Google needs to penalize them or else this will encourage others to employ these black-hat techniques in the future. It doesn't matter if RapGenius has the better content or not.

In the entire scheme of things, if RapGenius gets penalized, and their rankings/traffic plummet, and they go out of business, that's a very very small price to pay. If you're Google, fighting this type of spam requires a TON of resources, and they've already done a great job of discouraging it (ppl are actually paying others to remove links now).