A while ago there was much discussion about the rights and wrongs of Napster, the Internet file-swapping service that allowed many people to get free music. (Myself, I never bothered with it: I have plenty of music on CD already.)
One comment I read about this kind of thing was from Adrian Strain at the International Federation of the Photographic Industry, who said that in the long term you can't have free music any more than you can have free cars: it's not sustainable.
Well, he's wrong. Free cars are not sustainable because they're too costly to produce and few people would be willing or able to make cars for fun. But free music is being produced all the time by large numbers of musical amateurs all over the world. It's sustainable forever, because they enjoy doing it and it costs them little.
If it ever becomes impossible for people to make money from recorded music, the music industry will of course change and diminish somewhat. But professional musicians will still be able to make money from concerts — albeit not as much money as they currently make from record sales. Musicians who can't make an adequate living from concerts will have to take regular jobs and play in their spare time (if they still want to).
This is the situation that existed throughout history until the mass production of recorded music became technologically feasible in the twentieth century. It doesn't mean the world would be deprived of music. It does mean that music would be produced on a lower budget, and so the nature of popular music would probably change a little.
The moral aspect
Recorded music is a particular example of what's known as “intellectual property”. In practice, this covers anything that can be put on a computer and copied at virtually no cost: prose, poetry, music, drawings, designs, photographs, videos, software, and data in general.
If you steal a car, you obtain free use of it (which is good for you), but you also deprive the owner of the use of it (which is bad for him).
If you copy a computer file without paying, you obtain free use of it, but whoever you copy it from retains the original: he's not deprived of anything, and neither is the original author deprived of anything. Indeed, in most cases the original author isn't even aware that the copy has been made. It seems to me that to call this “stealing” is a misuse of the word.
If you pay to copy a record, you're not paying to compensate the author for his loss, because he doesn't lose anything. What are you paying for, then? Well, it's alleged that unless such payments are made, authors won't be motivated to produce. This is highly questionable. In all categories of intellectual property, large numbers of people already produce the stuff for free. And although the free stuff is often inferior to the commercial products, it's not always so.
There are many possible moralities. For instance:
In the second case, authors who do uncommissioned work aren't entitled to payment (though they can solicit voluntary contributions), and authors who do commissioned work get paid only by the client. If the client allows other people to copy the work when it's done, the author isn't entitled to further payment.
As a technical writer producing documentation for large companies, I work under this second system. The company pays me for my working time, per hour, and they make as many copies as they like of the results, without any further payments to me. I'm never going to make a fortune this way, but I don't starve.
It seems to me that the choice between these two moralities is a matter of subjective preference. The most successful authors have a clear financial incentive to prefer the first, but I see no objective reason why society as a whole should prefer it.