This depends entirely on what you mean by "piracy".
When laws concerning copyright were passed, it was impossible to make flawless copies of media for free. New copies had to be printed on physical media, and the copying process involved industrial machinery.
Copyright laws were not intended to prevent free distribution of media; they were intended to prevent people other than the creator and legally authorized agencies from profiting from others' work.
Personally, I think people who sell bootleg CDs and DVDs at flea markets ought to be prosecuted; I nearly said "to the fullest extent of the law" before I remembered just how distorted those laws have become. They should be prosecuted, fined severely, and in cases of gross copyright infringement there should be the possibility of imprisonment.
However, our current interpretations of copyright laws do not support their original intent-- and media publishers have been cautiously exploring their options in dealing with institutions that have always been protected from copyright issues.
First, the length of copyright has been extended far beyond any practical limits-- essentially, in the United States, it is "however long Walt Disney's been dead plus twenty years". This does not promote further artistic endeavors, it stifles them, and it is a gross example of our government selling out to business interests.
Second, before the advent of digital media, copyright laws were never concerned with free distribution of media. Libraries were expected-- encouraged-- both to lend out free copies of materials and to reproduce those materials themselves. (This is important as several book publishers have attempted to prevent libraries from lending out new and popular titles recently.) People were not prohibited from copying books or cassettes and sharing them with friends.
Technically, this may have been illegal, but it was overlooked; I cannot recall a single case of prosecution for (or litigation against) freely-distributed media before Napster.
Attempts to prohibit peer-to-peer file sharing violate the intent of copyright laws and disregard the nature and function of information. The free distribution of knowledge and culture is desirable behavior, regardless of the interests of media conglomerates; artists are still fantastically well-paid for their efforts, and despite their dire warnings, the media companies are still making considerable profits.
I agree that artists, musicians, and authors deserve-- and should be able to expect-- to be paid for their work, and I agree that this requires producers and publishers to be able to profit from this work. These are full-time jobs and people should not be expected to "get a real job" when they are contributing to the cultural wealth of our society.
However, to promote these ends at the expense of the free distribution of information-- whether in libraries or on peer-to-peer networks-- is intolerable.
