We mentioned back on the 19th that a statement by the RIAA's Hilary Rosen seemed to indicate a change in philosophy regarding ISPs and some kind of fee to be paid to enable file sharing.

Unfortunately, she took it all back:

It seemed too good to be true. When I read the Reuters report on Monday that Hilary Rosen, chairwoman and CEO of the Recording Industry Association of America, had declared that her agency "will hold ISPs more accountable" and suggested that one way was to impose a fee on Internet service providers whose users frequent file-sharing sites, my ears perked up.

Not only did her suggestion make a lot of sense, but it also signaled a significant attitude shift for the industry. The music industry's business plan to date had called for suing college students and seizing laptops from Navy midshipmen; now it seemed as if Rosen was saying that the RIAA was amenable to imposing flat fees on ISPs to compensate for their users' downloading.

But alas, to paraphrase R. Crumb's Mr. Natural, 'twas never thus. When I called the RIAA for elaboration, a spokeswoman answered, "Hilary never said that." Her clarification went as follows: When Rosen was asked about charging ISPs a flat fee for users' file sharing, she said the music industry is not ready to accept that. According to the RIAA, Rosen clearly stated that compulsory licensing is not a good idea. Reuters, however, stands by its reporter's account and its story.

....But news broke Tuesday afternoon that gave a hint as to what Rosen may have actually meant by "holding the ISPs more accountable." A federal judge ruled that Verizon must release the name of an individual who the RIAA believes was making hundreds of songs available for download through Kazaa.

If the decision stands on appeal, ISPs could be forced to relinquish literally hundreds of thousands of customer names — music fans all — and subject them to RIAA litigation.

It's a shame that Rosen is now distancing herself from the comments attributed to her in the Reuters piece. And it's a shame that a federal judge is allowing the RIAA's flawed business model to flourish.

As a music fan and an avid Internet user, I want the music industry and ISPs to fare well — whether separately or together. Investors in these two areas should be breaking down doors trying to get the companies to embrace compulsory music licensing.

For the recording industry, the way to capitalize on file sharing and enter the 21st century sits right in front of them. Unfortunately, however, that seems to be their blind spot. [Eric Hellweg, Money]