>they should have stood firm or offer up the 'Oh no we couldn't possibly figure out how to do that, it's entirely too complicated, you wouldn't understand.' excuse all other tech companies put out whenever they are told to do something trivial.
Here in the UK, that's basically what BT said back in the early days of rights holders trying to block this stuff.
The rights holders took them to court and managed to get the court to order them to use Cleanfeed (a system that was only used, at the time, to block Child Sexual Abuse Material) to block Newzbin.
Not only did it help kick all this off but, overnight, it meant there was a socially acceptable reason for people to share knowledge on how to circumvent Cleanfeed.
The rights-holders give zero shits about the collateral damage they create with stuff like this
And importantly that rule meant that if your ISP doesn't have censorship filters, the anti-piracy people can't touch them. That's why Andrews and Arnold (aa.net.uk) is the way it is.
After all, who can say how much AA should spend to stop their customers from committing crimes? Should they spend $100 per customer? $100 per week? $100 per day? How much extra money are you required to spend to stop other people committing crimes?
For people with existing censorship capabilities the answer was oh that's basically free right? I mean you already have this capability so we'd just piggyback on that. But for AA it's an entirely open-ended question. If Hollywood wants to pay, let them propose how much they want to pay for this service. It's worth almost nothing to them, they know that, and so there won't be an offer.