Was this the same lady, who got sued by the RIAA for downloading child songs for her kids?
As for the damages, there logic is this.
She downloaded from person A
She uploaded that, in conjunction to say, 20 people.
Those 20 people uploaded that song to 20 people
And then 20 more people, and then 20 more people, ect, ect, ect. So she according to them, have effectively 'gave' there songs away. For no profit. And they can't claim no-profit, so instead of sueing them for any money she could have earned 'selling' the songs, they have to sue her for potential damages she has suffered the company.
Course, IF those people werne't going to buy those songs anyways, you can't really say they lost any profit.
Also, of course people download songs they haven't heard! Are you stupid!?
Friend: "Dude, I just bought this CD with this awesome song on it"
You: "What song?"
Friend: "*insert song here* it was f***ing great!"
You: "sweet"
So, instead of going out and buying a $30 CD, they go torrent it for free. If they really, really like it, they may buy the song on itunes, you know, to support the artist. Or perhaps, they'll actuallly spend $150 on a concert ticket.