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Is this for real? Why on Earth would ISPs put so much money and effort into doing something like this, when there's zero benefit for them? (Besides, perhaps, not getting sued by the RIAA... but then again I doubt companies like AT&T would be too worried about that.)

20 years from now we'll look wistfully back on the days of online anonymity and innovation and shake our heads at the fact that a few jerks who make movies and music systematically crushed one of man's greatest achievements.

It's because they are all owned by the companies that hold the copyrights.
I'm pretty sure there's no spying here.

http://www.copyrightinformation.org/sites/default/files/Momo... (sections 4.A and 4.C.)

From my brief reading, I would tend to agree. This seems to be more about providing copyright holders with 1) a channel to spread their propaganda, 2) a method of getting notices to people they claim are pirating and 3) the ability to scale to termination of services for repeat offenses. I didn't read closely enough to see if they could ask the ISPs for contact information on repeat offenses. Ugly? Yes. SOPA-redux? Not so sure.

The "spying" would still be the RI/MPAA doing whatever they've done until now.

is there a complete list of ISPs participating?