A useful question to ask here is whether there are characteristic differences between the sorts of projects that are distributed freely even in an environment that supports commercial distribution, and the sorts of projects that are distributed commercially when that option is available. If there are, then it's similarly useful to ask whether the second category has any value above and beyond what the first group has.
For example, if I compare free fiction to purchasable fiction, do I find that the latter group has valuable properties relative to the former group? What about if I compare free software to purchasable software?
If not, then your argument makes sense; there's no value being added by commercial projects, so there's no cost to eliminating the system of constrained distribution on which commercial software projects depend.
If so, then it's useful to ask whether that extra value will still be available if that system is dismantled.
Personally, I often find commercially distributed projects that offer signfiicant value relative to freely distributed ones, which is why I often pay for commercially distributed projects such as books and software. Presumably, if I didn't find that to be true, I would be perfectly content to use freeware/shareware products instead (as I do for computer games, for example).
I could discuss the large scale effects of piracy (copyright infringement) for days! From a game-theoretical/utilitarian -, ethical - or any other perspective. I have a set of views and suggestions for topics that could be interesting to break down and address, but instead of writing a long post addressing many different topics, Ill start with the first one in my mind.
Just a thought:
For a subset of activities you could map the question of the ethical status of illegal downloading of a software p (preferred choice) to the existence of a certain kind of element a in a set S, which I'll call the set of alternatives (assuming the risk of getting caught is very small).
Lets say that you for some reason need a graphics editor and your preferred choice is Photoshop CS5. You could either:
In the case you have chosen to illegally download a copy of the software, some people would compare that to stealing (certainly the folks at Adobe). Would that really be fair to say? At least in my opinion that depends on whether or not you would have bought a copy in the absence of the 'download' alternative. Your preferred choice is indeed Photoshop CS5, but that is one among many choices, the rest being in the set of alternatives S. Most users with illegal copies wouldn't pay the 650$ when there are free alternatives. Those alternatives may be much less attractive with less features but many of them would still do the job.
So if there exist an a in S, such that you would prefer a over p in the absence of alternative 2, then in a game between you and Adobe, the choice a would not be Pareto optimal. Your utility is maximized by choosing p (downloading Photoshop), Adobes utility left unchanged. --> Maximizing total utility (ignoring potential side-effects, such as effects overall attitude towards piracy and so on)
Today there exists an S for almost anything.
Whats your opinion on this in regards to utility maximization (utility of society). Can we really break it down like this looking at the individual case?