Big Music Accepts Reality, Drops Lawsuit Strategy. Next Up: Nasty Notes From Your Cable, Telco Companies.

Good news, Internet music “sharers”: The big music companies have accepted the fact that you’re not afraid of the legal threats they’ve wielded against users of Limewire, BitTorrent and other son-of Napster file-swapping services. They’re going to stop trying to sue people who use them (for the most part).

Bad news, Internet music, movie and other content “sharers”: The content companies are trading their sue-’em-all strategy for one that leans on Internet service providers to help them fight their battles for them. This may ultimately be much more effective. Here’s how it will work, via The Wall Street Journal:

The [Recording Industry Association of America, the music industry's trade group] said it has hashed out preliminary agreements with major ISPs under which it will send an email to the provider when it finds a provider’s customers making music available online for others to take.

Depending on the agreement, the ISP will either forward the note to customers, or alert customers that they appear to be uploading music illegally, and ask them to stop. If the customers continue the file-sharing, they will get one or two more emails, perhaps accompanied by slower service from the provider. Finally, the ISP may cut off their access altogether.

The RIAA said it has agreements in principle with some ISPs, but declined to say which ones.”

The fact that the big labels are going to stop suing people who “share” their music via P2P services is the least interesting development here. That’s just the industry accepting that it lost a battle that ended years ago. In Q3 of this year, the volume of music swapped on via P2P increased 28 percent, says NPD.

More interesting is that Big Music thinks it has finally found an ally in the ISPs, who have traditionally been just fine with letting their subscribers swap all the music they wanted. It’s not clear what incentive they’ve offered to get the ISPs on board. And note that the WSJ doesn’t identify any ISPs that have actually signed on to this strategy. So this still may not be a done deal.

But the people who sell you Internet access–whether its the cable guys like Comcast (CMCSA) and Time Warner Cable (TWC), or telcos like Verizon (VZ) and AT&T (T)–have already shown a general inclination to help content owners fight piracy. Or at least help them fight particular kinds of particularly egregious piracy.

They’ve been doing so by trying to limit, in various ways, your ability to swap lots of files with other people. Some of these strategies have been clumsier than others.

Last year Comcast tried “throttling” the connections of broadband subscribers using some file-sharing software–a ham-handed approach (particularly the lying about it) that earned them a wrist-slap from the FCC.

But other companies have been more upfront about telling subs that they reserve the right to cut off file-sharers. A different approach that many are contemplating: simply charging heavy file-sharers a lot of money.

Do the ISPs really care about the sanctity of copyright? Doubtful. But they do care about the cost of moving lots of data around–and those costs are only going to increase as consumers start consuming more and more video over the Web.

And at least in the case of Hollywood, they do care about keeping content creators somewhat mollified, since all of the ISPs want to make money by selling, renting, or just offering up Hollywood’s movies and TV shows to subscribers.

So I’ve always understood why Comcast was standing up for the likes of Sony’s (SNE) movie studio. But why is Comcast (or its peers) going to start working on behalf of Sony’s music group? I’m all ears.

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