So you finally get to the real crux of the matter. It's a matter of ensuring that you have the proper incentive to create. But you don't address what several people have pointed out. The guy copying your content is exposing other people to your content. People who wouldn't know you from Adam. People who enjoy your content (and whose enjoyment is an independent social benefit worthy of protection in its own right), but who also increase the potential market for any content you might produce in the future. Morally, we should only protect your right to profit from your idea if the disincentive to your creation is greater than the value created by sharing your art with people who normally wouldn't buy it.
The disincentive to create is my biggest issue with free downloads, and this argument has been made several times but I don't buy it. People keep saying that the wide distibution of your product will introduce it to a larger pool of potential customers, etc. So what? They'll just download my next product for free, too.You're basically saying, it's ok that people download your first album for free, because the increased exposure means you'll have more fans and therefore you'll make money on your next album. I see no reason to believe that's true. Once we legitimize free downloads, no one will ever pay again, and once people stop paying for the product, people stop making the product.
In a similar vein, someone earlier said essentially that producers should produce because they want to -
because it's their life's passion! - and not because they want to be involved in the lowly business of collecting a paycheck. Equally dumb, imo. People need a place to sleep, and food to eat, etc. I might be the world's greatest singer-songwriter but if I can't monetize my songs, the fact remains that I'm going to have to do something else for a living and the world is going to miss out on all that art that they are supposedly entitled to.
Anyway, re: a solution. This is probably not at all feasible, but I heard something the other day, I think on NPR, where they were talking about the Comcast case and the future of filesharing and ISPs. I only listened for a few minutes but someone made the point that eventually, the internet will be a utility like water or electricity. Right now you pay $50/month for cable internet, whether you never log in once or you download torrents 24/7. That model will likely change to one where you pay for what you use - it would likely be too complicated but I wonder if there's a way to incorporate compensation for the content creators into that structure. Just completely change the industry so that no one "sells" music anywhere anymore. It's just all over the internet, when a new album comes out it just gets released into the cloud, and you can download whatever you want whenever you want. Your ISP serves as the "meter reader" that charges you at the end of the month for all the songs, movies, etc. you downloaded and distributes that revenue back to the producers.
At this point, filesharing can't be stopped. The best recourse, it seems, would be to make it irrelevant.