It doesn't matter if it's technically legal or fair. Remember, we're talking about the record industry here. They're going to be using some combination of threats, bribes, and lobbying to get access to the records. They may offer universities a file-sharing service that they approve in exchange for not suing them(also called extortion), but they'll only provide it to campuses that they deem to be cooperating, and they can provide the same deal to ISPs as to colleges. This puts them back in charge of distribution, and it's why I don't trust vertically integrated systems like itunes. Depending on a centralized store for all your media puts the store maintainer in control of what you get, and it makes them a vulnerable target for lawsuit, which leads to them being easily corrupted.
Source(s):
http://www.dmwmedia.com/news/2008/11/18/tennessee-passes-riaa-backed-campus...

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As if to preempt this, ThePirateBay at least is contemplating the creation of an encryption protocol to hide p2p from prying eyes (see link below).

It seems a bit unfair to me for ISPs to try to punish users for accessing resources which the ISP itself makes available. That's like a newspaper publisher punishing people for reading an article which they've warned people not to read but which is published and plainly visible anyway.
Source(s):
http://newteevee.com/2008/07/09/the-pirate-bay-wants-to-encrypt-the-entire-...

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I don't see how it can be done without breaking anonymity. There are also enough things shared legally that it's going to cost the ISPs a lot to try to monitor it all and figure out what's legal and what's not. I would guess that if they go this route there will be a lot of class-action lawsuits from endusers who've been sharing legal things.
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All that they will achieve is to further alienate their own customers. Eventually they will get greedy and file a lawsuit that will irritate the wrong judge and they will get slapped for good.

What will probably happen is that they will make deals with ISPs just like media companies do with Youtube. Let people host our content as long as you share with us whatever ad revenue you make from displaying the content. As long as they try to bully people and try to push private entities into law enforcement that they are not allowed to do, they will fail. You can't expect to make money forever by treating your customer as a criminal.
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I think the RIAA are a bunch of lawyers, agents and MBA's who couldn't write a ten note jingle on a kazoo!

Look, why do the RIAA deserve money? Janis Joplin is dead. If you download her version of "Summertime" why should some sleazy suit make a dime?

These are the same people who screwed most of the original artists out of their royalties in the first place.

The RIAA are criminals who steal with a pen. The whole system of copyright was developed to "encourage artists to create art." They have bribed congress to give them more and more and now they think America owes them money for music they never wrote, recorded or distributed.

RIAA = thieves in suits.
Source(s):
http://www.loti.com/fifties_music/the_payola_scandal.htm

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Actually, regardless of the legality, the record companies attempts to crack down on peer-to-peer will have no effect. The world is built on trade and not always with a monetary reward in the end.
Record companies are dying and this will allow the artists to evolve into the next stage for music. Already many have found that allowing their music to be distributed freely has been beneficial and some have come up with some very novel ways of recouping the cost of recording. Artists will succeed where companies have not by being creative and realizing that the more people hear your music, the more music you will sell.
Personally I liked Prince's idea: with every ticket to his concert, you got his newest album "free". This meant that his true fans got the music and the casual listener wasn't forced to shell out a lot of money for the new disc. Also, the method that Coldplay adapted by charging "whatever you feel its worth" proved successful in that they recouped their expenses.
Record companies will die, it is inevitable. Its just sad that so much litigation needs to preceed it for that to happen.
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They can do this. If there is no law to prevent it and no precedent has been set, then they can.

Keep in mind, we're looking at this as customers of music. Think about the artist, though. Imagine how much it sucks to know that people like Elvis or Michael Jackson once were able to create great music (judged by people) and sell millions upon millions of records, and now it's impressive if you sell just a one solitary million records. This is despite the fact that CDs are higher quality sound, easier to work with, and prices haven't gone up relative to either inflation or wealth.

I think it's fair. I think it sucks too, because I haven't bought a CD or mp3 except off the street by some random rappers, but I think it's fair.
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