It's the music industry's equivalent of legalized prostitution- instead of trying to legislate and enforce morality (in this case music piracy), why not legalize the practice, control it, and make money off of it.
The big problem here is that the government cannot blanket-charge everybody/ Pirated music is not a public good in the same way that national defense is- you should be able to opt out of whether or not you want to have to pay for illegally downloaded music.
Another thought that came to mind- by legalizing the illegal behavior in this case they could actually end up increasing the amount of "illegally" shared music in Canada, disproportionately to the fee that is being paid. Then the artists are going to complain in a few years that the $5 fee should really be $10.
The best solution here would be to get the record companies to lower their operation costs so they can in-turn lower the prices they sell albums for through legal channels (e.g. iTunes), however these companies are so royally screwed up and their business models are so buried in the past that such a solution won't be possible for years.
