I disagree with you there. Illegal download peak is now. In that time frame, the majority of people didn't even have internet access. I remember using Napster in 2000/2001 and while it was fairly common with teenagers - vast volumes of material just don't transfer quickly on the 56k connects still common at the time.
Copied CDs were much more common as I remember.
Maybe in your world.
In my world, copied CD's (boots and others) peaked in the '97-98 era. Slowly people started making mp3's and this shifted the music world dramatically.
I disagree that people didn't have the 'net back then. Maybe in other parts of the world that was true. But by 2000 I would say most people had at least dial-up service, if not DSL (I had DSL by then and soon switched to cable).
And, keep in mind, one reason mp3's were created was because they were small. Downloading a song that could only be 1 to 3 MB in size, even on a 56K connection, was fairly painless. As soon as one got DSL, it went even faster. I recall almost never using Napster in 2000/2001- by then, Napster was already facing legal challenges. Other sites popped up, like KaZaA (and countless others).
The RIAA really clamped down in 2002 or so. I know a person who was sued for downloading ONE song for his wedding (per his wife's request). He couldn't find the song, so he downloaded it - and he was sued thousands for it. Ridiculous! It wasn't even a popular song - those thousands are about $4999 more than the artist would have made! But these types of actions did deter some people.
Then along came iTunes and WalMart and other legal download sites. And suddenly people had a choice. The reason why I say the peak was around 2000/2001 was because there was no iTunes or other download sites. Still, even in 2004 and 2005, illegal downloads were high, yet HTDAAB still sold over 3.1M copies in the U.S.
So while there is still tons of illegal activity now, when Clarkson's now song has almost 500,000 downloads in two weeks, it indicates to me that this is not the "peak" of the illegal download era. People are willing to pay for songs. If not, iTunes wouldn't exist.
I say this from a U.S. perspective. This could be VASTLY different in Asia and other parts of the world.
But, perhaps you are right. Maybe even with iTunes, the illegal activity peak is now. And if true, it may really dent U2's sales. Probably why more bands rely on touring more than album sales.