Well what you're saying has a lot of truth. There are a few things you may not be considering though.

Growth in anything is generally accelerated by a number of conditions. Conducive environment being the major factor. You could argue that piracy only exists because the environment is conducive to the practices used. So in an environment where piracy is possible and easy you can only expect to see more piracy. And as a pirate thinks different as we discussed, once they have come to accept that they can access this content for free, with almost 0 effort or risk, it is unlikely they will ever decide, encrypted or not, to rejoin the legitimate customer base.

That said by reducing the conduciveness of the environment in this case, the ease of piracy. You may have an impact on the growth of piracy as an expanding user base. Meaning that if the means to acquire a product is harder through illegitimate means an individual may not enter into piracy at all and accept that access is easily grant by a legitimate purchase. Financial hardship is another conducive factor to piracy but generally not the largest one.

An environment that allows piracy to thrive is in a way perpetuating the practice. To do nothing is to actively allow the practice of copyright infringement to continue to grow and expand it's own user base and community.

So for what DAZ is doing, the big question is will the few people who might now buy their encrypted content offset the number of people who now won't buy encrypted content?

The answer to this is, well it's hard to judge accurately, but you could say that reducing the accessibility of illegal content will damage the expansion of piracy as a practice. Imagine if when you typed into google and the first 300 hits were to torrent sites with illegal content. And not legitimate sites. The likelihood of any individual at any given time to visit one of these sites and perhaps try a few illegal downloads would be greater. Does google removing these threads stop piracy? No, but it does mitigate people's access to pirated content to a certain degree. In a similar way that Daz encryption mitigates casual pirating. One thing is for certain though continued free access to pirate material will only result in more piracy.