Bainwol testified that he doesn't think filesharing helps sales

and that 97% of the files on p2p networks are infringing.

Seems like a short term memory for Mitch, because during the Grokster oral argument [mp3] I presume that attorneys for the industry were talking about 10% as being non-infringing because Judge John Noonan says to them:

So 10% is noninfringing? That sounds like a lot of noninfringing files to me." and "You don't solve it by calling it 'theft.' You have to show why this court should extend a statutory monopoly to cover the new thing. That's your problem. Address that if you would.

Filesharing doesn't seem to be hurting sales either. According to recent data -- I believe there were 13,000,000 more units (albums) sold in 1Q 2004 over 1Q 2003 and that file sharing networks saw somehting like a 5 million user increase over the same period.

There are studies too. Felix Oberholzer-Gee of the Harvard Business School and Koleman S. Strumpf of the University of North Carolina at Chapel Hill argue that

Even in the most pessimistic specification, five thousand downloads are needed to displace a single album sale...high selling albums actually benefit from file sharing.

and  

Our study provides the first serious evidence that file sharing cannot explain the decline in music sales in the last couple of years. In addition, in the last two quarters, music sales increased while file sharing has become even more popular.

See Oberholzer-Gee/Strumpf study [pdf]. If you're lazy or don't like pdf you can read John Schwartz or Suw Charman summaries. Also, Professor Felten, of Freedom to Tinker, offers his Grand Unified Theory of Filesharing: "Recently we've seen several studies of the impact of filesharing on CD sales. We have enough data now to draw some (very) preliminary conclusions, assuming the studies are correct. Despite the apparent contradictions between the various studies, I think there is a plausible theory that can explain them all...."

See also: Filesharing is not effecting music sales no matter how creative RIAA's accounting (Nielsen Soundscan Ratings).  Some question whther the lawsuits are even having an effect on filesharing. In fact 44% of kids don't download copyrighted music illegally. It is also not the reason that musicians don't get their checks. Musicians don't think they're helping.

Moby: "personally i just can't see any good in coming from punishing people for being music fans and making the effort to hear new music. i'm almost tempted to go onto kazaa and download some of my own music, just to see if the riaa would sue me for having mp3's of my own songs on my hard-drive." [via DigitalConsumer.org]

Fran Healy of Travis: "Kazaa and Napster and all that stuff is a brilliant way for kids to taste the album." [via TechDirt]