I've seen the following argument a thousand times: "Well the marginal cost of a copy of [some digital good] is 0 so it isn't stealing!" That argument is actually completly irrelevant. I took a train the other night, and there were only 2 people in my whole car. The previous week it was packed. Both times I had to buy a ticket at the same price. If you don't see what that has to do with pirating music (or software, or…
Many things DO work by this model.
ie, art. Someone may pay for the 1st copy of a Picasso at 100 million dollars (the copy that actually required talent to make), but everyone else gets it at the marginal cost, free.