Matthew Yglesias is doing a fine job of dissecting the MGM vs. Grokster case now being argued before the Supreme Court.
If you're not familiar with the case, this is the one where the RIAA and the movie studios are trying to shut down the latest incarnation of P2P networks (think Napster), which they claim facilitate and promote theft and are a threat to their business, despite the fact that their sales of CDs and other music products rose 2 percent last year.
It appears that the justices have been fairly receptive to the Grokster side of the issue, though the outcome is far from certain.
As many have pointed out, this is no different as a matter of law than the challenges the content creation industry has mounted against nearly every new recording or distribution technology to come along since the piano roll. They are not interested in serving their customers, they're interested in maximizing profits and choking off competition.
It's basic business evolution. These new technologies are here and they're not going away. Adapt or die.