Your comment doesn't follow from mine because I touched on both (a) quality and (b) legislature that makes distribution or possession of copies illegal.
This is an economy of scarcity -- people tend to buy the cheapest product that fulfills their needs. Those needs many-times include not getting sued to oblivion and risk huge penalties.
I was going to reply with all the legal stuff on TPB, but I wanted to point out that even the biggest-budget and most popular content can survive even if it's available for free. There are a lot of producers who distribute primarily on P2P and it doesn't seem to be any harder for them to make money. I think http://vodo.net/ is the biggest example that comes to mind right now, and individual artists like http://www.pronobozo.com/ are doing OK on their own as well.
You're touching on alternative business-models. Alternative as in different than creating shit then selling it directly ... a general business model that has worked since money where invented.
And the problem with these business models is that they aren't general enough (working on a case by case basis) and don't even survive the onslaught of technological evolution.
Music artists can make money from concerts (they always did). But in case you haven't noticed, theaters are in big trouble, artists many times having to seek out employment in sitcoms/trashy TV shows to make a living. One month ago I also watched an opera show in 3D with surround sound ... it was like being there and it will only get better.
Yes, you can find artists that do well by riding the Internet wave / the freemium business model. That doesn't mean it works on a bigger scale or that it will continue to work 5 years from now.
Creating shit and selling it if it provides value is the only sustainable and general business-model. Society would be worse without it, unless you're talking about getting rid of money altogether.
This is an economy of scarcity -- people tend to buy the cheapest product that fulfills their needs. Those needs many-times include not getting sued to oblivion and risk huge penalties.