First, most of the people who are getting those free MP3s would not be buying the CDs anyway. They're doing this in order to get far more music than they can actually afford. That means that if they weren't sharing MP3s online, they would simply have less music -- or share CDs hand to hand. It does not mean that they would have bought CDs to get the tunes they're downloading from Napster-like sharing schemes.
That's why I laugh at their estimates of "lost sales."
That "excellent point" means that since I can't afford a porsche, I can just steal one from the dealership? Hey, they got plenty, and this way, many people that otherwise would not have one will and just imagine all the "lost sales" that are being prevented!
What a stupid statement.