They are not terrorists though. Their goal isn't to harm their target - their goal is to enrich them selves through ransom.

Bomb their families instead?

If victims need to be consistent. When terrorists are shown that they'll either get a bomb through the roof or nothing, but never payment, then they'll change their business plan.

The goal of most contemporary terrorist is not personal enrichment.

It is hanging out with their buddies.

See http://www.gwern.net/Terrorism%20is%20not%20about%20Terror#t... and http://www.gwern.net/Terrorism%20is%20not%20Effective

This strategy has worked so well in Israel/Palestine /s.

That's because the situation between Israel and Palestine is a bit more complex than the proponents of that particular strategy in that particular case would like to have you believe.