I am living proof that peer to peer file-sharing networks _can_ increase music sales. I'm not saying it will in every case, but if I had to guess at it's overall effect on sales, I'd say it would be positive.
In the beginning there was almost no music I would listen to - all the radio stations played rubbish almost exclusively 24/7, and I certainly didn't enjoy the music that my Sister or Mother listened to, so quite frankly the best music around was to be found in certain video games as far as I was concerned.
Then one day while I was chatting with a friend the subject of music came up and I mentioned that I didn't really listen to much because there wasn't very much mainstream music that I liked, so he gave me a copy of his entire music collection. Even going though that I found myself going from one artist to another - there were certainly artists there that I enjoyed more than what I heard on the radio 99% of the time, but there are probably only about 3 or 4 artists in his entire extensive collection that I still listen to today. It was in this time that I got my first few albums on CD - I didn't buy any of them myself mind you - they were all gifts. It has been a long, long time since I've added any of the songs from those albums into my playlist.
Keep in mind that I was still on dialup back then, so I was still only minimally engaging in filesharing as it could take hours to download a single song - my music knowledge was limited to little more than the radio I never listened to and the large collection of another person's musical tastes.
Two years ago my Internet situation changed and I gained much better access to filesharing networks such that p2p became a viable and attractive option. I was able to try out a much wider variety of musical genres and used Amarok's last.fm related artists functionality and recommendations from other users of the same p2p network to help me find out that what I really like is in fact Symphonic and Power Metal and to a lesser extent, some Alternate rock and Celtic music - far from the punk rock tastes of my friend, and even further than that pop crap so many radio stations love so much (no offence pop fans, your tastes are your own). Since making this discovery which I attribute almost exclusively to filesharing networks I have purchased no less than nine albums with my own money, all of which I continue to listen to extensively today. That's nine albums that I would not have bought if it wasn't for filesharing networks. I will also be attending my second ever concert that I have paid for (I've been to a few others where other people shouted or were free entry) next week when Nightwish perform in Melbourne.
Even now that I know the genres that I like, I would not just go out and buy a random album that is labelled as Power Metal from JB-HiFi because there are a lot of bands in the Genre that I dislike, mainly due to their firm belief that since they use metal instruments, their vocals should all be shouted as hard as they possibly can - I do have respect for their throats to be able to cope with that much yelling though. No, I would have to either preview them on last.fm or failing that, download an album or two of theirs to try them out first.
I know that I've mentioned last.fm several times and some of you may wonder why I pirated music at all when I could have just used their free service. Well, I've only had an account with them for less than a month - before that I only used the related artist functionality built in to Amarok to tell me what was similar to music I already had. Also, they don't have previews of every artist around and for the most part they are just that - 30 second previews - not enough to get a complete feel for an artist. Actually, come to think of it, I don't think I've pirated any music since joining up - but then again that's not really unusual for me in one month.
And yet, despite the fact that I'm more satisfied with my music collection and the producers and bands of the albums I've purchased have deeper pockets now because of filesharing, I cannot recommend anyone engage in illegal downloading over these networks. I can however, vastly recommend last.fm as an excellent and completely legal substitute.