Thanks for your response. I think there are two distinct points in your paragraph, so I'll respond to them one at a time:

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1) "The Promoting of the Arts Argument"
Wherein if we don't work to provide a significant
amount of funding to artists, they won't be able to
create expensive works.

It is true that, unless studios can see a significant amount of return on their investment, they won't have an incentive to create massively expensive content. But there are more than a few problems with this line of reasoning.

First, is there any evidence that technology and innovation will cease if piracy continues? The mount of illegally-acquired content is increased dramatically in the last 10 years, but artistic progress hasn't stopped. In fact it's increased. We still have expensive and technologically-groundbreaking blockbusters like Avatar being produced. And there are more self-published authors and independent filmmakers than ever before.

Secondly, where do we draw the line? There has to be a cutoff point. We could theoretically create laws that force people to buy movies, guaranteeing that the film industry has $100 million in funding for every movie it makes. Or $1 billion. Or $10 billion. But would that really be justifiable? At some point, you're going behind "promoting art". There are plenty of movies that cost 1% of Transformers to make, but contributed much more to society by almost all accounts. I don't think it's the government's place to guarantee the financial success of the artistic industry. And if they're going to do that, it should be done via taxation, and the public should own some stake.

Third, why can't artists rely on supply and demand? If the public values art so highly, it will pay for it. Louis C.K. released his new standup online in an easily-copyable way, and he made millions. People still go to see movies in the theater. They still see plays. They still go to art galleries, and live concerts, and book signings. Hell, they still buy books and even e-books. This is how artists have survived for centuries, and how art will continue to progress. If you're good enough, people will want to see you and your work.

Fourth, why should anyone be guaranteed success in the digital marketplace? The downside to the digital world is that file-sharing, which will obviously be a problem when audio and video are converted to bits. The upside is that you can easily reach billions of people, so the potential for exposure and revenue is huge. But as an artist, no one is forcing you down this path. As I pointed out above, there are plenty of other ways that you can succeed. So how is it justifiable for us to have laws that limit the populace's digital freedoms, just so artists and companies can make business decisions with less risk?

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2) "The Consequentialist Argument"
Wherein piracy must be bad, because it ultimately
results in less income for artists.

I don't think this argument is as strong as the first. We live in a capitalist culture where nobody is guaranteed to succeed at any business venture. I don't see why there should be an exception just because the business is related to art.

Your argument implies that, if the ultimate consequence of a decision is a reduction in someone else's income, the decision is unethical. If that was the case, then early car owners would have been immortal for failing to support people still in the business of selling horses. And it would be unethical to share a lawnmower with a neighbor instead of buying your own. And it would unethical to borrow a friend's DVD (or copy its data) instead of buying a new one.

This doesn't seem sufficient to me. It not that you deprived someone else of income: it's how you did it. Compare all of the above to, say, copying DVDs and selling them.