Drum's hypothesis fails because he doesn't consider a number of factors. Bandwidth ain't free. No matter how 733t the 4ax0rs are, it costs money to reliably serve up gigabytes of data. Also, malware will continue to evolve. When the script kiddies start corrupting video data with virii (or porn in kids movies and cartoons in porno), people will get upset.Those factors aside, it's important to consider that many of us have been living in free content world for years now. If I want the new Wilco CD, all I have to do is answer an email ("Sure, I'd like to hear it") and show up for work. With Yankee Hotel Foxtrot, I liked the CD enough to buy my own copy. With the new one -- what's it called? A Disappointment is Born? A Ghost is Disappointing? Something like that -- I gave it a couple of listens and put it in a drawer.
Old-fashioned peer-to-peer file swapping has been around for as long as music has been recorded. I don't know how often friends swapped LPs and 8 tracks, but from the first mix tape to CD-Rs, music has been copied and shared with no great damage to the music industry. When all the world is digitized all you do is eliminate the need for human interaction.
For which, of course, many of us will be thankful.
The entertainment industry will change, evolve, and prosper. Mozart eked out a living without selling a single CD. Joe Heller sold a few million copies of Catch-22 before eBooks. Paul McCartney is doing quite well even though my first Beatles album was a 60 minute Memorex tape.
Yes, sir, the studios will be just fine, thank you very much. People will still go to the theater, not because they are old farts, but because it's a date, or something to do, or because the experience is more immersive.
It's damn sight easier to criticize than it is to offer something constructive, so I feel a modest obligation to provide an alternative view. Let's say it's Big Sister Hammer's first day in her first house, sometime about 2 decades from now. She turns on her ComputoTainment center, browses the library of her OmniMediaCrontastic subscription -- and decides to download BBC's The Office, because her father has been talking about it for 20 years. The $1.99 fee is charged to her account when she makes her selection. A short series of ads plays during the 2 minute download, data verification, and virus scan. She hits play, sees a commercial for Ricky Gervais's memoir, Me and Bug Eyes (now in paperback), watches the first two episodes,then composes a poignant letter thanking me for being such a wonderful father.
I'll leave it to the readers to decide the least likely prediction in that scenario.