This approach seems exactly right - they are going after the real pirates:

Producers and retailers of counterfeited goods will face jail sentences and high fines across the European Union, under plans to be unveiled this week by the European Commission.

The proposed rules are part of a crackdown on piracy, which is estimated to cost governments some 14bn euros ($15bn) a year in lost tax revenues and reduce companies' profits by 2.5bn euros.

The plans, which are set to be backed by the 20 commissioners, aim to close loopholes and reduce the wide differences in the national laws of the EU's 15 countries.

....However, the new rules will exclude piracy for private use, such as downloading of songs from the internet - a rapidly growing trend estimated to cost the music industry billions of pounds in lost profits.

....This week's proposals complement other rules, unveiled last week, to give customs officers more powers to stop the import of counterfeited goods. [Financial Times]

Even if the industry refuses to see the difference between pirating for profit and Joe Kazaa swapping a music file or two, I am very pleased to see politicians and bureaucrats making the distinction.