The Verizon ruling is troubling on several different levels, most broadly for privacy concerns, but it may also bode ill for the very industry that pressed the case in the first place, says Eliot Van Buskirk in his "MP3 Insider" column for CNET:

Punch Networks offers online lockboxes for the storage of sensitive information. The content in the lockbox can be synced to any number of computers, which helps law firms and other such organizations keep their documents accessible, updated, and, most importantly, secure.

The company recently began planning an MP3 service, which consumers can use to sync their music collections on two different computers over the Internet. Since files are transferred to the Punch lockbox over a secure HTTPS stream, ISPs won't have any idea whether the traffic represents a bunch of self-penned Word documents or a collection of copyrighted MP3s. Even more interestingly, you can give your account's password to whomever you want. Your friends and family can sync their own music to the collection, and their tunes will automatically copy to your hard drive.

This service costs $100 for one year of access to a 100MB lockbox--enough space for a rotating cast of 20 to 40 MP3s. Certainly, some people will use Punch and other such secure data-syncing services to trade copyrighted MP3s, but not one penny of that money will go to copyright holders since the files cannot be tracked and Punch promises confidentiality to its clients. This reveals the ultimate folly of the record industry's litigious approach to file sharing: driving it underground where it cannot be tracked. Instead, the labels should embrace the Internet and offer compulsory licenses to P2P companies so that such sites can offer paid file sharing in a legal manner.

Besides trampling our Constitutional rights, the record industry's lawsuit will only hurt it in the end by driving people to secure, harder-to-track file-sharing networks. Obviously, people really like trading MP3s. Many folks--perhaps even the vast majority of them--would pay for the right to do so, whether the money goes to secure file-syncing networks such as Punch Networks (which give no money to rights holders), or an RIAA-approved service that compensates copyright owners using funds gathered through a compulsory-licensing rate. The record labels need to decide whether they want a slice of the online-music pie. I have a hard time believing that the music industry would rather let someone else collect the money generated by file sharing, but that's exactly the option it's choosing by pursuing such lawsuits as RIAA vs. Verizon.