It's not an old law. It is one of the few that has transitioned very well with new technology.
Laws are not made for absolutes. Have you ever read the constitution?
The judicial branch exists to interpret specific cases against existing law and to provide clarity for this reason.
I can deny your claim because it's entirely untrue. By your logic, the only reason the internet exists is to pirate software and trade child pornography since these things both happen on the internet.
That's not true at all either. Look at imgur/imageshack/photobucket/tinypic, look at cnet/download.com, look youtube. They're the same thing. People upload content, others consume it. They all profit the same way -- advertising. The vast majority of content on all of these sites is not infringing. The vast majority of views on YT are on user-submitted non-copyright infringing videos (> 99%). It makes hundreds of millions a year, and pays producers very well at that.
These sites are not designed around copyright infringement. It is not the majority of traffic through these sites. It is not their primary source of income. There's a reason many are disabling file sharing and quoting that it does not hurt their profitability nor bottom line -- because they don't profit from criminal copyright infringement.
These laws are not about controlling copyright infringement save the saner laws (like DMCA). These newly proposed laws are about control and censorship, nothing else.
To give you an analogy that's accurate, premium memberships is like Netflix offering super high definition streaming for more money because you consume more bandwidth as a result. You already pay more to your ISP for a faster connection. Aren't they allowing you to download more copyrighted content? Where's the lawsuit against them?
The same is true for filesonic and other companies that have long since been used by legitimate copyright holders as a distribution medium. They are 100% free to the content distributors, and subscribers get 3+ MB/s downloads whereas free users are capped around 150KB/s. If you are willing to pay $9.99/mo for higher download speeds, that's what you're paying for. Not for infringing content.
Some people just don't get the internet.
You don't seem to get it.
The law in question is very old. It might not be old in terms of years, but if you look at the internet now and then, the difference is absolutely huge. It's a common fact that laws can't keep up with the internet.
15 years ago only a small amount people had internet. People weren't really into downloading movies, music did got downloaded, but not even close to the amount it's downloaded now. Lawmakers simply had no idea what was going to happen.
With so many people connected to the internet now, connections speeds that make it easy to download it all and the availability of all that content, it's simply a new world.
So like I said, the law is old, extremely old. Not because it's completely useless, but because lawmakers didn't imagine how things would be 15 years later.
Laws are written as absolutes. If they weren't then they just wouldn't work. Because laws are written as absolutes and we got so many laws that contradict each other, we got judges to decide which law is most important. A constitution are completely different laws and cannot be compared to laws such as the DMCA.
When the DMCA was in effect, most copyright material was on those free websites in the form of MP3's. No one could expect those website hosts to check every single site to see if anything wrong was on it.
Those website hosts were there to give people the chance to put up their own site, put some pictures up etc, their main income came from legitimate websites. They were protected by the DMCA so that single users who they did not want, couldn't ruin their business.
Sites like megaupload, filesonic etc make their money because of all the copyright material. The law was never intended to protect such sites. Not because every website that has such files on it should be taken down, but because their money focus and income is on such files.
When the DMCA came in effect, they simply had no idea what would happen. There are quite a few laws that make these sites illegal. It's DMCA that protects these sites, but the law was never intended to be abused and thus the question remains, which laws will the judge base his ruling on?
The internet isn't just about piracy and pornography, you know this. Besides you can't sue the internet.
Here we got sites who knowingly make money of copyrighted material that are not theirs. They do not use any of that money to reduce the amount and they couldn't exist without such materials.
You are thinking in absolutes, like how laws are made.
Here in the Netherlands thepiratebay is banned with 2 providers (the rest will follow), why? Because the courts decided that TPB is mostly about offering copyrighted materials and on TPB they only link to the content. These uploading sites actually host them.
Cartridges for the Nintendo DS are banned in many countries. Why? Because the courts were convinced they were primarily used for piracy.
Today a judge ordered a defendant to decrypt her PC to see if there is evidence on it that could cause her to be convicted. The fifth amendment is ignored here. Why? Because the fifth amendment never considered computers and passwords that are virtually unhackable.
Laws allow police officers to search your homes etc if there is enough reason to do so, but because of these passwords, police officers are no longer capable to search your homes properly.
Like I said, laws are absolutes and especially with computers and the internet, many laws are simply outdated. The idea that the courts can't touch these people is just absolute nonsense. The world is changing, judges 'ignore' old laws because they are outdated and cannot be used in todays world and it's their right as judge to make such rulings, just a as long they use other laws to back up their ruling and there are plenty of those that give them the option to convict such websites that can only exist and make money of copyrighted material.