Technology can be empowering.
The music industry did have a point: the nature of downloadable music is not like a cassette tape or VHS, given the ease of recording and mass distribution. Its actions prosecuting individual violators in retrospect, however, were a public relations disaster and accomplished no social good. From a utilitarian standpoint and in terms of the general good, monitoring and legally sanctioning suppliers rather than focusing on the demand side of the industry seems to be the best way to ensure that file sharing is conduced in an ethical manner.
Violations will likely continue to occur, given that many nations, especially in the developing world, have a less proprietary notion of copyright than the U.S. And fans may still feel angry about having to pay money at all for music. However, artists trying to sell their work have a right to price their content as they see appropriate, and it is a consumer's right to pay or not pay for the music, not to decide that everyone...
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