I think it looks morally and legally pretty black-and-white when you pick the case of the person who has a library of 11,000 mp3s and has only ever paid for 15 albums. And that's common. But when I think about the issue of free music and paying artists, I keep running into grayer areas than that.
Most of the music I have, I got in CD form. But an awful lot of the CDs I own I bought used, at goodwill or yard sales or wherever. Now, I've never heard anyone get on a soapbox about the evils of buying used CDs. I think I'm legally and morally clear because I paid for the music. But at the same time, none of the money I paid for the used CD went to the artist.
I've taken free music off the internet, not from mass file sharing but pulling individual songs from youtube and converting them to mp3. Not 11,000 songs, certainly, but some. I usually burn them to mix disks and play them in the car, because that's where I mostly get to listen to music. So maybe that makes me a pirate.
But the thing is, if a song sinks in as a favorite after a few listens in the car, I often go and buy the whole CD (and not always used, either!). And if I see that the band is coming through my area, I'll buy tickets to go see them and buy the t-shirt at the concert. I wouldn't have done that if I hadn't sampled the songs from youtube. So it seems to me that three or four free songs became what retailers call a "loss leader" that in the and brought me to spend more money on the band than I otherwise would have. With the radio pretty much dead for any music that interests me, and not being able to sit at my computer watching youtube or listening to grooveshark all day, making those mix disks is the only way I have to find interesting bands and wind up supporting them.
I think that, while it's right and good to tell people to act morally, what's really needed is new economic paradigms. It's already been said that concert tickets and t-shirts are much more where the money is rather than album sales. I don't think artists ever made much off records in the early days of the phonograph; rather, having a record was what established your name and made people want to pay to see your show. It's time to be realistic and say that, with the current technology, that's how the market works now and we may as well embrace it (and not overinvest in recordings other than as promotion for shows, perhaps?).