Although this has been said over and over again, with a number of different theories to support the opinion, I've going to say it again: the music industry cannot win.
Well, sure they -can- win, but to do it they're going to have to close down the Internet and all computers so that only approved messages can be transmitted, at permitted intervals, in a permitted order. And I'm fairly sure that that isn't going to happen any time soon.
But first things first: suppose that MPAA et al manage to shut down Pirate Bay and all the other file sharing sites and networks. Suppose that they manage to get DRM on all music that is sold. Even then, they cannot win.
The reason for this is simple: everything that I can listen to, I can record. Everything I can record, I can transfer to my friends. So far, so good. This is basically back to the tape recorder stage, where everything could be copied but it was a hassle to do it.
But these days, things are different. We have the Internet, which means that distances have disappeared. And then there is an interesting basic characteristic of social networks: they are highly connected. Suppose that I can only trust my friends; that I assume that everyone will potentially turn me in if I copy without permission. Now suppose that not all of my friends know the same people, that for each friend I move away from myself the total network grows. Moving from friend to friend-of-a-friend in this manner will allow me to find a route to every human being in existence.
This has been studied for quite a while, and there's a famous saying that you can get from any person to any other person in six steps or less, "six degrees of separation". Even if six steps might not be enough, a relatively small number will connect me with anyone.
So how does this mean that the music industry cannot win?
Easy. We design a system where each user only connects to other users that she knows she can trust. Every connected user will forward requests and files to trusted users, and trusted users only. Now when a user is looking for some music, she asks her friends if they have it. If they don't, they ask their friends in turn. Sooner or later, someone will have the sought after music, and will send it back to the friend from which the request came. The file is forwarded back to the first user, step by step.
Disrupting this kind of network is extremely hard, since to do it you need to gain the trust of the users. I find it hard to believe that too many users can be persuaded to turn in their friends..
Maybe you're asking how hard it would be to build this system?
It's already more or less built, have a look at version 0.7 of Freenet. So, they cannot win. The best thing they can do is adapt, and if they don't.. People are going to create music even if there aren't any companies around to create the next Britney. Perhaps we could even have a system where music is played because it's good, and not because someone paid a million dollars on PR!