I don't have too much time right now but I wanted to respond to my vision of the "lost sales" portion. (I do tend to go on so I actually set a timer for myself.
Originally Posted by BoldlyDubious
I don't think so.
Let's say that Mr. X buys ebook or music album "Y". I estimate that for the average Mr. X there are maybe 15 "completely trustworthy" people in the above sense. Of these, 5 live with Mr. X, so are already considered as "lost sales" by media vendors according to today's system (licensing rules such as "you can load this book on up to 5 different devices" mean that anyone you share your devices with can read the book for free). Of the remaining 10 people, I'd say that the number of those who would certainly buy the book if Mr. X or someone else doesn't give it to them reduces to 1: Ms. Z. Let's make it 2 to keep into consideration the fact that Ms. Z may know someone else who bought "Y". (Ms. Z can get "Y" only from people who consider her as "completely trustworthy", i.e. from a very small set of people.)
You envision that people will only share with a few close people, and those people will not pass them on because they don't want to endanger the source of the file. But I see something different, and so my numbers work out differently than yours.
Let's use Mary again, because I get confused when I use letters instead of names, and we know and love Mary by now anyway.
Mary has an ebook. Her sister Jane wants to read it, and so she gives her a copy with a reminder that she shouldn't go giving it away because if it ends up on the internet, Mary will be in trouble. Jane reads the book, and when she meets with her Green Valley Gardening Club, she tells the other 19 ladies about the book. They all want to read it, but gosh, the book is expensive... So Jane says to them, "Okay, I'll give you copies but you can't pass them around because if they end up on the internet my sister will get it trouble."
Kathy, one of the Garden Club members, reads the book, and it sits on her computer for a while, right next to her other ebooks. Her cousin Amy and niece Sue come by and Kathy gives them copies of a few ebooks, including the one she got from Jane. Likely, some of the other members do something similar.
One ebook, purchased by Mary, results in 50+ free copies rather quickly. Not a single one ends up on the internet, and no malice was involved whatsoever. You asked them to rely on trust, and they did. Mary never gets in any trouble because it's all person-to-person and every single one of those people would never consider uploading it because that would be piracy!
If Mary trusts Bill, she gets a fine, and several thousand people who would likely never buy the book get a free copy. If Mary trusts Jane, nothing bad happens to her, and 50 people who might have actually bought the book get a free copy.
Crap. My timer went off.
My closing thought (for now) - if "social policing" (or positive peer pressure, if you will) really worked all that well, we wouldn't need traffic cops. It requires that everyone (or most) are susceptible to that sort of thing. I'm not. Fortunately, I'm lawfully good (okay, sometimes chaotic good
) so I'm not a risk in this scenario, but if people are honest about the reality of the human animal, they'd be in catlady's camp - trust no one, just in case.