fan since birth. His band Paris by Air was once signed to Sony's Columbia Records label many moons ago. He owns no shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.