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I'm not going to say "authors should be thankful for pirates because it's free publicity" because, frankly, I don't have valid data (even anecdotes) to defend that stand. It may be, or it may not be, or it may vary depending on writer. In fact, it does vary depending on writer. Everyone who's likely to read her books knows who J.K. Rowling is; few people know who Joe Schmoe is.
To me, the issue isn't one of publicity, but of focus. Taking our hypothetical writer Joe Schmoe, what would change if absolutely nobody ever read his books without paying him? How much more income would he get? Based on the concept that people who want the work of an unknown writer for free are unlikely to pay for it -- they'll just read a different unknown writer for free, or go watch TV instead -- I'd say very little. But every bit of effort Mr. Schmoe is putting into keeping people from reading his books without paying him is effort he doesn't have available to promote his books to the people who will pay him, or to write new books with. Even if he was perfectly successful at preventing un-paid-for reads, he'd have traded inconveniencing non-customers for not recruiting, or ignoring, actual customers. A basic fact of business is that you need to keep the customers you already have and convert potential customers; people who are not in either category are a waste of time, effort, and money.
For a major author, it's possible that the people in the third category (the non-customers) might affect potential customers, moving them into the non-customer category. But for a minor author, the problem is one of not having enough customers in the first place. Let's say our hypothetical Joe Schmoe sold 10 books last year. That's pretty lame. He sold 100 books, and another 100 books were read without paying for them. Out of the latter 100, the readers of 10% of them, had there been no free books available, would have paid for them. The other 90% would have just read something else, or done something else. Now, Joe has two choices of how to use his available time: He could put it into promotion, and increase the sales of his books, or he could put it into a crackdown on the pirates, and decrease the copying of his books. Let's say he could double his sales, or halve the piracy. If he doubles his sales, he'll sell 200 books, and another 200 people will read them without paying. If he halves the piracy, he'll sell 100 books + 1/2 of the ones who would have bought if piracy was not an option, which is 5 books, and 45 people would read them without paying. Which one he chooses depends on his focus: If he's focusing on getting more customers, he'll want the 200 people buying his books, and not worry about the 200 who aren't paying up. If he's focusing on reducing people reading without paying, he'll settle for the 105 customers in order to stop 50 pirates (45 of which read something else and 5 of which paid for the books). I'm just pulling numbers out of the air here, of course. They can be any numbers you want. But the focus is what matters: is it more important to Joe Schmoe, or to you, that more people give you money, or that fewer people read the book without giving you money? I can't answer that -- only the person with the book (and the real numbers) can.
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