The problem with piracy is that it's often the easiest, cheapest and most convenient way to go.
When so many people do it, there have to be something fundementally wrong. Here's what I think.
1. The media use have exploded the last decade. Many people have huge collections of music, series, videos, games etc. The consumption is alot more than it was, and the prices is still the same as they were 15 years ago. Most people just can't handle that cost.
2. Another issue it the avalability of the media. People use Internett for almost anything today. Why are there not good choises to download music, series and games online? I would not want to go down to the store to get an album, when I can download it in 10 minutes. Sure there is a few alternatives here, like steam, amazon and iTunes. But when it comes to good offers they are often bound to spesific contries and regions. Take US for example. iTuns have a rather easy to use and good online service for series and movies, but it's only offered in US!! People from Europe have to get a proxy to use the service, and have to buy Credits from e-bay! How stopid is that. I think there is many other exaples too. With the internett used by everyone, there should not be such boundaries!
3. Give the users the option to get the quality they want! With music I do not think it would be that hard to have a huge library with flac files (or what ever) and convert them on download if people rather want 128kbs MP3. The internet connctions for most people should not be an issue, and not the hard drive space either. If the price drops more it will soon be free!
4. DRM. This should be a dead subject; only to be used for free services such as Nokias "unlimited" download music service they offer with they're new models (though it's not really unlimited).
Enything you buy, you want to be able to transfer and play how many times you want, when you want and where you want. Restrictions like this is hopeless. Most in the media busines have realized this, but there are those who cling og to the hope. Do something with number 1, 2 and 3 and you would not have to use such things as DMR. I would not even think of buying music with water marks.
So my answer is no. I think it's rediculous give people a huge fine just to prove their point and making an example. The user should pay for the actual cost of the music she or he's downloaded, and possibly more if the usere have intentionally distributed it to alot of people.