The internet is the greatest communication tool humanity has ever created. The US entertainment industry is trying to cripple it, because they're not making quite as much money as they would like to. Piracy is a scapegoat; the real issue is them not wanting to put the effort into adapting to the changing face of content delivery, and not wanting to give up the control that they currently have over it.
Basically, with the internet, sources of entertainment have become much less centralized, and they don't like that.
This bill is the equivalent of solving a small ant problem by burning your house down. Also, the fire spreads to several neighboring houses. It's a drastically exaggerated problem, and they mostly back it up with bullshit statistics and over the top rhetoric.
The music industry is making less money for two main reasons;
1) You no longer have to buy an album of mostly filler to get one or two songs you want. For a while, the model was just that; a pop artist would put out a mostly shitty album with a catchy song or two. If you wanted to be able to listen to those songs, you had to buy the entire album. Now, you can just buy those two songs, and some people just obtain them illegally, almost on moral grounds, since they feel like such a lazy effort doesn't deserve their money (I'm not saying this is okay, I'm just saying that this is how it is). Obviously one or two songs bought on iTunes bring in less money than an entire album. Since a large chunk of music sold is Top 40 pop, this is reflected as a huge loss financially, even though it will eventually even out.
Just look at two genres that haven't really taken a significant hit; metal and country. They tend to have more devoted fan bases, and rely less on catchy singles to sell albums. Going for the long term instead of a short term profit like pop has gone for, has paid off, and demonstrated that piracy isn't the main problem there.
2) Loss of focus. Look at the music scene over the years. It used to be that people mostly listened to a handful of bands or artists at any given time. That changed over the years, and now, in the age of the internet, it's extremely decentralized. There are so many options out there, many independent with no money going to the RIAA. As well, it both takes focus away from pop acts the industry tries to artificially cultivate, and shows people that they have more options, meaning that some people who would have purchased an album by a pop artist may be less inclined to do so. There's also the simple notion that they're putting out less quality content. Even some of the worst pop acts of past decades are brilliant artists compared to much of the schlock on the charts now. The average listener probably doesn't even know who half of the acts on there are right now, and even with the ones they do, they may be hardpressed to name any of their songs. If you put out lower quality content, fewer people will buy.
On the side of the MPAA and television, they're just worried about the rise of easy digital independent film making, and web series. These are still in their infancy, but are definitely getting bigger, and it causes the MPAA and major studios and networks to lose a bit of control. They don't like this.
The thing is, they're still making obscene amounts of money. For the past several years, we've had multiple films per year grossing over a billion dollars at the box office, with many more in the high nine figures. The home market is also doing quite well, with both physical media sales and streaming. For television, streaming has opened up a whole new stream of revenue for them. Again, they just don't like losing control of when people watch their shows, which is just silly and shortsighted. Viacom alone has pulled in over a billion dollars from streaming over the past few years. A billion. With a B. They're just mad that the internet and specialty cable, with innovative, creative programming, are beating their formulaic, cookie cutter schlock. They could actually try being creative themselves, but effort is hard, so they'd rather just squash the competition, which in this case includes the internet.
Piracy gives them an easy excuse to go after online content.
As a sidenote, the RIAA and MPAA tend to count every single illegal download as lost sales. While some are, how many are either people who wouldn't have purchased the content in question? How many are people who simply wanted to try before they buy, and purchased a copy if they liked it? Again, I'm not saying illegal downloading is okay, but it's extremely overblown.