Another huge reason is overseas competition. Why would I pay someone 10k to write my software in the states when I can bid out my project for 1k to someone in India for the same quality, if not better.
If everybody stopped downloading demand would increase which would increase prices. However, if there is such a high demand, it should be possible to introduce a distribution model that could charge less per song but still make the same profit as the models today (like iTunes).
Kinda unrelated to the price change but related to pirating, I've discovered so many artists though pirating that I would have never discovered otherwise because they aren't played on the radio or anything. And many of those artists I've later actually bought the albums for and/or paid to see them live. Like, with LCD Soundsystem, a band I like. I'd never heard a song, so I pirated all 3 of their albums. I now own their newest album on vinyl and CD, paid to see them live, and bought a t-shirt while there. They would have never gotten my money if I had to buy it because I don't think I would have bothered to spend 15 dollars or whatever. Like mentioned 30 second samples aren't enough. And as for the price change, like mentioned, if they raised the price too much right now, everyone would pirate. If there was no pirating, they could raise it as much as they want with no alternative.
Remember a few years ago when Microsoft would calculate their losses due to pirating by multiplying the estimated number of pirated copies of Office and Windows times the full retail price? Like everyone who pirated a copy would have paid full retail if they hadn't. Riiiiight. Not condoning pirating at all.
I thought people started stealing music because CD's were ridiculously overpriced. Right. Years ago UH would sell XP's for $10 to students. I think UT also did that, maybe for less.
Yep, piracy essentially enables an infinite supply of the illegal kind, which drives prices of the legal kind down. However, economics generally deals with allocation of limited resources. In this case, the supply is infinite. The only resource is memory space and bandwidth. If a limited resource were being offered for free, it would all be quickly obtained and flipped at market value. When the supply is infinite, this won't happen.
Does UT not sell that software for that price anymore? When I was there we could get Office and XP for like 5 bucks apiece. Limit one per student.
This interesting article from Harvard Business School indicates that piracy not only doesn't hurt sales, it boosts sales of some types of music. http://hbswk.hbs.edu/item/4206.html
