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I voted that it will increase piracy, but I think it depends on what you mean by "increase". Just as with the iPod, there will be a new group of people who look to the internet for free content for their new device. This demand will increase the number of files floating around and books digitized, as well as increasing the downloads for each file.
However, I think more people will buy the Kindle with a view to legally acquiring content than those who buy it in order to pirate. No doubt almost everyone who owns one will engage in a little casual piracy, much as they do with digital music these days, but most people will be happy to buy books from Amazon.
So... the amount of piracy will increase, but the proportion won't. It might even decrease.
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