In an excellent post predicting the imminent death of the music labels, Scott Karp raises the spectre of the music industry sustaining itself in its death-throes by litigation alone:
"Imagine the revenue potential from suing hundreds of millions of people, i.e. suing every one of your customers...Is it possible for an industry to develop a business model based entirely on litigation?"
To which of course the answer is "yes" - the patent trolling industry is alive and well, and there are companies making a living buying up patents from bankrupted technologists and then suing alleged infringers. This patent trolling trend led Cory Doctorow to speculate last year about the potential for EULA trolling in which companies buy up and then try to enforce those absurdly onerous End User License Agreements that we all click without reading. All of which points to one obvious fall-out from the imminent death of the music labels - IP trolling.
When (I don't consider this an "if") the music labels finally grind to a halt, some enterprising lawyers - perhaps the very same ones currently raking in the patent trolling dollars - are going to buy up the IP at fire-sale prices with an eye to suing the labels' previous customers for copyright infringement. As Mathew points out, that'll be all of us since we've all ripped hundreds or thousands of CDs onto our computers (as demonstrated by Umair's old calculation that only 1-3% of the space on all the iPods sold is filled with iTunes songs). And those lawyers won't be fettered by the concerns of the music labels such as having to sell music to the same people they're suing. There are some very dangerous precedents being fought for by this dying industry, aiming to transfer rights from us as consumers not just to the current so-called rights-holders - but to anyone who wants to buy up those rights when the end comes.