In other words: free download services (except for the specialized high-quality-only trading networks with community controlled entry) are only free if your time has no value to you.

The fact that much of the music industry has decided to target a group with more time than money (the 14-24 age bracket consisting of high-school and college-age people) is clearly turning into a significant strategic blunder on their part. A strategic error they appear to hope to correct by blunt force of law.

Also, take your “a person is willing to spend 50 dollars per year on music and he wants to acquire 100 songs per year” theoretical user… I’d adjust that a bit to “a person is willing to spend 50 dollars per year on music and wants to acquire the 100 best songs of that year” (where “best” is whatever rating criteria they choose, something like the 100 songs they like most). With a record store, that 50 dollars will get you 30-40 songs, but only 3-8 of those “best” songs, since your average music album has 1-3 really good songs and a lot of detritus. With iTunes you might be able to get 50 of those “best” songs. With Kazaa you spend less money and more time, but may not be able to get a sufficiently good quality version of some of those songs at all. With a mixture of iTunes and KaZaA, I might get every song I want for $50.

Personally, as a reasonably well-paid computer professional with an active social calendar and a love of music, 99cents for a song really is fairly close to nothing. I can buy 15 songs for what I spend on coffee in a week. More songs if I happen to want to buy entire albums. If I spend 1-2 minutes with iTunes getting a song vs 5 minutes with KaZaA, I’d consider it a cost savings. (It’d be even at 3minutes vs. 5 minutes, so Apple had better keep it simple, fast and easy)