This is interesting Evan, as a musician I think this whole topic is continually evolving as musicians and artists gear themselves to working independently from big labels. I personally have been giving my recordings away online (as opposed to $10 digital downloads), and I’ve found a huge increase in people at my concerts. As an artist, I would much rather have a great turnout at my $15 show, than a $10 copy of a digital album.
Martin, you are right on. I always like to use the example of someone downloading an album from an artist they know nothing about. If someone has never heard of an artist, and they listen to them via a pirated source, who’s to say they won’t purchase an album in the future? Without the ability to “test drive” said artists earlier material, would the industry make those sales at a later date?