Lessons for RIAA and Entertainment Industry?

The RIAA’s scorched earth policy in which they seemingly want to sue all of their potential customers never has made much sense to me. Matt Haughey’s Donuts ‘n Porn essay seems dead on target to me. As he says, “there are two ways a business can view people crowding around their valuable products: either as thieving pirates that must be stopped at all costs, or as potential customers that can bring in a lot of money. As a business owner, what view is best for your profits?”
That question seems to be a rhetorical one to me, but I guess that others disagree.