Hi - I don't have time to debate too much more about this, as my wife keeps asking me, "What are you doing there...?" In brief, the legal understanding of these issues here is very lacking.
1. "The organization of 1's and 0's that your computer can interpret as a sound" IS a thing. I can locate it on your hard drive. The fact that it can be copied and transmitted electronically doesn't change that.
Selected quotes from Duke's Law and Technology Review concerning exactly this subject:
¶ 3 Section 101 of the 1976 Copyright Act defines a phonorecord as a "[M]aterial object in which sounds are fixed and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device."
¶ 12 Fixation may seem like a hurdle considering an Mp3 file is composed of ones and zeros, but this hurdle is quickly crossed. Unlike a shower rendition of a song that is captured only by my ears, a digital file is actually a series of positively- and negatively-charged ions trapped in a magnetic source, be it a floppy diskette or a hard disk drive. ****The file is thus fixed in a material object****, as it will exist for as long as the storage medium exists (absent accidental erasure by another magnetic source).
The standard of an MP3 or other digital file as a physical object has been well argued and is totally accepted under current law. There are even more explicit definitions here:
http://digital-law-online.info/lpdi1.0/treatise5.html
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2. A "reasonable third party" or "reasonable bystander" viewing the fact that someone was given the music file for free would not expect the artist to be likely to then consummate a sale to that person. The fact that some future hypothetical transaction is not physically impossible is irrelevant, legally or morally.
Again, I don't claim to never copy stuff myself - but I think it's imporatnat to be honest with yourself about the issues involved. It is clearly a form of theft. The injury to the artist may be extremely small in each instance, but theft it is.
Now if you may excuse me, I have some CD's to burn tonight....