It's all about ownership. The shopkeeper owns the vodka as much as the software company owns the game/software.
It's not like that. The shopkeeper owns the vodka as much as a CD store owns a CD or iTunes owns an MP3 (although I'd argue less--since the shopkeeper cannot sell multiple "copies" of vodka from the single bottle). When it comes to ownership, the ownership should be of the code. For example, Absolut owns the recipe of it's vodka. If anyone steals that, then they should surely be punished. Similarly, if anyone steals Microsoft code for Office 2007, they should be accordingly punished. But, you can buy vodka and share it with your friends. However, you can't legally buy a music CD and share it with your friends... the vodka comparison fails, IMO.
Interestingly, there was a music website I saw that was giving music away for free, except they had adverts that you had to watch, etc to pay for it, I can see them being successful.
There's a service call Ruckus that is legal, DRM music that is available to anyone with a .edu email address.
You've brought up price, this is an issue I've never thought could vindicate piracy. If you can't afford something then you don't get it, simple. Most people pirate because they can and because it's free, not to do with price.
It has got a lot to do with price, in my opinion. The reason that black markets exist is because there is not a proper equilibrium of the supply and demand curves. The demand for software is such that most people would buy it if it was cheaper. Supply does not properly provide for that, and you end up with a lot of people who want the software, but not for the given price. If you look at old-school piracy (before the internet downloading era) you would note that people
PAID for pirated copies. That in itself shows that they are willing to pay a certain price for the goods purchased, and that the suppliers are not estimating that price properly.
sohum added 1 Minutes and 11 Seconds later...
And, on a side note, expenses are probably high cause sales are low. And sales are low because of piracy. You could look at it as a vicious circle...
Actually, no. Expenses are completely independent because of sales. You can say net income is less because sales are low. Sales are low because prices are high. Expenses don't have anything to do with sales, for the most part, since they are two completely different parts of the production process.