The supply of Picassos are limited, since there is only one of each piece. Software and other digital medias don't have this constraint.

True. But to take and distribute freely somebody's copyrighted material is essentially taking all the value out of the material. Some similar in that way.

Value?

I don't get less enjoyment out of a video game because somebody else played it. In fact I might get even more enjoyment because of that since we could play it together or discuss it!

So that means the value stays the same or even goes up in my book!