> there's no marginal cost to making another copy
Marginal cost is not the only cost. It's disingenuous to treat it as such. It's also incorrect - making a copy for someone to access is most certainly not free.
And the economics is sound - partitioning markets allows sales at lower prices to many purchasers. There's simply no way around this, no matter how you feel about it.
>That's a pretty clear cut market failure
No, the same economics above apply - partitioning the market lets those less needs obtain product at a lower cost than those with more needs, no matter how the device/software is created.
Market segmentation replaces a single, ham handed consumer and producer surplus with a multi level one, allowing each side to capture more of the surplus for their benefit, leaving less of the summed surplus on the table.
Not every purchaser has the same surplus to trade. By splitting the market some purchasers that would not otherwise buy are now willing and able to do so, and the tighter or possible non-existent margins there are offset by selling to those accepting higher price points, almost always offset by extra capability.
And no matter how you slice it, commodity chips and software are so incredibly cheap compared to the value they provide it's hard to claim these prices are somehow not reasonable. For less than a week's pay I can purchase an incredible set of tools that I can then turn into orders of magnitude more value for me. Pretty much any professional making a living based on computers is in the same position.