The fairest penalty is no penalty. We need to end the war on sharing by legalizing noncommercial copyright infringement.
Why would anybody go through the trouble and expense to create quality movies, tv, music, books, software etc if it's legal to just take the end product without paying? Sure, some people will pay out of principle, but if it's perfectly legal most people will just take it. Without funding, I'm sure there will still be hobby projects, but nothing on the scale we currently enjoy.
To effectively prevent piracy the penalty has to be such that PenaltyAmount * ProbabilityOfGettingCaught > SavingsByPirating. Right now the chance of getting caught is quite low, so the fine has to be quite high. Perhaps the problem is actually that the *IAA isn't suing enough people. If ProbabilityOfGettingCaught was close to 1, the PenaltyAmount could be quite close to the actual value of the item pirated