An unenforceable stricture. Has to be in place to prevent someone from setting up a business reselling files. Short of some sort of on-line activation as with PC software, I don't see how it could be enforced. Maybe file sharing is popular among kids. It would surprise me if adults engage in it much, but who knows? I have never shared a music file. Maybe if I had some friends it might be different.
One of the earliest attempts I can remember at an online music service was
Liquid Audio. (The Wikipedia article linked to says the company was founded in 1996, which sounds about right to me.) IIRC, the lossy compression system used was licensed from Dolby, and, of course, it used DRM.
In the early days of the iTunes Music Store, all downloads were encrypted. It wasn't too long, though, before "they" gave up and the downloads were not encrypted. All attempts from SCMS (DAT) on to prevent copying ultimately failed.
Online piracy activities do not necessarily require friends! Not sure what you mean by "adult" but I'm sure plenty do. Compared to the heyday of Napster and KaZaA, though, it's probably relatively niche these days as everything is on YouTube, and for those who want lossless, the emergence of high quality streaming services tends to render it a poor use of time. (He says whilst engaging in the timesink that is forum messaging!)