I think a very accurate, yet simple metaphor would be something like:
Imagine this: If a man sings a Lady Gaga song in a park, then Universal Music Group will be able to close the park.
(Turn it into: "If a girl sings a Lady Gaga song in her school, then Universal Music Group might ask to close the school." and you may win every mother's support =P )
Or also: If a thief tells someone where he left a stolen wallet, government may close the buidling where the talk took place.
PS: Hi everyone, I'm from Argentina, but I really care about SOPA because it may set a very bad precedent in Internet legislation. Right now, in a lot of countries, this kind of bill would make the proponent look like someone come from Iranian or Chinese government. A fascist person looking for a way to censor the Internet. But if this bill passes, a GLOBAL consequence will be that politicians in other countries (like Argentina, in my case) will say: "Look, this law was approved in the USA. And they care about Freedom of Speach, so, it's not a big deal. -End of story-". And of course, they will use laws like this, to censor much more than just piracy. I dont want to sound fatalistic, but if this bill passes... well, we can start saying goodbye to the Internet as we know it.
And the best Company X I can think of is a sports franchise. (A customer base that is too large to monitor in real time, and that forms a community that would get shut down along with the business.) So what are Y and Z? I don't think they even have to differ from the reality. "Imagine if the government shut down the Boston Red Sox because one of its fans was handing out ripped Beyonce CDs." Or maybe the fan should be selling fake Rolexes, since that probably actually happens.
What is happening in many cases is the Boston Red Sox gave the guy selling the Rolexes a booth to sell them in, and directed people searching for "Rolexes" to his booth. The Red Sox hung up ads along the way and made money from all the people who walked past those ads on their way to get Rolexes. Someone reported those Rolexes stolen, so the Red Sox kicked the guy out with no penalty to the guy or the Red Sox, and then let some other fake watch seller setup shop in the same booth. This kept happening for years, and Rolex had to lay off 4000 people, while the Red Sox made a killing.
SOPA is like a law that would allow your local bar to be shut down if some of its customers meet there to swap pirated Music and Films, only the bar is website on-line.
Imagine you are a shop owner and someone writes something offensive on the outside of your building without you even knowing about it. This bill would allow the government to shutdown your store before you even knew the writing existed.
Today we already have in place a mechanism to notify the store owner, but SOPA changes that. It makes it possible to shut down entrepenuers, the store owners and wealth creators on the internet, before they even have a chance to get started helping to revitalize the American economy.
"But how would you not notice someone graffitied your wall?"
I dig this analogy: http://news.ycombinator.com/item?id=3426990
I was picturing an outside wall with the shop owner inside all day behind the counter. The Mickey Mouse one is more concise though.
If the analogy is somewhat askew, but still suitable, just beginning it with "A _crude_ analogy would be ... " should amend that.
Either way, I do not believe that the faults in analogy would be any real disadvantage in a debate. Here's why:
• Old Grandpa would not be tech-savvy enough to notice the flaw at all, but he would still understand the intended message of the analogy
• The knowledgeable people that support you would understand what you really mean, and either way would have no interest in pointing out flaws in your arguments
• The knowledgeable people that oppose you (e.g Hollywood) would not want to point out the flaw for anything in the world, because then they would have to concede that piracy is not theft (a notion they are working very hard on establishing).
But if you want a more fitting analogy, how about something were people plan illegal activities in the store, instead of shoplifting? The police finds out that some customers have been discussing smuggling in a toystore that you own - the whole store gets shut down without anyone contacting you first.
Most older people seem to think piracy=stealing, and I suspect any argument designed to make a distinction will probably just steel their resolve.
The only way to explain how its bad is to latch onto examples of things that were made possible by the DMCA, and would no longer be possible under SOPA. So I would focus on internet stuff most people DO know about. Basically what you said about reddit, but applied to even more mainstream 2.0 sites. The obvious ones-
"If SOPA had been in place, youtube would never have existed, and if SOPA passes, youtube will probably shut down."
"If SOPA had been in place, WIKIPEDIA could easily have been shut down for something as simple as a user uploading a picture of a celebrity for their entry"
Those sites are big enough that they're known even by older people. At the very least they've heard about them. And if not you can talk about how amazing they are to warm them up.
Then, you can explain that wikipedia has millions and millions of entries by tens of thousands of people, and if the laws are that brittle and unforgiving, collaboration on that scale simply becomes impossible.
The struggle I have with metaphors like yours is that it doesn't accurately describe piracy (because it's not the same as theft). This feels a bit disingenuous, but definitely makes for a great soundbyte.
It's a catch-22: the thoughtful, reasonable explanation of why it's a terrible idea will never get through to anyone except the people who already know.