Actually I am flabbergasted that you're flabbergasted.
Of course the industry is going to respond to this. THey are watching movies, music and games get pissed away because people can burn them at home and therefore leap around the copyrights.
Pirates suck because they kill the incentive of the industry- to profit off their artistic creation. Kill the artistic incentive and you kill the drive to make new products, which eventually sucks for the consumer.
It's not that the industry firms are saints- they want to maximize profit. But they live by supply and demand- burn CDs and the demand for products goes down. The easier it is to burn, the lower the demand, the larger the supply, the lower sales prices go, and the lower profits.
That's not communism- that's capitalism. Capitalism requires fair markets, fair markets require government, government rules by laws to protect economic systems. Intellectual Property is seen as fundamental to economic growth. Burnt Dvds fuck that in the ass.
That said, the industry is screwed. This is a basic collective action problem. You have a few firms that have an interest in protecting property- so they will gang up together to try to demand change. Each has an incentive to do this- survival.
At the same time most of the people who are pirating are free riding on lax intellectual property laws. It's just not cost effective to go out, hunt each one down, and sue them. So the alternative is to lobby the government for protection.