Not to mention that they navigate in a minefield of copyright and IP issues.
I believe bittorrent traffic is subject to heavy deduplication. But what about legality?
Not really, it is essentially rapidshare except they don't need to store as much data and they are backwards compatible with torrents. A pretty smart way to seed their service.
FWIW Rapidshare is about $6/month.
The recording industry would be making $6/m more from at least one person if they offered this service directly themselves.