Pistons and Windmills
In the past, the information industries repeatedly freaked out about recording technology as it became commercially available. Hollywood attacked the VCR, the music industry attacked cassettes and later CD-burners and the printing press had its dissenters too. But these concerns passed because, for analog, the duplicate was never quite as good because even the best devices added a generation to the copy which dulled edges and rounded corners. Even CDs, and later DVDs, which were technically digital, had some amount of separation from copies because the copies where at best photocopied covers (at worst, blank discs with sharpee scrawl on it) and as it turns out the culture of enjoying music and movies included enjoying them as objects which meant that even pirated copies felt a little sub-par.
The big way that pirate copies were taking sales away were through satiation. People who were less concerned about authenticity were not buying because they no longer wanted to. They had already seen or heard the product. And what would be left of the market that would be interested in an authentic product over a pirated one was being dissolved by the fact that users were now interested in and buying computer files. They were authentic digital files. There was no hope for digital information bound to a medium.
Apple's iTunes came out the big winner of the Napster war because they realized early on that they weren't selling music anymore, they were selling convenience. I read an interview with one of Apple's main guys behind iTunes and/or the iPod and unfortunately I can't site it. But he made the point that when they started working on iTunes they went into it with the attitude/understanding that they weren't competing against record stores for music sales, they were competing against piracy. Even though they have some of their own DRM built into iTunes and the iPod, they succeeded because they made their tools easier to use than dealing with all the other crap or bit torrent clients like Napster. In essence, they knew that you can't sell music and you could no longer sell the plastic, but people would be willing to pay for the ease of having them handle all the moving, loading, organization, presentation, and whatever morality is associated with intellectual property theft. In our terms, the music industry was holding a solid steel piston up over their heads while Apple was smart enough stretch some rip-stop nylon between carbon rods.
Many years later The New York Times raised eyebrows and caught flack when they made their on-line articles available for free. All links to articles brought up a "Please subscribe and pay for this" message screen for those who hadn't subscribed to the site, but all you have to do is close the message and proceed to the article. Many observers thought it was the dumbest move ever. Who would pay for something if they weren't being forced to? Turns out plenty. Not only did the Times not lose money but they actually gained subscriptions.