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@Velocio
They wouldn't have the rights then.
Musicians don't generally own the copyrights, they sold or licensed the rights either to record labels (recording rights) or publishing companies (playback, cover versions, performance rights).
Musicians don't generally have the ability to exert control over their rights once they are signed, the labels or publishers need to do it.
It's also risky as hell. No musician really wants to be aligned with suing their fans (except Metallica), best let the labels take care of it as it's their responsibility (they own the rights) and it won't tarnish the name of the artist when it goes to court.
Looks shady though... it's a bit of a protection racket. Give us £500 and we won't take you to court. I think most who believe it to be legit would pay up because £500 is so low a figure that it's similar to just seeking legal advice on it.