"This is typically the kind of situation that happens when lawyers are allowed to become too influential"
You are exactly right.
There is also another related [poor] business strategy: Sign on with a consulting firm that will provide "full service" protection of your brands and IP. In that situation, the business may not even be directly involved in the decision to do send this type of letter.
Hint for the MBA set: Any time your decision making process consists of "leaving it up to" someone who is in a different business than you, watch out. They may be making decisions that are not necessarily in your best interest.
What the US sorely needs to accomplish legal reform can be said in 2 words: Loser Pays.
So called consumer advocates (who are really representatives for plaintiff's attorneys) hate the idea for the very reason it is a good idea. Increasing the risk associated with bringing a questionable lawsuit means there will be fewer lawsuits. Fewer lawsuits mean fewer lawyers getting paid, and less expenditure of resources in nonproductive ways by all concerned.
A true consumer advocate should accept this idea because if a corporation has wronged a consumer or group of consumers, the offender would be quicker to settle if it knew there was a good chance of losing not only the judgment, but also the opponent's legal fees. There is less chance that a true offender can just stall until the claimant runs out of money and gives up.
Loser Pays means fewer frivolous lawsuits, fewer attempts at legal bullying and less expensive justice. Period.
Adobe's subsidiary and suspected NSA contractor Omniture is the #1 merchant of private data taken from your computer without your permission or knowledge. (Yes, I know Google Analytics is right up there doing the same thing). Adobe/Omniture wants to ensure there is a legal framework for them to continue doing this without your approval, and certainly without any ability for you to block or otherwise interfere.
No, Amazon should not be compelled to sell something they do not want to sell, and no, they have not done something terrible by exercising their right to choose what is sold on their site. I just happen to disagree with their choice. It also is most certainly censorship - not in a universal sense, and not in the sense that they are seeking to deny anyone the right to find and access material that others may judge to be objectionable. Such a limited meaning of "censor" isn't the only way to use the word. Consider, for example, that you can choose to censor your own expression.
I do believe this policy is related to liability risk. Amazon doesn't want to get criticized and perhaps even sued by some angry parents alleging that Amazon should be liable for allowing their innocent child to be exposed to objectionable material on a site that Amazon made available to the public.
I seriously doubt Prince himself is trolling around the internet looking for supposed infringement. Almost certainly he signed a contract with a company that has promised to look out for his copyright interests so he doesn't have to personally worry with the details. The IP enforcement firm has incentive to find every miniscule scrap of music that can be attributed to their client. They must continue to keep proving their value in order to perpetuate their future paychecks.
"They don't have anyone who can validate that the content "
It should not be Amazon's responsibility to "validate" content. "Validation" in this context is just another euphemism for censorship. If Amazon is truly concerned about their inability to monitor what is being published, why can't they rely on crowd-sourced reporting of objections.
This case is an example of why I believe the concept of safe harbors ought to be extended beyond DMCA liability. There should be similar safe harbors from tort liability as well.
Maybe by dismissing the cases there will be a reduction in material damages, but even if all the claims are dismissed, there's still the fact that Prenda Law has caused a lot of time to be wasted in courtrooms which are funded and maintained by the taxpayers.
It will be interesting to see how this turns out since Dutch museums hold some of the world's most famous paintings -- think "Old Dutch Masters" such as Rembrandt, and those museums have been in the forefront of claiming copyright on images of paintings.
Que the "national heritage" claims in 3,2,1...