The authors of the paper cryptically explain their methods:

We match an extensive sample of downloads to U.S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.

Translation: people who illegally copy music wouldn't buy it anyway so don't count them as lost sales.

So where are we now? Record companies have started to throw in the towel on DRM and if Universal dumps DRM completely it is likely others will follow. File sharing will continue because it seems that it's done independently of what the record companies do anyway. What may change is attitudes about file sharing and P2P clients.

Here is a possible scenario:

1. Record companies dump DRM completely.
2. More customers assume it's OK to share music files, after all they aren't prevented from sharing
3. The number of P2P file sharing clients grows
4. Too few users keep their clients patched and organizations don't manage P2P on their networks as they should.
5. P2P becomes an even more viable option for malware distribution than it is today
6. Creative attackers start to use P2P as an infrastructure for botnet and other rogue applications, kind of like the current rush to build Facebook applications.

For every silver lining, there seems to be a cloud.