Very good points. I'll try to address them, but proposals for amendments are of course welcome :-)
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Originally Posted by JoeD
The issue I take with this, is that unlike knowing your car/computer has been stolen because it's clearly not where you left it 
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You are right, but this is a general problem and not one specific to "theft" of media. As an increasing part of our lives takes the form of data, including sensitive data of several types, everyone of us needs to be aware of the risks and countermeasures.
That said, if someone just doesn't feel happy (or technically competent enough) to manage the security of her/his own media library, they can choose to let it reside on the media vendor's servers and access it via their own proprietary devices and/or programs only. In other words, just as it is today, but with a crucial difference: that
it will be a choice of the user, not of the vendor.
If, on the other hand, I want to download everything and keep it (without restrictions to copying/backing up) on my own PC, I should be allowed to do so, provided that I take my own responsibilities.
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Originally Posted by JoeD
What about anyone who takes their PC for repair and has an unscrupulous employee copy some music/books whilst they're backing up the machine to reinstall?
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In my view, if I have on my PC some data that -if illegally distributed- can damage someone else I have the responsibility to prevent that untrusted people can get at them. This includes media, but also my aunt's bank data. I certainly would not leave an unencrypted media library on a PC that I give to someone for repair.
Again: if a person don't know/want to take adequate security countermeasures, they can avoid keeping the files on their own machines. It's their own choice.
Quote:
Originally Posted by JoeD
[...]you'll have people accused of file sharing facing life ruining fines.
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I think that if an effectively enforceable system to track down illegally distributed files to the original owner were in place, reasonably small fines (say, a total of a few hundreds of dollars or euros) would be more than sufficient.
Getting (or knowing that your neighbor got) one of such fines would make people much more wary of possible consequences... and thus much less likely to incur such consequences.
Life ruining files are the current way to scare people into complying to laws that everyone knows are, in practice, almost unenforceable. (I mean, how many massive uploaders have been actually caught?)