Thank you for your article. You made many great points and clearly understand the issues. One area that you briefly discussed involves reputation. In any business revolution there is a time - initially - when low cost providers rule. I believe that reputation will soon become a prime mover in all internet business models.
Do you want a product that's cheap or "free", or would you prefer something that works? Do you want to pay money to a fly-by-night operator or someone with a reputation for integrity?
I have a (low-cost) cell phone service that was I subscribed to based on cost. Their service is horrible (fraudulent billing, dropped calls, etc). Unfortunately so is the service offered by their competitors. When a cellular service company demonstrates that they are good company to do business with I will gladly pay them twice what I currently pay. This is what you have already achieved in publishing. Businesses in many other fields would do well to follow your lead.
You can choose to see "piracy" - or anything else - as a problem or an opportunity. You see opportunities and I look forward to watching your continued success.