A car company, CarCo, buys $30,000 worth the parts, to produce 10 cars. The labor to produce these 10 cars costs CarCo $50,000. So, 10 cars cost CarCo $80,000. In order to pay for facilities, research, advertising, and such, CarCo, marks up the amount they charge for these cars by 75%. Now we are at $140,000 for 10 cars, which is $14,000 for that brand new car you want to buy. In order for CarCo to produce another 10 cars, it will cost them another $80,000, and they will mark it up and will still charge you $14,000.
A movie studio, MovStu, buys $20,000,000 worth the props and equipment to produce a new movie. The labor (actors, crews, producers and such) costs $45,000,000. So, 1 movie costs MovStu $65,000,000. If this new movie is an average movie, MovStu will make about $75,000,000 from box office sales. Now, MovStu still wants to make money, so they produce some DVD's.
For simplicity's sake (and to make the movie studios look a little bit better), we'll ignore the $75,000,000 the studio made from the theaters and start back at zer0. So, the movie cost $65,000,000 to produce. Each boxed DVD costs $1.00 (which is high) to produce. So, 25,000,000 DVDs will cost MovStu about $90,000,000. In order to pay for facilities, research, advertising, and such, MovStu, *should* mark up the amount they charge for these DVD's by 75%. Now we are at 157,500,000 for 25,000,000 DVDs, which is $6.30 for that brand new DVD. So they sell a new DVD for $20, big deal, right?
That would be okay, because it's not TOO absolutely outrageous that they would mark it up an extra 300%. But don't forget the fact that they already made their $65,000,000 back in the Box Office, so, they really don't have the $65,000,000 expense. If you take that away, the marked up price of a DVD is more like $1.75 a piece, which means that they are really marking it up a total of 2,000% (and no, that's not a typo).
Anyway, now MovStu is upset because people are copying and and distributing their 2,000% marked up DVD's for free. So, they get together with other movie studios and decide that this is 'copyright infringement' and they start going after 'pirates'.
Meanwhile, Joe Scientist has been working hard on his research project and is finally done. It is revolutionary and will help the common man as much as it will help anyone else. He publishes his work in magazines and websites across the world. People read it and realize that they need to share the information with their friends and neighbors. They print off copies (with appropriate attribution of course) and hand them out to their friends.
Meanwhile, Johnny Poet writes the best poem man has ever read. He decides that to make money, he will sell the poem in print, which will be beautifully matted and framed. George buys the poem and hangs it on his wall. He is so inspired that he types up the poem and posts it on his blog with a link to Johnny's online store. Some of George's friends read the poem, and they love it. One or two of them go to Johnny's store. Others print it out on paper and frame it themselves and put it on their walls.
Would Joe or Johnny prosecute those individuals who copied their work for copyright infringement? Of course not. It costs nothing to Joe or Johnny.
Would CarCo prosecute someone who stole one of their cars? Of course they would. Each car that got stolen would cost them $8,000. But they wouldn't care if Freddy Mechanic liked the design and made his buddy one from scratch (he's a REALLY good mechanic).
Should MovStu prosecute people who "steal" DVD's. Of course not. I mean, if they actually steal a physical DVD, then yes, they should. But that isn't the problem. People are stealing digital copies which costs MovieStu (who is charging extortionate prices) absolutely nothing. They already made their expenses back in the theaters. They will still make plenty of money on DVD's (if they don't charge so fricken much), because people like to have an original. DVDs are worth the box and the pretty image on the top of the disc itself. Nothing more. The data on the DVDs is worthless.
Why is data worthless?
Data is worthless, because after the initial cost of production, it costs nothing to replicate. Take CarCo. While the initial cost of research and design may have been in the hundreds of thousands or millions of dollars, each car produced thereafter costs them a fixed rate of $8,000. Same for the movie. While MovieStu spent $65,000,000 on that first digital copy, each subsequent copy will cost a fixed rate of exactly $0. Nada. Nil. Nothing. Electrons are free. You cannot steal electrons.
So, in conclusion, while "pirating" movies/music/anything else it definitely illegal (whether or not it should be is a different story), it is also definitely not immoral. You are robbing no one of hard work. The simple truth is this: the entertainment industry's paradigm needs to change.