OK - I'm getting in to this fray.
I run a network at a nonprofit, and you know what, sharing iTunes libraries is expressly forbidden on it, as is any form of P2P (easily handled by port blocking), and I frown on Internet radio.
It's all well and good to say IT folks are a pain in the ass when you can't play your friends' music across the LAN, but you know what? When I watch traffic over a network map blow up and suddenly I get a dozen emails asking why folks can't connect properly to our server or have ridiculously slow load times on outside Web pages, I'm darn well going to investigate and put an end to it.
Our T1 manages VoIP and data, and I'm going to cut out every extraneous use of it's bandwidth to the outside world that I can. Likewise, our LAN has anywhere from 10-30 simultaneous users, and I want to be sure they can get their work done and properly connect to our fileserver. And if you're at a nonprofit like I am, it also usually means getting all this done on a shoestring budget, so forget putting in that 6.0/1.5 pipeline or installing fancy new gigabit switches for all.
It's not about being a hardass or arrogant, it's about making sure people have the tools and resources to do their job properly. I review our network policies with staff on a regular basis, give an orientation to new users, and politely but firmly enforce the rules that help *everyone* have the best experience with the equipment and software under my charge.
Edit: I will say that I welcome folks ripping as much as they want into iTunes from their own CDs, the caveat being that unlike their actual work data, their music libraries are not included in the overnight backups. This seems to go down well with folks, who then are still able to have a soundtrack they want to accompany their work.
I too worked in a Creative/Branding Agency that allowed their users to share/stream itunes contect + use limewire on their workstations.
Ayup - you were smart to go. Sooner or later someone is going to download something illegally from the likes of Adobe, HBO, Paramount, or any given large record label and their ISP will need to get involved. A couple slaps on the wrist later, and the ISP can pull the plug because of copyright violations. And, if it happens in a corporate environment, it's usually the company that gets in trouble for it, not the individual, if some large media company wants to take a settlement.