(1) It's a tax on everyone that, at least in part, takes money out of reasonable people's pockets and gives it to Miley Cyrus.
(2) No equitable mechanism exists to apportion that tax revenue, with an end result that Nielson SoundScan becomes social policy.
The problem with copyright isn't copyright. The problem with copyright is that the music distribution channel is controlled by a small, intertwined group of cartels. We should solve the right problem.
Your proposed problem to focus on solving would drastically improve the American system if changed, so I hope it happens.
One final point I would like to add: I did not purchase music in university when I could not afford the luxury. Since I have improved my economic situation, I have recently purchased various older albums. I think that is a good example of how the system can potentially be successful.
I find this concept very objectionable. If I buy a blank CDROM for the purpose of distributing my own software then music companies receive some of the proceeds of the sale because I could have used the discs to copy their work.
That's a bad law because I'm assumed to be guilty and I have no recourse to prove innocence. Furthermore, why is the levy specific to recordable media? If we're going to be fair then we should have similar levies on cars, crowbars and numerous other items which can be used in crimes that deprive people.
Edit ... not that Miley Cyrus is a public good, but still.
In Canada, you can't sue for any amount - you have to show damages. So if downloading a song was copyright infringement here, you would only be able to sue for the cost of the song.
So, it is in the recording association's to have a levy rather than to pursue individual legal action here.
Initially it was deemed legal to tape the radio for personal use. Now that has moved into the digital age.
It does not whatsoever eliminate the point of copyright. I can't bootleg albums and sell them on the street.
To answer your question, nothing would happen if more people downloaded movies and music for personal use. Lots of Canadians still buy music to support the artists, and still purchase DVDs. Movies still make a killing in theatres, and musicians still make most of their money on tour.