With apologies to Star Trek...
I've invented a matter replicator. I can make an exact duplicate of any physical object in a matter of seconds and for free (it recombines hydrogen molecules out of water). I also open-sourced the specs for the matter replicator so anyone can make one of their own.
I have a large collection of O'Reilly books and a lot of poor geeky friends who want these books. Out of the kindness of my heart I replicated my entire collection of O'Reilly books for my friends. Hundreds of copies of "Running Linux 4th Edition" "Mac OS X: The Missing Manual".
I even went so far as to hook my matter replicator up to the Internet, and give the IP address out to the Slashdot community. Would you believe that in a matter of two months over 200,000 people replicated my collection of books? Thanks to me O'Reilly has reached a very widespread audience of people who now love their tech pubs but know they don't have to pay for them. I'm still waiting for that phone call from Tim thanking me for my service.
Maybe not the best analogy in the world, but I'm just trying to make a point. What is any industry going to do when pratically overnight people are able to get the fruits of their labor for free?
Sure, a forward thinking music publisher would have saw the advent of P2P, digital music, etc, and found a business model for it. But, it's not that easy. Even if Napster didn't have legal problems, nobody was entirely certain what their Step 4 was going to be before Step 5: Profit!
It's not like you can even count on people saying to themselves, "Wow, it sure is nice to get music files for free, but something just doesn't seem right about this. How are the artists getting paid? Should I be burning a copy of my Sting CD to share with my friend Tim even though I know both of us will be listening to it at the exact time on two different devices? That doesn't seem right, so I'm not going to do it. Even if everyone else. I'm also not going to pirate copies of Windows XP anymore."
I believe I understand what you're saying Tim. There is a market out there for the publisher that can get the digital music into the customer's hand in a way that allows him to listen to it on multiple devices. But markets take time to develop, and what do the publishers do in the meantime?