Does Digital Piracy Hurt Sales?

After a recent conversation with a friend about digital piracy--and its alleged negative impact on sales of music albums and movie tickets--I found myself wondering how exactly a distributor could prove that piracy really is to blame for a decline in sales. That is, how could they prove that the rise of digital piracy wasn't just coinciding with a time when people no longer felt that the cost of purchasing entertainment was justified by the product they purchased?

I can imagine two points groups like the MPAA and the RIAA could try to prove, but both would be difficult. The two points are:

1. A significant number of people who download an illegal copy of a work would otherwise, if they had no other choice, purchase the work at full price; and
2. A significant number of people who download an illegal copy of a work do not then go on to pay for a legal copy of the work or purchase some equivalent works.

To the first point, let's suppose the record labels found a magic switch that, if pulled, would definitively end all digital piracy.  Would sales of albums then increase, or would it stay the same? I think the tendency is to suggest that this point is proved by looking at what record sales were before file-sharing sites became popular, and then looking at the overall decline in sales. However, this could be a coincidence. It is possible that many music downloads are more like impulse purchases, and if the means of impulsively downloading them did not exist, those users would not feel like it was worth the cost to buy the albums. And if that is the case, piracy is not really hurting record sales. And it might even help them.

Which leads me to my second point. It would be interesting to see how many consumers who purchase an album first became aware of it through an illegally downloaded copy. (I don't have a strong feeling with regard to how often this occurs, it is just an idea I had.) What if it turns out that many record sales come about because someone "samples" an album for free, decides he likes it, and then wants to pay for a legitimate copy? Additionally, suppose someone downloads an illegal copy of a popular new album, likes it, and then buys other albums by that artist? In these cases, piracy might actually be stimulating record sales. I have seen some of this in action in the world of Japanese movie fandom; otaku in the US have been known to download an illegal, fan-subbed version of a movie because it is not otherwise available in the US, but then when it does get a US release, those same people get excited to buy a copy.

In my points I used the phrase "a significant number" because these points would have to apply to more than just a few people, but obviously would not apply to everyone. If only a small number of people who download an album for free would instead buy it if they had to, it would not be a strong argument for the negative effects of piracy.