Indeed a nice one.
This blank asks us to fill in evidence that will prove that excessively restrictive controls can be avoided. Now, what is the problem?
Problem: People are downloading and redistributing music illegally. (Internet Piracy). Of course the leaders support this movement to stop illegal download.
A - The only way we can tell them that they don't need to have excessive restrictive controls is if we show that the new controls will allow (not prevent) downloading and redistribution of electronic files by legal means. So thats the answer. Its legal, so they are happy!
B - Going into the country of origin is too specific
C - The economic cost of implementing controls does not exceed the economic losses caused by illegal downloading and redistribution. Well, yes cost is a factor, but we are looking for a reason to avoid excessive control for illegal download. Cost is not a concern here
D- Uniformly, but will they be legal? and by music record labels?? Why them? Nope this is out.
E - Yes, we know there is an upward trend. The premises already tells me that. Does not really answer a reason to avoid excessive control for illegal download

So, the correct answer is A
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Kudos if I helped

What is the source?

We can interpret the meaning of option A as:
1) The prevention mechanism is illegal.
2) The control doesn't prevent the download if the download was a legal one.

I interpreted the meaning as 1) above and eliminated A because the meaning I inferred was that the prevention mechanism was NOT legal.

It's #2. The control doesn't prevent the download if the download was a legal one.
The question states" to prevent illegal downloading and redistribution", not that the prevention method was illegal.
and if we show that the new controls will allow (not prevent) downloading and redistribution of electronic files by legal means, then we can avoid excessive restrictive controls. Thats choice A
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Kudos if I helped

I'm pleased to help. in the blank we have to say something like: despite the fact that new controls will help to reduce illegal downloading music but we don't want it to be excessively restrictive controls => we have to point out a fact proving that the new controls will not be excessively restrictive.

Option A : The new controls do not prevent downloading and redistribution of electronic files by legal means.
-> New controls will ban illegal download but those legal download will not be under control -> It tells you exactly that new controls is not excessively restrictive to all cases.

(Though option A at first sounds pretty illogical by saying "by legal means")