>>>How about charging her the $0.99 per song if she had paid.What is the deal with $250 per?<<<
I think there should be some happy medium in between. If all the illegal downloaders had to pay is the regular price, they would just try to get away with it knowing that if they get caught they would be no worse off than if they had simply bought the recordings.
Perhaps something like $10 or $25 per song would be reasonable.
At that price, there is little deterrence, because the risk of being caught is low. Fines are "big" so that even with the low risk of getting caught and being sued, people think "it's not worth it."
Moreover, high fines encourage copyright holders to bring suits to enforce their rights; if the fines were lower, it would not be cost effective to bring suits, and copyright holders would be effectively denied the ability to enforce their rights. I really don't understand why people are advocating that the system favor the infringer.