First, you're confusing the cost of distribution with the total cost of creating media. While digitization has driven down distribution costs, it doesn't affect the tens or hundreds of millions of dollars that a typical movie costs to produce. Just because you can download a movie from a server to your laptop for free, does the cost suddenly cost nothing to produce? Of course not.

Second, the scenario we're discussing does not reflect traditional free markets. Conventionally, a seller offers a product or service, and if the seller and a buyer agree on a price, there's an exchange. Basic supply and demand.

Technology now allows buyers to set the price of certain services to zero against the wishes of the seller, and the seller is powerless to stop the transaction. Clearly, this is not a conventional free market scenario, and we may need new principles.