Andrew
Well I do agree with a lot you say, I'd like to make an argument for my specific case, and I'm sure the same argument of many others. My point is what option (other than Kazaa, etc) is there for me to hear new music in a market devoid of anything other than top 40 radio stations? There are no rock stations in Winnipeg that play anything other than the latest-greatest from Nickleback and Default. The only way I have to hear some different music for the first time is by downloading. I own nearly 400cds and I've probably bought 100+ in the past year. Of those I'd bet 80% were artists that I had previously downloaded music from to get a taste for it. How can any reasonable person involved in the music industry expect me to spend $15 on a cd without hearing it first???? They're nuts!
Some reps of the Candian music industry actually just lost a case in Federal Court that was brought about online music sharing. It found that the 29 defendants had not infringed on copyright laws. I personally applaud the court's decision.
Here's the CBC
article 
