I know this horse has been beaten to death as of late, but I just had to give my two cents.
Louis CK recently sold one of his stand-up routines that he spent his own money recording and producing on his website. He sold each copy for $5, had zero copy protection, and was not backed by any big companies. He released it as a simple movie file download fully knowing people could burn it to DVD's, give copies to their friends, you name it. And you know what? He made a shit-ton of money, over a million dollars. I'm not sure if he pocketed more cash than he would have by selling it to a television company, but as Louis puts it:
One million dollars. That's a lot of money. Really too much money.
I'm a huge fan of Nine Inch Nails. Trent Reznor recently started his own record label, The Null Corporation. Whenever he releases and album through Null Co, he gives at least a half a dozen songs away for free, as decent quality MP3's. These MP3's don't come with any DRM (Copy Protection), which means they can easily be distributed. They also sell the full albums, in CD form, usually for $10. When buying the album, the MP3's are made immediately available for download, and the CD is shipped to you within a few weeks. I don't have an article to back me up, but I know he makes so much more money now.
Ever pirate video games? I know I used to when I was younger. It wasn't too painful, you'd open up a copy of some software on the gnutella network, search for Quake or whatever, start the download, and 12 hours later you'd have the game. But, it was a pain to always keep them backed up when moving from computer to computer. And you'd always have to download them again, and lose your save files and start over from scratch. Or, even worse, you could buy a copy of the game from the store and have to keep a bunch of boxes in your closet full of CD's for all of them, and these games would span 6 different CD's. But then, one days this awesome platform called Steam shows up. Suddenly, it's uber convenient to just give them your credit card number, and mere seconds later you're downloading the game. Depending on the game, your save files move with you. AND, your games are accessible from any account you login from. Needless to say, Steam has been very profitable.
Ever download an MP3 that you really shouldn't have? Most of us have. Why would someone want to go purchase a physical CD to take up space somewhere in your house when all you want is to listen to a song on your computer or iPod? You'd have to throw that CD into your computer, rip it as an MP3, hope the CD didn't skip, probably violate some TOS along the way. Then came along Amazon and the iTunes store. Suddenly you could buy a song for $1. How cool! Just kidding. I literally know the lyrics and tune for thousands of songs which I listen to weekly, that would have costed me thousands of dollars. But, along came awesome streaming music services like Spotify. I now pay $10 per month and no longer need to lug around a huge collection of music. I just run their music player, which isn't at all shabby, and it keeps track of what music I like, caching files somewhere on my machine.
Ever download a movie (detecting a pattern here?) Those things suck. Before you know it, you've got a TB hard drive sitting around somewhere full of movie files. That's a lot of useful space dedicated to hording movie files, in the hopes that one day you'll want to watch them. Even worse, have you ever actually bought a DVD and tried to play it in your computer? It's a very painful experience! Even worse, try running a Blue Ray movie. The software sucks, and the drives are horrible. Before you know it you've got a closet full of movies. But then came along the movie streaming services. I'm currently paying like $15 a month for Netflix. I have access to thousands of movies, which I can stream at my leisure, bookmarking the ones I like the best, without having to waste hard drive space.
So, what do all of these concepts/services/companies have in common? They've embraced modern Internet technologies and are using it to their advantage. It is incredibly more convenient to acquire media legitimately using these services than it is to pirate. When you shut off the ridiculous amount of copy protection and ease the installation/usage of media, people tend to love it more. Also, copy protection only makes it harder for legitimate users, the ‘bad guys' end up distributing copies of the media with the copy protection already circumvented.
The SOPA and PIPA acts (you knew this was coming) are a dying attempt by big business (MPAA, RIAA) to keep their out-dated companies surviving in the age of the Internet. Instead of embracing these technologies and using them to their advantage (like all of these successful companies I've listed above), these ancient giant companies have resorted to lobbying and paying off senators. Luckily, those who don't embrace modern technology are doomed to failure. They're annoying now, but soon the companies will be gone like the antiquated ones before them. It's really only a matter of time.
As Paul Graham of Y Combinator said so eloquently, it would be a really good business idea to develop a company which competes with the concepts of ‘Hollywood' and the recording industry.