It wouldn't have changed a damn thing. People would still be sharing music for free today, like they did as soon as the medium allowed it (tapes).
The problem is there is only so much profit to be had. The recording industry is not interested in trying to sell their own product digitally at a price consumers want. So instead, either a company is large enough and entrenched enough (like Google with Youtube) that that company is able to capture the profit, and the music industry complains, or the company is small enough that the music industry captures the profit, and the company goes under or operates at a loss (too many to name, but Spotify and Pandora both fall under this).
There may not be a good split, that sees both the recording company and the distributor seeing a profit, at the prices consumers are willing to pay, which if the case explains why they've fought tooth and nail against every form of digital distribution. But I don't see how the recording companies can stay afloat without it. It may be we'll have to see how music works without them.
Not a valid extrapolation. The Internet is billions of times faster and more densely connected than the sneakernet.
> Sure. But music sharing didn't kill the industry then; there's little reason to believe it'll be the reason for its death now.
To me that translated to: "Sharing some songs between a handful of friends once every few days didn't harm the music industry; hence being able to share hundreds of songs with millions of people in a few seconds will harm it now."
The second statement sure looks like an extrapolation from the first, and given the mind-boggling difference in scale, an invalid one.
As for lack of data, music industry revenues have been decimated since the turn of the industry. Sure, there are several factors involved, but can you really pretend the terabytes of copyrighted music being torrented every month has nothing to do with it?