[smarsh]

Then perhaps piracy is an indicator that the pricing is considered too high, above the threshold at which a potential customer decides to either not buy it or pirate it.

The question then is how the ability to pirate affects that "reasonable price" threshold, amongst other hard to quantify effects of piracy.

[wtvanhest]

Then perhaps piracy is an indicator that the pricing is considered too high, above the threshold at which a potential customer decides to either not buy it or pirate it.

For some customers it is absolutely too high so they resort to piracy. For others, it is the correct price or even too low. In a perfect world, the seller could use your income to determine price (or some other even better metric for what you are willing to pay) and charge everyone differnet amounts. Very wealthy people would pay huge amounts, impoverished people would pay very low amounts, maybe even nothing.

The question then is how the ability to pirate affects that "reasonable price" threshold, amongst other hard to quantify effects of piracy.

I imagine it pushes the price down slightly, but who knows if the record companies are acting rationally (pricewise) or could even predict the correct price they should charge to max profit. (I imagine they have some very smart people modeling pricing, but models can only get you so close).