"What's happening is that content companies are fighting to protect companies like Napster, Youtube, etc, from free-riding on content they didn't create."

No one is stopping content companies from creating their own Napsters and Youtubes and making the money that the "free riders" are now taking. They have shown no willingness to do so even with so many profitable examples out there. If the companies had come out with something like Spotify back when Napster showed what the appetite for music was really like I suspect they'd be in a much better place now in both a PR and Profit sense.