Yet, people still pirate music.
I pirate music from time to time, because (1) I can't find the albums I want from my country on iTunes or similar and (2) wages are lower where I live, and these services are still too expensive. Both issues are fixable however.
It's also the case that some people will always pirate stuff -- but does it really matter when the market got a lot bigger? To me it's really not an issue of price -- BUT I do refuse paying for crappy content or for content that's too expensive relative to my monthly revenue.
The biggest problems with the movies/music industries for example is not piracy, but crappy content. For instance I go watch movies at my local movie theater, and I regret paying for 25% of all movies I'm seeing, even though I'm pretty selective about it. That's just sad.
Nobody wants to spend their hard-earned money
on something they can just as easily get for free.
This is true, but the MP3 file itself is not the only thing you're paying for when using iTunes or similar.
Other things would be convenience (searching for stuff on PirateBay is totally not fun), free online backup (100 GB on DropBox is $20 / month - and with my current needs, I would need 3 times that storage and constantly growing) and the insurance that you're buying quality.
You see, even if people prefer Free all the time, people also think that quality reflects directly in the price paid. That's why people still buy Nike shoes, even though there are hundreds of brands producing cheaper clones with reasonable quality.
And back to searching on PirateBay, I can't count the number of times I downloaded something, only to find that it was not what I wanted or that it was of poor quality. Sometimes whole hours would pass until I found something that I liked, or until I gave up.
And that's the thing -- some people will always pirate, but other people will prefer buying if it is more convenient. And yet other people have this feeling of accomplishment when rewarding authors that they like (me included) ... like 2 days ago I bought a copy of an ebook called "The Making of Prince of Persia", even though you can find the whole book in the author's blog.