Why would the industry be damaged by a service that is just extra revenue? The film and TV industry isn't being destroyed by the success of Netflix or LoveFilm, YouTube isn't killing the music industry.
There is a fine line in how it's done, Sony aren't offering the newest titles for download, many of the games that are on PS+ have long since been out and sales dropped off, it's an extra source of revenue for the developers (in the assumption they are offered money for these downloaded titles). Lets take Borderlands 2 for example, just arrived on EU PS+ 2 months after the GOTY Edition. The 'free' game might entice people to buy DLC or buy said GOTY edition to get the DLC after playing the game.
And Sony make money from it else they wouldn't do it.
Hmm, pie.
