What Kevin Drum doesn't understand
Piracy is a "snarl" word, meant to inflame emotions and derail reasoned argumentation, and not at all an accurate description of file sharing or even for fraudulent representation (selling unauthorized imitations as real) for that matter, neither of which are what pirates did or were famous for, anyway.
There's profiting illegally from someone else's work, and there's sharing what you have. Giant Corporations, the IP rentiers, would like you to think of them as the same, but they are not. People who share or have been shared with are not pirates. You can call people who make unauthorized copies of CDs or DVDs and sell them pirates, though it's a stretch-- they're actually committing fraud, they are effectively forgers, selling unauthorized imitations. But people sharing things they paid for, or sharing what others have shared with them is not piracy by any reasonable definition. Sharing should not be illegal even if sharing is less complicated with digital files than with physical objects. The fact that you can share a copy, while keeping your original, makes the activity more attractive to the people sharing, but it doesn't change the nature of the act from sharing to stealing.
(It is only because Microsoft and others got us used to their income model, enforceable at all only because they are a great big giant monopoly who can stay one step ahead of hackers, and intimidate other institutions, that has us taking seriously at all the idea that sharing digital files should be outlawed.)
There should be no laws against possessing or sharing digital files. There are already laws against fraudulent sales of knock-offs of commercial products.
Copyright laws were never intended to stop people from sharing (hello, libraries!), and they are not able to stop people from sharing (hello, cassette tapes and photocopiers!), they are there to stop people from stealing other people's potential revenue streams through fraud and forgery (selling your copies as originals).
A different state of technology requires a different profit-making model. CD and DVD manufacturers should make products so good that people want the commercial CD or DVD with all the trimmings/guarantees/support/extras/whatever.
The fat cats will just have to deal with it.
Artists' compensation is not the issue. Seriously, unless they're established superstars, they don't make much in the way of mechanical royalties. That all goes to guys in suits. Artists have to play for live audiences to make a living, and file sharing grows their potential audience. It's possible to imagine scenarios where someone might have made some money but file sharing kept it from happening, but it's not common, if it happens at all.