That's not really the way the harm actually plays out.
The free rider problem generally won't affect entities that are very large, rich, and established. Microsoft has a ton of profitable relationships that won't just go away. Besides, they have so much money in the bank that they could easily fund the development of Windows 9 even if they did not receive a penny of revenue from Windows 8. Likewise, Radiohead is not checking the latest rates of piracy before deciding whether to put out another album. They have a big enough fan base that it doesn't really matter.
But, if the free rider problem is bad enough it harms the ability of new entities--who do not have deep cash reserves or established relationships--to grow large enough to challenge the incumbents. To go from garage to professional success means making enough sales to either bootstrap or convince investors to buy in. If most customers are taking the product and not paying, that obviously is going to be a lot harder to do.
The free rider problem generally won't affect entities that are very large, rich, and established. Microsoft has a ton of profitable relationships that won't just go away. Besides, they have so much money in the bank that they could easily fund the development of Windows 9 even if they did not receive a penny of revenue from Windows 8. Likewise, Radiohead is not checking the latest rates of piracy before deciding whether to put out another album. They have a big enough fan base that it doesn't really matter.
But, if the free rider problem is bad enough it harms the ability of new entities--who do not have deep cash reserves or established relationships--to grow large enough to challenge the incumbents. To go from garage to professional success means making enough sales to either bootstrap or convince investors to buy in. If most customers are taking the product and not paying, that obviously is going to be a lot harder to do.