When does enforcing copyright become ridiculous?

This post over on BoingBoing reminds of a conversation I had a while back about the notion of music copyright. Music in the form of, say, digital information on a disc is protected by copyright yet it only has value to me as sound coming out of my loudspeakers. Is that protected by copyright laws too? Does this mean that if I have friends round to my house I should check with each of them that they all own the music I'm about to play? I'm assuming that if they own that music in some form then they have a 'licence' to hear it round at my house. Anyone else will be issued with bright yellow ear defenders and a guide to lip-reading. Perhaps we could converse using sign-language or maybe just not listen to music at all ever for fear of breaking some aspect of laws whose meaning we are only vaguely aware of. I mean, if I play music off a CD and it turns out one of my friends has it on vinyl is that format-shifting their 'licence' and hence breaking the law? I just don't know. Perhaps the music industry could sell a licence that permits the enjoyment of their product from wherever the sound may be being emitted? Sadly we would all have to rely on people's honesty to not enjoy music they had not purchased the appropriate licence for. Obviously such a scheme is patently ridiculous because it is unenforcable but is surely the ideal the music industry would would wish for as no one would ever hear anything without the copyright owner being remunerated. It can't work because you  can't apply such rules to the environment that we live in. Being able to make digital copies of music and share them at no cost is a change to the environment music inhabits and the rules the industry would like to enforce simply can't work.

Update: U2 tracks leak after Bono plays stereo too loudly