I don't think it's only about the money here. Having been through a mini-riot in India, when public goes beserk on the streets it's not a pretty sight, people die. Whoever incited the riots, whatever the rioters' reasons, right or wrong, I feel the government's aim here is to quell dissent that can bring life to a standstill or worse, lead of loss of life. There's not much cops can do when 1000s of mindless drones hit the street with the single-minded objective of practicing acupuncture with knives on anything that breathes. During such sprees, cows are spared, but I digress. Psychological trauma on society following such incidents, predominantly religion-related, last for decades. In certain regions in India, there is an uneasy peace between people of different faiths and taboo (read religious) topics have the potential to rip that apart. From this perspective, I understand Google/government insight into local behavior and respect their decision to respect local sentiments in spirit and act.
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I would still want my music, can't Wal-Mart provide unencumbered tracks for download through the buyer's account? Seems like a nice way to keep everyone happy!