Motley Fool: litigation isn't a business model, sell RIAA short

Alyce Lomax, an investment analyst for the financial site The Motley Fool, has written a smart little editorial arguing that lawsuits are not a sound business-strategy, and if that's the best the RIAA can come up with, it's time to short the stock of the record labels.

As I've said before, a good sign of a dying industry that investors might want to avoid is when it would rather litigate than innovate, signaling a potential destroyer of value. If it starts to pursue paying customers -- which doesn't seem that outlandish at this point -- then I guess we'll all know the extent of the desperation. Investor, beware.

Link (Thanks, Gary!)

[#1 posted by Jun-Dai , January 3, 2008 12:42 AM]

"As I've said before, a good sign of a dying industry that investors might want to avoid is when it would rather litigate than innovate, signaling a potential destroyer of value."

That sounds like a good point, but it would be nice if it came supported with a couple good examples of where there were increases in litigation during the waning years of a moribund industry.

[#2 posted by Agent 86 , January 3, 2008 12:58 AM]

#1, The RIAA

;)

[#3 posted by RyanH , January 3, 2008 4:33 AM]

Actually, as an investor I'd be more interested in examples of a business or industry where litigation had proved to be a viable option. After all, if it has never worked out in the past, why risk my money on the people trying to get it right?

[#4 posted by nicheplayer , January 3, 2008 8:01 AM]

But if you're a company like Apple, which innovates and litigates, you're golden.

[#5 posted by Chan Lee Meng , January 4, 2008 7:52 AM]

For an example of a company which litigated itself to death, look no further than SCO.