It's not theft. That's not a semantic argument, it's at the heart of the issue. Theft by definition deprives the rightful owner of the benefits of what has been stolen, for example if I stole a box containing your band's CDs then I'm depriving you directly of the sales. I'm also preventing someone who actually wanted to buy the CD from being able to, causing you damage in terms of your ability to get products to your fans and also in the monetary benefit from those sales.
On the other hand if I copy one of your CDs you still maintain the same stock you had. If I then make a copy on my computer I haven't deprived you of yet another sale. I could, in theory, create more copies of that CD than however many CDs were actually physically manufactured.
Piracy has real issues for the content owners. Having worked for over 10 years at a publisher of digital content I have been involved first hand in dealing with these issues. It does create extra costs for us. It has its own problems, but generally the people who discuss the issue as "theft" tend to not have any deep understanding of the issue. It's not theft and you cannot approach it as such. And yes, there are benefits too. We do recognise it can drive sales, but this varies across the different demographics and isn't that simple.
When a 13 year old has thousands of dollars of our content we logically know that we have not lost thousands of dollars worth of stock. You cannot extrapolate one download to result in one sale. You also have to be realistic and pragmatic. The genie is out of the bottle and a law with no public support is very hard to enforce. Being heavy handed can seriously hurt reputation and sales. Nobody is going to get pissed off at us if we have a guy who stole a crate of our physical stock from our warehouse arrested. Having that 13 year old arrested for copying one of our products could very well result in a backlash, and it wouldn't even address our main issue. Our main issue are commercial pirates who directly compete with us on a mass scale. We have been trying to break into territories where we have seen our product on the shelf right next to a cheaper pirated version.
Everyone is learning their way through this, but it's clear that we are going through a paradigm shift. Manufacture is no longer an issue. People sometimes ask what it would be like to live in a world with Star Trek replicators, and this is a version of that. People can create a copy of something they have and give it to friends for free. We are not going to successfully make these people think they are doing anything wrong in a moral sense. We as content creators and distributors need to find what we can bring to the table to have people turn to us instead of the alternative. With software it has been to keep supporting products via updates or ongoing content. For music (and increasingly books) it can be harder as you're not going to start making new chapters for books or revising the story.
It's actually a pretty complicated issue with the different types of digital content needing different types of approached (the demographics you sell to are also different). I hate people using the "theft" reasoning because it's not helpful to the debate, it distracts from it and nothing beneficial comes from it as it frames the problem in the wrong context. We're not dealing with warehouse/shop thieves, we're dealing with something else. We need to get people coming to us for the content and we have to give a better incentive than "we'll financially cripple you and send you to prison if you don't".
Some jobs are going to go and people who used to make a lot of money will find themselves no longer relevant to the process. The music industry is largely built on middle men who took care of reproduction and distribution. They also take care of marketing and exposure. Today a kid in his bedroom has the reproduction and distribution abilities that would make an 80's music exec's hair curl. Kids have YouTube channels that rival viewership numbers that high rating shows would charge us a lot of money to advertise on. The genie is out.