Yes, they can download each eBook, MP3, etc - and they already can today. But e.g. the selling numbers for MP3s are raising, not falling. You can download nearly every MP3 for free on the well known P2P-nets. Nevertheless - people are buying MP3s, WMA, CDs, etc.
Yes, the market will change - but IMO not as much as you think/hope. Lets see what evolves
DRM is a bad idea - we agree on this one.
(Oh and btw: Laws are used to enforce EVERY SINGLE business model, there simply is no business model (and that includes manual labor) that works without the law protecting it and people agreeing to (or being forced to) keep to the law ... But that only as a side remark).
-- second thoughts:
One possible market-advantage for authors/publishers: Service. Have a good and nice page where you can buy (and use) your books/music very easy (easier and faster as downloading the product from grey/black market) and give away very high quality.
I personally do very much prefer simply clicking "buy this-and-that-book" on a fast server (prefarably from my reader and wherever I am) then searching, downloading, waaaaiiiitiiing on a p2p-net. Let's say I am waiting at the station and missed my train - if I can just start my reader, download the newest novell of my favourite author and begin to read it, I would prefer doing so, then waiting to come home and download it there
)
But we can possibly agree that the market will change - and the statement above WOULD be a change to the business model ..