And the best way to fight piracy is to remove the incentive to do so.
But how do you do that? The incentive to pirate is that you get what you want for free. Removing the incentive would mean...giving it away for free.
The way the RIAA did things just made people very bitter, but with services like Pandora, iTunes, Last.fm, etc. I think things are getting much better for artists as far as reducing piracy and increasing the income they receive from music purchases. Piracy will never be eliminated but I do feel it has been reduced.
Are you sure about that? I just did a quick Google search and it came up that in 2008 there were more than 40 billion illegal downloads, which accounted for 95% of all music downloads. I'm sure the numbers fluctuate a little from year to year, but I don't think there has been a sea change regarding the general attitude about piracy in the last two years.
Also, here is a chart which breaks down how much money people make from downloads:http://www.informationisbeautiful.net/2010/how-much-do-music-artists-earn-online/
Artists aren't making more money from downloads. They're making the same, more or less.
Here is the issue as I see it: people feel okay about piracy because it's not a physical object. Stealing a song or an album is not the same as walking into a record store and stuffing a record in your shirt. Until MP3s become more than data in a computer, people will never think of this as stealing. The biggest incentive to encourage a legitimate purpose seems to be making the physical album desirable again.
That's exactly what's been happening. While it only accounts for a fraction of the industry, vinyl sales have been climbing each year, compared to CD sales, which have been declining. Part of this is because retro is the new cool thing, but also because people want to see liner notes, look at covers, and actually hold the record they're listening to that week.
To return to the topic: yes, this law is stupid. No, I don't think it will pass.