I don't think people necessarily download as a means of keeping that music permanently (if that nakes any sense.) As someone who doesn't download and struggles with finding out what albums are worth it, I think people who do download as a means to see what worth them spending money on.
I have faith in Japanese policymakers to learn from their mistakes, especially as economics are concerned (yes, and I'm gonna stand by that statement no matter what you might say about the Lost Decade). I'm sure soon enough, if the populace gives enough of a stink about it, they'll reapproach this law. That said, it's a $25,000 fine, chump change compared to the penalties you'd expect over here in the States. Seems like a pretty reasonable policy, relatively speaking: not hundreds of thousands and no jail time, just a slap on the wrist.
Making music more available to the public doesn't hurt either. I did the bulk of my CD buying in my early-mid teens coming from a small town in the Midwest where I'd look forward to going to Wal-Mart just so I'd have a shot at a broader selection to choose from. Had I had the internet access I now have there's no chance that'd I'd be shelling out my monthly allowance on St. Anger or Godsmack.
No offense, but a dollar a song is pretty much the deal of the century. Literally - until about a decade ago, it was either the whole record or nothing, and that could cost a pretty hefty amount. Imagine if instead of just clicking on a single you liked on iTunes, you had to buy the entire record if you liked just one song. And if you didn't want to do that, the only other alternative was to wait for it on the radio for who knows how long.
It's about what society thinks a great deal is. Clearly the industry is pricing songs and albums too high if sales are going down. They don't understand basic supply and demand economics and are trying to legislate people into buying songs at their artificially high prices. The world has changed and they haven't adapted to the market. Usually this paves the way for a new dog to enter the race with a new idea and take over, but we haven't seen that yet.
For any market, regardless of the price level set by the industry, if the product is more easily obtainable for free, that's what people are going to do. Why pay here when it's free over there?
How is 99 cents an artificially "high" price? Sure, arbitrary maybe, but that's a sweet fuckin' deal. You used to be able to buy candy for that price, or a whole newspaper before that.