Fair use fights are messy and expensive if they go to court. Because of the nature of the law, the creator of a new work must decide whether to take a chance on how their work will be judged. This is definitely not good for business or the arts, as it can inhibit creativity through preemptive censorship. However, art itself demands risk-taking and so there must be some balance to allow culture to flourish.
I agree with many that GoldieBlox' new recording represents a parody. The replacement lyrics are clearly transformative and provide commentary and criticism on the original version. If GoldieBlox had simply produced an audio-only recording, they could have released the song using a compulsory license and might've avoided the whole fight.
That said, GoldieBlox used their new recording in a video, a separate right reserved to copyright owners that requires a synchronization license. In fact, GoldieBlox didn't seek permission at all, deliberately using a copyright owned by a major artist as part of a advertising campaign designed to go viral when the Beastie Boys have said they will not allow their work to be used in such ways. GoldieBlox invited the entire battle for publicity's sake and attempted a preemptive lawsuit as a way to shut down debate. How is it fair that they can simply take what they want and profit from it?
One other note about the commercial nature of parodies: In the famous caseCampbell v. Acuff-Rose Music, Inc.[PDF],the Supreme Court held that the band 2 Live Crew's use of Roy Orbison's song "Oh, Pretty Woman" was fair use, writing in the opinion that a new song's commercial nature doesn't automatically preclude its protection as a parody. Taking things one step further, it is possible that even with the overt advertisement at the end, using the criteria in the law upon which fair use is judged, the video might have been ruled fair use should the fight have gotten to court.
Complicating this further is the irony that one of the writers, MCA (Adam Yauch), included provisions in his will instructing his estate to deny licenses of his works in advertisements, yet the group's album Paul's Boutique remains embroiled in lawsuits over the samples they used. Despite this, the Beastie Boys' popularity and credibility stems from their being at the vanguard of genre that uses sampling. Such reuse is important to art and culture's ability to flourish, but the law can get in the way, and it is increasing difficult for artists to sample as liberally has they once did.
This is the problem with fair use: it just isn't fair. All of these factors are weighed in the determination, and each can affect the outcome in unpredictable ways. While this matter was settled without a protracted court battle, the lack of a ruling means that no precedent has been set and unfortunately, any ambiguity as to what constitutes fair use will remain. Hopefully future cases will help clarify this important part of the law.