See what happens when you post comments, people? I respond! Jason respectfully requested that I post something new, and I will! Actually, I'm going to repost something I wrote yesterday over in the comments section at Mark Cuban's blog...I was initally responding to someone who was writing...well, something I didn't agree with, I can't remember what. It's about the peer-to-peer networks' legality going before the Supreme Court.
[edited]...and I think your estimate of 75 percent of p2p downloads being illegal material is quite low...I'd quess upwards of 90 percent, personally. But the issue for me is the future of p2p technology, not the dissemination of illegal material.
The easiest parallel to draw is between the clients of p2p and the end users of the VCR. The VCR made it possible for people to record things and share them (illegally) with others, albeit on a much more personal level. Xerox did the same thing - it was now possible to make a million copies of a copyrighted work illegally, but due to the many legal uses of the technology, there are copiers in almost every office today (save for the mythical 'paperless offices'). Just because new technology opens the door for piracy does not mean that door can be closed, probably ever.
And today, VCRs have opened the door for DVRs, which allows us to record television whenever we want, and skip through commercials. And despite what the entertainment industry wanted me to believe, teevee is still around even though I'm not watching their commercials. I honestly can't remember the last time I could afford a product advertised on the idiot box anyway. But true to market-fundamentalists everywhere, TV has adjusted (minimally) - there's more product placement in shows, and Tivo is apparently running banners when users fast-forward.
But it never would have happened if not for the VCR being ruled a legal technology (well, Betamax really).
Xerox is the same. Although unforseen at the time, those xerox machines have been replaced by machines that can turn any document into electronic form, then email it to someone or bind it and turn it into your own book. Would it have been possible if a few publishers had been successful in claiming, "Hey, some people are making illegal copies of our work! Let's shut down these wannabe Gutenbergs!" Of course not. Now we can all have happy jobs standing in front of fancypants copy-machines. Go progress!
p2p is exactly the same. Think apple would have made tons of money in 2004 from their iPod if all p2p networks were shut down? They would probably like to think that everyone would just buy their music from the iTunes store, but that's not very realistic. Apple capitalized from the new technology, while the entertainment industry went kicking and screaming into the night.. "b-b-but...Chairmain Powell!! DO SOMETHING!" He laughed, then wisely resigned.