I guess I'll join into the conversation again and I bring numbers with me:
http://www.bi.no/BI-Startpage2/Facts...-CD-purchases/
This survey had some extremely interesting conclusions:
1) People downloading illegally are also the ones paying the most for legal media. So if the entertainment industry punishes illegal downloading, they're punishing their best customers. (The entertainment industry wanted to punish illegal downloading by limiting or revoking internet access, doubt they would suggest such a thing after reading this survey.)
2) Paid downloading is more common than unpaid downloading. I find this fact extremely interesting, given that paid downloading is usually quite annoying. Payment methods are often too limited and it's far easier to find a torrent than a legal download.
But back to my "solution". TV has proven it possible to offer series/movies without having people pay for more than a cable fee, they rely on advertising.
There is no reason this can't be done on the internet (at a much larger scale than now), since advertising on the internet is cheaper to make, more direct (you can link straight to your website for a sale) and easier to value (you can track how many people saw your banner and how many clicked on it, you can even see how many made a sale after using said banner.)