The music industry's fight against piracy continues, with a high-profile trial currently in progress. But the courtroom action reveals that such lawsuits could be a major cash burn for the very labels prosecuting them.

Jammie Thomas, a mother of two, is being tried in Duluth, Minn., for illegally downloading and sharing music. She denies downloading and sharing the 1,702 songs at issue in the trial. (You couldn't even fill up an 8GB Apple (NASDAQ:AAPL) iPod nano with those tracks.) She's being sued by all four of the major labels, including EMI (OTC BB: EMIPY.PK), Sony (NYSE:SNE) BMG, Warner Music (NYSE:WMG), and Vivendi's (OTC BB: VIVEF.PK) Universal Music.

According to Wired magazine's blog, the Recording Industry Association of America's (RIAA) president, Cary Sherman, has vowed that the industry will continue its legal pursuit of pirates, regardless of this trial's outcome. It's not surprising that the industry would keep up the tough talk, but my Foolish colleague Anders Bylund recently pointed out that legal boilerplate changes suggest that the industry knows it's losing this battle on many fronts.

Speaking of losing battles, news reports quote a Sony BMG representative who testified that the legal wranglings are costing the industry millions of dollars, and that "we've lost money on this program." Ars Technica also reported that the testimony implies there's uncertainty as to how much money the industry actually loses from file-sharing in the first place. If that's true, how much thought or research is the industry devoting to the possible benefits of file-sharing? Has anyone measured whether the additional exposure some artists get from sharing actually adds up to more fans and better sales?

I know that many companies do quite well by enforcing patents and defending their intellectual property, sometimes in the courtroom. That's all part of their business. But the music industry's tactics against piracy have long seemed counterproductive to me, if not downright foolhardy. (Anders and I are in agreement, judging by his recent, excellent diatribe.)

The industry seems more eager to punish and blame its own fans than think up new ways to serve consumers' desire for digital music distribution. (Why not follow in Radiohead's footsteps?) That seems particularly poignant at the moment, since the pursuit of alleged pirates (including grandmas, children, and dead people, over the years) doesn't even seem profitable.

Call me crazy, but maybe it's time the industry comes up with a new, better plan that focuses on making music fans -- its customers -- happy.

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