There's enough data to prove it's harmful to some people. Maybe not the overall music industry, and maybe not the artists, but clearly to retailers, record labels, middlemen, etc.
Aha! But that's precisely the catch! It doesn't matter if it's harmful for some people, because the constitutional foundation for copyright says that its point is to "promote progress of the useful arts". Intellectual "property" is not property. The terms is meant to confuse the law.
The question we should be asking - what system of copyright best promotes progress? It sure as hell isn't the one we have now, but it also isn't an abolition of copyright altogether.
I think the current copyright situation lets citizens do pretty much whatever they want and prevents corporations from infringing on creators and IP owners. That, to me, is perfect.
Corporations, for their part, went a little further than they had to with the DRM (which had nothing to do with our copyright system) and are finally starting to come to their senses.
I'd say the whole thing is working very well.
Share a song with some friends, create a mashup of two cool songs, use some music in a short film they've made, make a collage of different drawings, write new lyrics for an existing song and record that, use samples from an existing song to create something new etc. etc.