(1) Destroy old business model.
(2) ... hand wavey magic happens here ...
(3) Utopia!
I question #2 categorically. The magic never comes.
Historically people have to struggle to be compensated fairly for their work. It was true for labor in the late 19th century, it's true for Chinese sweatshop workers, and it's true for content creators. A rising tide does not automatically lift all boats, and models of fair labor compensation do not appear without a struggle.
Let's be totally clear here. I see the piracy issue as an issue of labor fairness vs. labor exploitation.
If programmers were the ones on the chopping block, none of you people would be talking like this. You'd all be up in arms and talking about what can be done. This is entitled elitism of the first order; only some professions are entitled to compensation or for their wishes about how their works are used to be respected.
Why is it that there are a million hackers working on new alternatives to The Pirate Bay, yet I see almost nobody working on new ways for authors, musicians, and artists to connect directly with their audiences?
TPB doesn't connect musician to audience -- it distances musician from audience even more than the record companies ever did! Piracy is the ultimate in passive consumerism. It's consumerism so passive there isn't even a twice-removed economic connection. There's no connection at all. You -- the viewer or listener -- might as well not even exist.
If the goal is to get the scummy record companies out of the loop, why aren't hackers working on that? Why doesn't somebody create a distributed, censorship-resistant medium for people to publish creative work that incorporates a transparent and direct-to-the-creator Bitcoin-based mechanism for payment? I'm not even talking about DRM, which I agree doesn't work. I'm talking about a simple mechanism. On TPB, Popcorn Time, and any number of these other things, I don't even see a way to pay the artists if I want to. There's not even a "tip" functionality. I think the intent is clear from the absence of anything like that in the design.
This is about free, not freedom. You're appropriating a bunch of high-minded rhetoric, but the reality is you're just cheapskates who want free labor.
I'll reserve my respect for people who actually make things of their own and put them out there to advance the cause of freedom-- people like Linus, or DJB, or pretty much every original OSS software author out there.