The seemingly-eternal “is downloading music legal or illegal?” question is really only a few years old, but it will be debated and argued for years to come, by the looks of it. Though the issue as a whole is too vast to address in such a miniscule manner (i.e. anything less than a book, if not a series), there are a couple of initial issues that can be explained relatively quickly:
1. Why bands encourage downloading until they get signed, and then “sell out” and stop encouraging (or actively discouraging) such activities:
When a small band creates an album, they usually put up the money for it themselves; they pay the studio where they record and any relevant people there (producer/engineer), they pay for the duplication of the record and maybe for the design and layout (many times they do this part themselves). Once they have paid for that album, what they choose to do with it is entirely up to them.
This is why smaller bands generally encourage downloading. Once they are signed to a label, though, they are no longer autonomous. This can include lots of benefits, but it also means that they are not free to tell people to share, upload or download anything - they are in a business partnership with a label and it is in the label's best interests to sell albums, not encourage downloading. The bigger the label, the more likely it is that more money is paid out (by the label) for promotion, recording, touring, merchandise, etc. (Whether these contracts are always fair or equally beneficial to the involved parties is irrelevant - once the parties mutually agree to a contract they are bound to uphold it unless and until the contract ends or a dissolution of the contract is sought.) And thus it becomes more important for copies of the album to be sold – for the benefit of the label, the band, and their continued business partnership.
The fact of the matter is, nobody truly “owns” the music. What they own is the right to distribute the music AS THEY SEE FIT. If a band enters a contract with a label, it is expected that they will record and release an album and the label will be able to sell it, when they want, where they want, for the price they want to. There is not total freedom, of course - market forces come into play. If you do not have the means to pay for the way which the band and label have agreed to distribute their musical recordings, though, you have no right to be in possession of it.
Many people decry the current state of record label contracts, a complaint which seems to have some validity. But again, no one is forcing any artist to sign with any record label; that decision may seem unfair, but if they agree to it they are implicitly stating that it is the best possible avenue for them to take at the given time. Seeing as more and more people are aware of this trend, as well as the rise of agents and managers taking interest in smaller bands and alternate (label-free) forms of production and distribution, this argument is less and less relevant as time goes on.
2. The argument that downloading is a benefit for all those “too poor” to afford the music:
If you have a computer and a fast internet connection (fast enough to make downloading albums a viable option), you are not too poor. Poor means "I have a hand-me-down Windows '98 computer with a 14.4kbps modem and neither the luxury of money or the time required to invest in that." Poor means “I don’t even have a computer, I can only use one at school or the library.” Maybe you are too poor to purchase every album you would “kinda-sorta” like to, but that does not necessarily mean you are too poor to purchase the albums you really want.
I admit that I've been guilty of downloading beyond my means. What I discovered, though, as I went through my computer and deleted everything that I had not legally obtained, was that I didn't really miss any of it. It was all overflow and junk, flash-in-the-pan songs that were never listened to after the first week. And if I did miss something, I'm willing to analyze how much I want it and if I'm willing to invest in it, and I think the average person can do this as well. If so, purchase it; if not, don't, and forget it. It's not worth thinking about after that. We live in a culture of people that feel that they have the “right” to freely obtain any music they would like. This is an extension of the “right” to have the latest and the greatest fashions, toys, or hobbies. These are not rights, though; they are luxuries, and the difference between the two is distinct, unchangeable, and quickly being forgotten.