CD's cost pennies. A single mp3 should not cost more than the CD to put it on. If they were pennies or a quarter each, people would buy in much greater volume.
The music industry and artists just need to find the optimal point on their equivalent Laffur curve to generate the max revenue. If you make it cheap enough that the time invovled in music piracy is not worth it, users will buy the music instead. There's your maximum revenue point.
There 300 million people in this country. If over half of them have PC's and you get just 10% of them downloading the song for a dime or a quarter. That's 150K to 600K. Pretty good wages for a bard.